<PAGE>   1
                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K


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

        FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

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

                       COMMISSION FILE NUMBER: 33-98372-01

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

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

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

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

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

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

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

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


<PAGE>   2
                                TABLE OF CONTENTS

                                    FORM 10-K


<TABLE>
<CAPTION>
PART I                                                                                        Page No.
<S>                                                                                           <C>
   Item 1  Business .....................................................................        15
   Item 2  Properties ...................................................................        15
   Item 3  Legal Proceedings ............................................................        15
   Item 4  Submission of Matters to a Vote of Security Holders ..........................        15
                                                                                                 
PART II                                                                                          
                                                                                                 
   Item 5  Market for Registrant's Common Equity and Related Stockholder Matters ........        15
   Item 6  Selected Financial Data ......................................................        15
   Item 7  Management's Discussion and Analysis of Financial Condition and Results of            
           Operations ...................................................................        17   
   Item 7A Quantitative and Qualitative Disclosures About Market Risk ...................        24
   Item 8  Financial Statements and Supplementary Data ..................................        24
   Item 9  Changes in and Disagreements with Accountants on Accounting and Financial             
           Disclosure ...................................................................        24
                                                                                                 
PART III                                                                                         
                                                                                                 
   Item 10 Directors and Executive Officers of the Registrant ...........................        24
   Item 11 Executive Compensation .......................................................        24
   Item 12 Security Ownership of Certain Beneficial Owners and Management ...............        24
   Item 13 Certain Relationships and Related Transactions ...............................        24
                                                                                                 
PART IV                                                                                          
                                                                                                 
   Item 14 Exhibits, Financial Statements, Schedules and Reports on Form 8-K ............        25
</TABLE>


DOCUMENTS INCORPORATED BY REFERENCE:

PART III: Portions of the registrant's definitive proxy statement to be issued
in conjunction with the registrant's annual stockholders' meeting to be held on
June 9, 1999.

LOCATION OF EXHIBIT INDEX: The index of exhibits is contained in Part IV herein
on page number 25.

        This document consists of 72 pages, plus exhibits attached hereto.


                                       2


<PAGE>   3
                                     PART I


This Annual Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Operating Partnership's actual
results could differ materially from those set forth in the forward-looking
statements as a result of various factors, including general real estate
investment risks, competition, risks associated with acquisition and development
activities and debt financing, environmental matters, general uninsured losses
and seismic activity.

OVERVIEW

Spieker Properties, L.P. (the "Operating Partnership") specializes in the
acquisition, development, management and leasing of office and industrial
properties in California and Washington, Oregon and Idaho (the "Pacific
Northwest"). Substantially all of the business activities of Spieker Properties,
Inc. (the "Company") are conducted through the Operating Partnership, in which
the Company owned an approximate 87.8% general and limited partnership interest
at December 31, 1998.

The Company was formed to continue and expand the real estate activities of its
predecessor firm, launched in 1970, commenced operations with the completion of
its initial public offering ("IPO") in November 1993.

BUSINESS STRATEGY

The Operating Partnership's principal objective is to achieve sustainable,
long-term growth in funds from operations per unit. Consistent with this
objective the Operating Partnership seeks to maximize the return on each dollar
of capital invested through the following focused and consistent business
strategies.

Quality Office and Industrial Properties

The Operating Partnership invests in quality office and industrial properties
that possess attributes that enable the properties to be competitive in the
marketplace in both the short and long-term. With approximately 30 years of
experience in owning and operating commercial properties, the Operating
Partnership's management team possesses the knowledge necessary to assess the
physical and locational attributes that determine a property's long-term
viability.

The Operating Partnership focuses on differentiating its properties from those
of nearby competitors, so as to maximize their attractiveness to potential
users. Important characteristics in office buildings include efficient suite
layouts, ample glass line per square foot of office space, user friendly common
areas, stairs, elevators and restrooms and convenient parking. Further
differentiation is achieved through amenities and services provided, such as
on-site management, conference rooms and health clubs.

Distribution properties are designed with high clear heights, multiple dock
facilities, appropriate truck staging and high-capacity sprinkler systems. With
light industrial or R&D properties, the Operating Partnership also uses
landscaping and exterior glass walls to increase the attractiveness of and
demand for such space.

Invest in Growing Regions

The Operating Partnership seeks to invest in regions with diverse and vibrant
economies that possess strong prospects for continued economic growth. The
Operating Partnership believes that California and the Pacific Northwest possess
attributes - high concentration of technology industries, growing populations
with a well-educated employee base, ability to attract new capital, excellent
universities, quality of life and well-developed infrastructures - that will
contribute to continued economic growth. Within these growing regions the
Operating Partnership focuses its activities in the major metropolitan areas of
Seattle, Portland, San Francisco, San Jose, Sacramento, Los Angeles County,
Orange County and San Diego, which have proven to be desired locations for a
large number of businesses.


                                       3


<PAGE>   4
Submarket Concentrations

In the specific local submarkets in which it operates, the Operating Partnership
generally seeks to own a number of properties and to be one of the most
significant commercial landlords in that submarket. The Operating Partnership
believes that it has achieved significant market penetration within a number of
submarkets in which it operates. By achieving concentrated market positions, the
Operating Partnership can offer prospective tenants a variety of property
options and can accommodate the growth of existing tenants. Such submarket
concentration also enables the Operating Partnership to maximize synergistic
opportunities and economies of scale and allows key operating personnel to
concentrate their expertise on specific markets and local conditions. Finally,
the Operating Partnership believes that this strategy gives it a measure of
control over the rental rates achieved and capital expenditures incurred in
leasing space.

Focus on Flexible, Multi-Tenant Properties

The Operating Partnership seeks to own properties which will appeal to a broad
range of potential tenants. As such, the Operating Partnership focuses on
properties which are easily divisible and can accommodate tenants of various
sizes. This flexibility also enables the Operating Partnership to meet the needs
of existing tenants by being able to accommodate their inevitable expansion and
contraction needs. In addition, the Operating Partnership's experience is that
such property flexibility helps it maintain high occupancy rates, particularly
when market conditions are less favorable, and control the cost of re-tenanting
space.

Provide a Superior Level of Service

The Operating Partnership's goal is to provide a superior level of service to
its tenants in order to achieve high occupancy and rental rates, as well as low
turnover. To achieve this level of service, the Operating Partnership's office
property managers are located on-site, providing tenants with convenient direct
access to a management team which can respond quickly and allow tenants to focus
on their business rather than property issues. These on-site property managers
enable the properties to be well-maintained and convey a sense of quality, order
and security.

EMPLOYEES AND OPERATING PHILOSOPHY

As of December 31, 1998, the Operating Partnership had 548 employees. These
employee's focus on enhancing the Operating Partnership's business strategies
through the following operating philosophies.

Fully-Integrated Real Estate Management Capabilities

The Operating Partnership has had, and will continue to have, a philosophy of
maintaining in-house resources to add value to properties through the entire
cycle of acquisition, development and ownership, including design, construction,
leasing and management. The Operating Partnership utilizes in-house resources to
market, lease and manage its properties and does not typically list its
properties with outside businesses or use third-party managers. All of the
Operating Partnership's officers with real estate responsibility have had
extensive experience marketing various properties and have, at least one time in
their careers, been directly responsible for leasing specific properties. The
Operating Partnership believes this approach gives it a significant advantage as
such depth of experience provides it with a detailed knowledge of markets and
tenant preferences.

Training and Retention

The Operating Partnership's hiring, training and retention of a talented
management group has been an important factor in its success. The Operating
Partnership expends significant efforts in the training of new employees in
fundamental real estate skills as well as in the continuing education of
existing employees. All of the Operating Partnership's officers, including the
executive officers, are involved in the education program, which reinforces the
program's importance to the Operating Partnership and its personnel.

The Operating Partnership's officer compensation program includes cash bonuses
and restricted stock payments tied largely to growth in net operating income
from existing properties under their management, as well as contribution to
funds from operations from new acquisitions and developments in their regions.
Non-officer


                                       4


<PAGE>   5
compensation includes subjective bonuses based upon, among other factors, tenant
satisfaction and leasing and re-leasing success. The Operating Partnership also
believes that stock options are an effective means of linking employees' actions
to stockholder value and generally grants options to all full-time employees
upon the completion of one year of service with the Operating Partnership.

Accountability

The Operating Partnership has a philosophy of holding one senior officer or a
small group of senior officers accountable, under the supervision and direction
of the Operating Partnership's executive officers, for all phases of a
property's development, from purchase, design and budgeting through
construction, leasing and ongoing management. The Operating Partnership believes
that this approach increases the likelihood of a project's success because of
the senior officer's accountability, continuity of involvement in the project
and resulting detailed knowledge of the property and its tenants, particularly
as compared to a compartmentalized approach to the real estate business where
individuals are responsible for only certain limited areas of a project.

PROPERTY OVERVIEW

As of December 31, 1998, the Operating Partnership's portfolio of properties,
consisted of 40.8 million square feet, made up of 20.5 million square feet of
office and 20.3 million of industrial income producing properties located in
California and the Pacific Northwest. With the exception of three assets
totaling 808,000 square feet, the Operating Partnership owns 100% of the
properties. The properties are segmented and managed in four operating regions.
These four operating regions have been broken down into nine identifiable
markets. Segment information related to the Operating Partnership's operating
regions can also be found in footnote 13 of the Operating Partnership's
Financial Statements.

The following table sets forth the rentable square feet of the Operating
Partnership's properties by region, market and type, as of December 31, 1998.



                      RENTABLE SQUARE FOOTAGE OF PROPERTIES

<TABLE>
<CAPTION>
                                              OFFICE                 INDUSTRIAL                 TOTAL                % OF TOTAL
                                              ------                 ----------                 -----                ----------
<S>                                         <C>                      <C>                      <C>                    <C>  
Pacific Northwest
   Seattle, WA/Boise, ID                     2,005,890                3,709,047                5,714,937                  14.0%
   Portland, OR                              2,472,344                3,400,578                5,872,922                  14.4
                                            ----------               ----------               ----------              --------
                                             4,478,234                7,109,625               11,587,859                  28.4
                                            ----------               ----------               ----------              --------
North - East Bay/Sacramento
   Sacramento, CA                            1,481,599                1,572,238                3,053,837                   7.5
   East Bay - San Francisco, CA              1,169,702                5,381,562                6,551,264                  16.0
   Peninsula - San Francisco, CA             2,116,337                  184,094                2,300,431                   5.6
                                            ----------               ----------               ----------              --------
                                             4,767,638                7,137,894               11,905,532                  29.1
                                            ----------               ----------               ----------              --------
Silicon Valley
   South Bay - San Francisco, CA             3,712,160                4,094,380                7,806,540                  19.1
                                            ----------               ----------               ----------              --------
                                             3,712,160                4,094,380                7,806,540                  19.1
                                            ----------               ----------               ----------              --------
Southern California
   Los Angeles County, CA                    2,480,721                       --                2,480,721                   6.1
   Orange County, CA                         3,643,523                1,081,105                4,724,628                  11.6
   San Diego, CA                             1,463,265                  874,928                2,338,193                   5.7
                                            ----------               ----------               ----------              --------
                                             7,587,509                1,956,033                9,543,542                  23.4
                                            ----------               ----------               ----------              --------
                         Total              20,545,541               20,297,932               40,843,473                 100.0%
                                            ==========               ==========               ==========              ========
                                                  50.3%                    49.7%                   100.0%
</TABLE>


Occupancy Rates

The Operating Partnership continues to operate at consistently high occupancy
levels and ended 1998 at a 96.4% average occupancy. This occupancy level is
indicative of the strength of the Operating Partnership's local real estate
markets, the continuing demand for space and the abilities of the Operating
Partnership's local management teams to keep their projects leased.


                                       5


<PAGE>   6
The following tables set forth average occupancy rates at December 31, 1998, of
the Operating Partnership's properties region, market and type and five year
historical year-end occupancies.

                             AVERAGE OCCUPANCY RATES


<TABLE>
<CAPTION>
                                                OFFICE           INDUSTRIAL           TOTAL
                                                ------           ----------           -----
<S>                                             <C>              <C>                  <C>  
Pacific Northwest
    Seattle, WA/Boise, ID                         98.7%              97.4%              97.8%
    Portland, OR                                  96.2               98.7               97.6
                                               -------            -------            -------
                                                  97.3               98.0               97.7
                                               -------            -------            -------
North - East Bay/Sacramento
    Sacramento, CA                                91.7               95.5               93.7
    East Bay - San Francisco, CA                  87.1               98.5               96.4
    Peninsula - San Francisco, CA                 98.2               98.3               98.2
                                               -------            -------            -------
                                                  93.5               97.8               96.1
                                               -------            -------            -------
Silicon Valley
    South Bay - San Francisco, CA                 96.5               96.5               96.5
                                               -------            -------            -------
                                                  96.5               96.5               96.5
                                               -------            -------            -------
Southern California
    Los Angeles County, CA                        91.3                 --               91.3
    Orange County, CA                             95.6               99.4               96.5
    San Diego, CA                                 95.3               99.7               97.0
                                               -------            -------            -------
                                                  94.2               99.5               95.3
                                               -------            -------            -------
                            Total                 95.1%              97.8%              96.4%
                                               =======            =======            =======
</TABLE>


                      5 YEAR HISTORICAL YEAR-END OCCUPANCY


<TABLE>
<CAPTION>
                                            TOTAL RENTABLE              YEAR-END
                     YEAR                  SQUARE FOOTAGE (1)           OCCUPANCY
                     ----                  ------------------           ---------
<S>                                        <C>                          <C>  
                     1998                     40,843,473                   96.4%
                     1997                     34,543,280                   94.5
                     1996                     21,429,732                   96.6
                     1995                     16,282,278                   96.9
                     1994                     13,933,113                   97.6
</TABLE>


(1) Historical rental square footage may include occupancies for properties
    that have been sold.


Rent Growth/Lease Expirations

During 1998, the Operating Partnership continued to benefit from strong real
estate markets with healthy demand, low vacancy levels and rising rents. As
rents in many of the Operating Partnership's targeted markets have risen
dramatically over the last few years, the Operating Partnership has achieved
accelerated roll-over rent growth. Rent growth, measured as the difference
between net effective (average) rents on new and renewed leases as compared to
the expiring coupon rent on those same spaces, was at 37.4% for 1998. The
following table shows recent historical roll-over rent growth:


                              ROLL-OVER RENT GROWTH


<TABLE>
<CAPTION>
TYPE                             1998               1997               1996
----                             ----               ----               ----
<S>                             <C>                <C>                <C>  
Office                            43.2%              27.9%              15.4%
Industrial                        26.8               18.8                5.8
                                ------             ------             ------
             TOTAL                37.4%              23.0%              11.3%
                                ======             ======             ======
</TABLE>


                                       6


<PAGE>   7
Lease Expirations

For the year ending December 31, 1999 approximately 15.3% of the Operating
Partnership's rentable square footage representing leases in-place, is scheduled
to expire. During the five year period from 1999-2003, over 86.0% of the leases
in-place are scheduled to expire. Given the difference between in-place rents
and current market rents, the lease expirations should provide opportunities for
the Operating Partnership to increase rents on the re-leasing or renewal of
second generation space.

The following tables set forth the lease expirations in summary and by product
type for leases in-place as of January 1, 1999, assuming tenant renewal or
termination options are not exercised.

                       LEASE EXPIRATIONS - ALL PROPERTIES


<TABLE>
<CAPTION>
                        RENTABLE SQUARE         ANNUAL BASE      PERCENTAGE OF BASE
          YEAR        FOOTAGE EXPIRING (1)   RENTS EXPIRING(2)     RENTS EXPIRING
          ----        --------------------   -----------------     --------------
<S>                   <C>                    <C>                  <C>  
          1999              6,028,500             $ 80,057              15.1%
          2000              7,634,086               94,988              17.9
          2001              7,985,659               99,203              18.7
          2002              6,549,855               85,013              16.0
          2003              5,538,059               81,835              15.4
          2004              2,046,278               28,115               5.3
          2005              1,052,666               14,249               2.7
          2006                697,943               12,705               2.4
          2007                638,465               13,638               2.6
        Thereafter          1,214,548               20,551               3.9
                           ----------             --------             ----- 
         Total             39,386,059             $530,354             100.0%
                           ==========             ========             ===== 
</TABLE>


                      LEASE EXPIRATIONS - OFFICE PROPERTIES


<TABLE>
<CAPTION>
                RENTABLE SQUARE           ANNUAL BASE       PERCENTAGE OF BASE
     YEAR      FOOTAGE EXPIRING (1)    RENTS EXPIRING (2)     RENTS EXPIRING
     ----      --------------------    ------------------     --------------
<S>            <C>                     <C>                  <C>  
     1999            3,383,442            $ 64,295                 15.8%
     2000            3,786,851              72,673                 17.9
     2001            3,548,947              73,542                 18.2
     2002            3,394,589              68,404                 16.8
     2003            2,489,065              58,727                 14.4
     2004              812,865              18,802                  4.6
     2005              388,532              10,585                  2.6
     2006              558,264              11,488                  2.8
     2007              513,906              12,156                  3.0
  Thereafter           663,555              15,752                  3.9
                    ----------            --------                -----
    Total           19,540,016            $406,424                100.0%
                    ==========            ========                =====
</TABLE>


                    LEASE EXPIRATIONS - INDUSTRIAL PROPERTIES


<TABLE>
<CAPTION>
                 RENTABLE SQUARE         ANNUAL BASE         PERCENTAGE OF BASE
  YEAR          FOOTAGE EXPIRING (1)   RENTS EXPIRING (2)      RENTS EXPIRING
  ----          --------------------   ------------------      --------------
<S>             <C>                    <C>                   <C>  
  1999               2,645,058             $ 15,762                  12.7%
  2000               3,847,235               22,315                  18.0
  2001               4,436,712               25,661                  20.7
  2002               3,155,266               16,609                  13.4
  2003               3,048,994               23,108                  18.6
  2004               1,233,413                9,313                   7.5
  2005                 664,134                3,664                   3.0
  2006                 139,679                1,217                   1.0
  2007                 124,559                1,482                   1.2
Thereafter             550,993                4,799                   3.9
                    ----------             --------                 ----- 
  Total             19,846,043             $123,930                 100.0%
                    ==========             ========                 ===== 
</TABLE>


(1)     Does not include month-to-month leases.

(2)     Base rent represents amounts contractually due, adjusted for contractual
        increases, which may include taxes, insurance and common area
        maintenance.


                                       7


<PAGE>   8
Leasing Activity/Re-leasing Costs

The Operating Partnership continues to aggressively manage the cost of leasing
commissions and tenant improvements ("capital expenditures") associated with the
renewal and re-leasing of space. The amount of capital expenditures spent on
leasing second generation space is impacted by the relative strength of the
local real estate market, the type of property being leased, the length of the
leases signed and the total value of the leases signed. The average capital
expenditure per square foot of space leased has shown moderate growth over time.
This increase is directly correlated to a shift in the Operating Partnership's
portfolio towards office properties, rapidly increasing market rents, which
result in higher leasing commissions, and longer average lease terms. The
following tables highlight historical leasing activity and re-leasing costs by
property type.


                        SUMMARY OF 1998 LEASING ACTIVITY


<TABLE>
<CAPTION>
                                                                                                           WEIGHTED  
                                              1ST GENERATION SPACE (1)       2ND GENERATION SPACE (2)      AVERAGE    2ND GEN.
                          TOTAL               ------------------------       ------------------------      LEASE      TI/COMM
TYPE            # LEASES        SQ.FEET        #LEASES       SQ. FEET       # LEASES       SQ. FEET       TERM (MO)    PSF (3)
----            --------        -------        -------       --------       --------       --------       ---------    -------
<S>            <C>            <C>            <C>            <C>            <C>            <C>            <C>          <C>  
Office              1,084      4,481,345            174      1,025,483            910      3,455,862             54     $5.26
Industrial            382      6,042,888             52      1,182,264            330      4,860,624             51      1.20
               ----------     ----------     ----------     ----------     ----------     ----------     ----------     -----
Total               1,466     10,524,233            226      2,207,747          1,240      8,316,486             53     $2.73
               ==========     ==========     ==========     ==========     ==========     ==========     ==========     =====
</TABLE>


                        SUMMARY OF 1997 LEASING ACTIVITY


<TABLE>
<CAPTION>
                                                                                                                       WEIGHTED
                                              1ST GENERATION SPACE (1)       2ND GENERATION SPACE (2)      AVERAGE     2ND GEN.
                         TOTAL                ------------------------       ------------------------       LEASE      TI/COMM
TYPE            # LEASES       SQ. FEET        #LEASES       SQ. FEET       #LEASES         SQ. FEET      TERM (MO)     PSF (3)
----            --------       --------        -------       --------       -------         --------      ---------     -------
<S>             <C>            <C>            <C>            <C>            <C>            <C>            <C>         <C>  
Office                673      2,121,754            122        570,977            551      1,550,777             41      $3.65
Industrial            325      5,774,904             58      1,168,891            267      4,606,013             45       0.88
                ---------      ---------      ---------      ---------      ---------      ---------      ---------      -----
Total                 998      7,896,658            180      1,739,868            818      6,156,790             42      $1.57
                =========      =========      =========      =========      =========      =========      =========      =====
</TABLE>


                        SUMMARY OF 1996 LEASING ACTIVITY


<TABLE>
<CAPTION>
                                                                                                                      WEIGHTED
                                              1ST GENERATION SPACE (1)      2ND GENERATION SPACE (2)       AVERAGE     2ND GEN.
                          TOTAL               ------------------------      ------------------------        LEASE      TI/COMM
TYPE             # LEASES       SQ. FEET       # LEASES      SQ. FEET        # LEASES      SQ. FEET       TERM (MO)     PSF (3)
----             --------       --------       --------      --------        --------      --------       ---------     -------
<S>             <C>            <C>            <C>            <C>            <C>            <C>            <C>         <C>  
Office                458      1,363,183             51        145,308            407      1,217,875             40      $4.38
Industrial            187      2,993,029             27        744,791            160      2,248,238             40       0.97
                ---------      ---------      ---------      ---------      ---------      ---------      ---------      -----
Total                 645      4,356,212             78        890,099            567      3,466,113             40      $2.22
                =========      =========      =========      =========      =========      =========      =========      =====
</TABLE>


(1)     1st generation is defined as previously unleased shell space.

(2)     Excluding month-to-month leases.

(3)     Tenant Improvement and leasing commission costs per square foot
        calculated based on 2nd generation space, excluding month-to-month and
        repositioning leases, of 1,936,943 square feet for 1998, 2,798,822
        square feet for 1997 and 877,587 square feet for 1996.


                                       8


<PAGE>   9
Tenant Profiles

The Operating Partnership has over 4,500 tenants, with the average tenant
occupying approximately 8,500 square feet and paying an annual net rent of
approximately $98,250. The tenant base is extremely diversified, as demonstrated
below, based on the business sectors in which they operate. The Operating
Partnership's largest tenant, Xerox, represents approximately 1.4% of the
Operating Partnership's 1998 net rental income. The top fifty tenants represent
less than 23% of the Operating Partnership's 1998 net rental income.

                     TENANT PROFILE BASED ON 1998 NET RENTS


<TABLE>
<CAPTION>
                                     PERCENTAGE OF
     BUSINESS SECTOR               NET RENTAL INCOME
     ---------------               -----------------
<S>                                <C>
Software                                 11%
Hardware                                  9
Insurance                                 6
Professional Services                     6
Banking                                   6
Telecom                                   5
Securities                                4
Research & Development                    4
Transportation & Logistics                3
Aircraft & Auto Manufacturing             3
</TABLE>


Investment Activity

The Operating Partnership strategically invests in real estate either through
the acquisition of existing properties or through the development of new
properties. The Operating Partnership invests in markets with vigorous economies
that have the potential for sustainable long-term economic growth. Within these
markets the Operating Partnership focuses on high quality, flexible,
multi-tenant office and industrial buildings. When evaluating potential
acquisitions, some of the factors the Operating Partnership considers are short
and long-term returns on capital, total cost compared to replacement cost, the
level of in-place rents compared to current market rents and tenant mix. In
assessing the viability of a potential development the Operating Partnership
also considers market demand and competitive supply.

Acquisitions

During 1998, the Operating Partnership acquired office and industrial properties
totaling 6.3 million square feet representing a total investment of $884.8
million. Office acquisitions added 5.1 million square feet for a total
investment of $825.4 million while industrial acquisitions added 1.2 million
square feet for a $59.4 million total investment. Average initial occupancies on
these acquisitions were 90.8%. The Operating Partnership uses the terms "total
investment" and "invested" to represent the initial cost of an acquisition, plus
projected costs of repositioning capital expenditures anticipated at the time of
purchase.

The following table sets forth 1998 acquisitions by region, market and type
based on total investment:

                                1998 ACQUISITIONS


<TABLE>
<CAPTION>
                                        OFFICE    INDUSTRIAL    TOTAL
                                       --------   ----------   --------
<S>                                    <C>        <C>          <C>     
Pacific Northwest
     Seattle, WA/Boise, ID             $   15.1    $     --    $   15.1
     Portland, OR                          52.3          --        52.3
                                       --------    --------    --------
                                           67.4          --        67.4
                                       --------    --------    --------
North - East Bay/ Sacramento
     Sacramento, CA                          --        25.0        25.0
     East Bay - San Francisco, CA            --        34.4        34.4
     Peninsula  - San  Francisco,         153.3          --       153.3
                                       --------    --------    --------
CA
                                          153.3        59.4       212.7
                                       --------    --------    --------
Silicon Valley
     South  Bay - San  Francisco,         189.9          --       189.9
                                       --------    --------    --------
CA

Southern California
     Los Angeles County, CA               218.8          --       218.8
     Orange County, CA                    159.4          --       159.4
     San Diego, CA                         36.6          --        36.6
                                       --------    --------    --------
                                          414.8          --       414.8
                                       --------    --------    --------
                            Total      $  825.4    $   59.4    $  884.8
                                       ========    ========    ========
</TABLE>


                                       9


<PAGE>   10
Developments

During 1998, the Operating Partnership completed six property developments
adding 889,651 square feet to the Operating Partnership's stabilized portfolio
for a total investment of $56.6 million. The Operating Partnership considers a
development completed and stabilized at the earlier of eighteen months after
shell completion or a 95% occupancy rate having been reached. Each of the
completed development properties listed below by type, market, and region were
100% occupied at December 31, 1998 and are included in the Operating
Partnership's stabilized portfolio.

                             COMPLETED DEVELOPMENTS


<TABLE>
<CAPTION>
                                                              RENTABLE     TOTAL INVESTMENT
      PROPERTY                              LOCATION         SQUARE FEET     ($000'S)
      --------                              --------         -----------     --------
<S>                                      <C>                 <C>           <C>
 Office

PACIFIC NORTHWEST
   Portland, OR
     4949 Meadows                         Lake Oswego, OR       125,190      $ 17,648
                                                                --------     --------

          TOTAL OFFICE                                          125,190      $ 17,648
                                                                ========     ========
Industrial

PACIFIC NORTHWEST
   Seattle, WA
     Kirkland 118                         Kirkland, WA           77,000      $  5,964
   Portland, OR
     Marine Drive Distribution            Portland, OR          258,500         8,308
      Center III

NORTH - EAST BAY/SACRAMENTO
   East Bay - San Francisco, CA
     Bay Center Business Park-Phase III   Hayward, CA           116,941         6,880


SILICON VALLEY
   South Bay - San Francisco, CA
     Dixon Landing-North Phase II         Milpitas, CA           83,890         7,934

SOUTHERN CALIFORNIA
   San Diego, CA
     Sorrento Vista                       San Diego, CA         228,130         9,903
                                                                --------     --------

      TOTAL INDUSTRIAL                                          764,461      $ 38,989
                                                                =======      ========

      TOTAL COMPLETED DEVELOPMENTS                              889,651      $ 56,637
                                                                =======      ========
</TABLE>


At the end of 1998 the Operating Partnership had seven industrial properties and
fourteen office properties under development that will add approximately 3.3
million square feet to the Operating Partnership's stabilized portfolio over the
next several years. The tables on the following page detail development
properties by type, region and market for a total estimated investment of $377.2
million. These development properties were on average 47.6% pre-leased at
December 31, 1998.

                         (See following page for table)


                                       10


<PAGE>   11
                            Developments in Process


<TABLE>
<CAPTION>
                                         ACTUAL OR                             TOTAL
                                       ESTIMATED SHELL        RENTABLE      INVESTMENT
PROPERTY                               COMPLETION DATE      SQUARE FEET       ($000'S)
--------                               ---------------      -----------       --------
<S>                                    <C>                  <C>             <C>
OFFICE

PACIFIC NORTHWEST
   Portland, OR
     4800 Meadows                       January 1999            74,211      $   13,019

NORTH - EAST BAY / SACRAMENTO
   Sacramento, CA
     Gateway Oaks IV                    June 1998               81,482          11,854
     Parkshore Plaza Phase I            November 1998          114,356          14,371
     Johnson Ranch Corp. Center II      December 1998           41,000           5,413
     East Roseville Parkway             May 1999               105,000          15,008
     Parkshore Plaza Phase II           August 1999            153,430          20,331
                                                            ----------      ----------
                                                               495,268          66,977
                                                            ----------      ----------
   East Bay - San Francisco, CA
     Treat Towers                       February 1999          362,146          63,569

SILICON VALLEY
   South Bay - San Francisco, CA
     Gateway Office III                 June 1998              123,400          21,628
     Ryan Ranch Oaks Phase I            September 1998          34,895           4,937
     Concourse V                        July 1999              135,238          35,210
                                                            ----------      ----------
                                                               293,533          61,775
                                                            ----------      ----------
SOUTHERN CALIFORNIA
   Los Angeles County, CA
     Arboretum Courtyard                April 1999             133,528          33,938
   Orange County, CA
     City Plaza                         November 1998          318,622          35,655
   San Diego, CA
     Bridge Pointe I                    August 1998            215,800          22,820
     Pacific Ridge Corporate Center     March 1999             120,980          17,468
                                                            ----------      ----------

                                                               336,780          40,288
                                                            ----------      ----------
         TOTAL OFFICE                                        2,014,088      $  315,221
                                                            ==========      ==========

INDUSTRIAL

PACIFIC NORTHWEST
   Portland, OR
     158th Commerce Park                June 1998              381,750      $   16,589

NORTH - EAST BAY / SACRAMENTO
   Sacramento, CA
     Riverside Business Center          June 1997              174,624           7,430
     Seaport Distribution Center        December 1997          199,553           6,510
                                                            ----------      ----------
                                                               374,177          13,940
                                                            ----------      ----------
   East Bay - San Francisco, CA
     Concord N. Commerce Center II      November 1998           64,125           4,163
     Benicia Commerce Center II         December 1998          220,549           9,580
     Vasco Business Center              December 1998           95,574           6,493
                                                            ----------      ----------
                                                               380,248          20,236
                                                            ----------      ----------
SILICON VALLEY
   South Bay - San Francisco, CA
     Dixon Landing North Phase I        January 1998           118,290          11,179
                                                            ----------      ----------

      TOTAL INDUSTRIAL                                       1,254,465      $   61,944
                                                            ==========      ==========

      TOTAL DEVELOPMENTS IN PROCESS                          3,268,553      $  377,165
                                                            ==========      ==========
</TABLE>


                                       11


<PAGE>   12
Competition

Other properties within the Operating Partnership's markets compete with the
Properties in attracting tenants, primarily on the basis of location, rental
rates, services provided, and the design and condition of the improvements. In
each of the Operating Partnership's markets, the competition for tenants has
been, and continues to be, intense. Some of these competing properties are
newer, better located or better capitalized than the Operating Partnership's
properties. The number of competitive commercial properties in a particular area
could have a material effect on the Operating Partnership's ability to lease
space in its properties or at newly developed or acquired properties and on the
rents charged.

The Operating Partnership also faces competition in its efforts to acquire or
develop desirable real estate. Such competitors include domestic and foreign
financial institutions, other REITs, life insurance companies, pension funds,
trust funds, partnerships and individual investors.

CAPITAL STRUCTURE AND WORKING CAPITAL

The Operating Partnership's principal sources of funding for its ongoing
operations, which include the leasing and build-out of existing space as well as
the acquisition, development, expansion and renovation of additional properties
and debt maturities, are cash flows provided by operations, unsecured short-term
borrowings, public and privately placed equity financing, public unsecured debt
financing, the issuance of partnership units in the Operating Partnership,
proceeds from the disposition of non-strategic assets and the assumption of
secured debt on properties acquired.

The Operating Partnership believes that its ability to access a variety of
capital sources enables it to reduce its overall cost of capital and maintain a
prudent capital structure. Including its IPO, the Company has raised over $1.7
billion in public equity capital. These proceeds were contributed by the Company
to the Operating Partnership in exchange for Operating Partnership Units. The
Operating Partnership has also issued approximately $1.4 billion of investment
grade rated unsecured notes with interest rates between 6.65% and 8.0% and
maturity dates ranging from 2000 to 2027 and approximately $500 million of
Preferred Stock and Preferred Operating Partnership Units at dividend yields
between 7.6875% and 9.45%.

                     CAPITAL STRUCTURE AT DECEMBER 31, 1998

DEBT

<TABLE>

<CAPTION>
                                          PRINCIPAL
                                            AMOUNT
                                            ------
<S>                                       <C>       
Unsecured Notes                           $1,436,500
Unsecured Short-Term Borrowings              300,000
Mortgage Loans                               110,698
                                          ----------
                          Total Debt      $1,847,198
                                          ----------

</TABLE>


EQUITY


<TABLE>
<CAPTION>
                                                                    SHARES     CONVERSION    COMMON STOCK      $ VALUE
                                                                  OUTSTANDING    RATIO       EQUIVALENTS     EQUIVALENT(1)
                                                                  -----------    -----       -----------     -------------
<S>                                                               <C>          <C>           <C>             <C>
Series A Convertible Preferred Stock                                 1,000      1.22:1          1,220         $   42,243
Series B Cumulative Redeemable Preferred Stock                       4,250         N/A            N/A            106,250(2)
Series C Cumulative Redeemable Preferred Stock                       6,000         N/A            N/A            150,000(2)
Series E Cumulative Redeemable Preferred Stock                       4,000         N/A            N/A            100,000(2)
Common Stock                                                        61,916         N/A         61,916          2,143,841
Class B Common Stock (3)                                               N/A         N/A            N/A                 --
Class C Common Stock (4)                                             1,176         1:1          1,176             40,719
Operating Partnership Units                                          8,903         1:1          8,903            308,266
Convertible Preferred OP Units                                       1,722         N/A            N/A             64,334(5)
Series D Cumulative Redeemable Preferred OP Units                    1,500         N/A            N/A             75,000(6)
                                                                                                -----         ----------
                                Total Equity                                                   73,215          3,030,653
                                                                                                =====         ----------
Total Market Capitalization (total debt plus total equity)                                                    $4,877,851
                                                                                                              ==========
</TABLE>


(1)     Value based on December 31, 1998 closing stock price of $34.625, unless
        otherwise noted.

(2)     Value based on $25.00 per share liquidation preference.

(3)     Shares were convertible at May 1998. As of December 31, 1998, all shares
        have been converted into Common Stock.

(4)     Shares are convertible beginning in March 1999.

(5)     Value based on $37.36 per share liquidation preference into Series D
        Preferred Stock; units have been convertible since May 1998 at a
        conversion rate of 0.90909 per unit.

(6)     Value based on $50.00 per share, units have been convertible into Series
        D Preferred Stock since April 1998.


                                       12


<PAGE>   13
The Operating Partnership believes that the cash provided by operations, its
unsecured line of credit and proceeds from the disposition of non-strategic
assets provide sufficient sources of liquidity to fund the Operating
Partnership's working capital requirements.

OTHER DISCLOSURES

Year 2000 Compliance

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

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

The Operating Partnership's IT department inventoried all IT hardware and
software to assess the business risk of each item. Manufacturers and/or
suppliers were contacted to determine Year 2000 compliance. Hardware and
software with high business risk, based on the manufacturer's and/or supplier's
assurances, do not appear to present Year 2000 issues. Since the filing of the
Operating Partnership's Form 10-Q for the period ended September 30, 1998, the
Operating Partnership's payroll system has been upgraded and tested and is now
Year 2000 compliant. Items with medium or low risk factors will be phased out or
upgraded. None of the above upgrades constitutes a material capital expense for
the Operating Partnership.

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

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

In addition to the "due diligence" being performed at the property level, other
steps have been taken to attempt to minimize the Operating Partnership's Year
2000 exposure: (1) the Operating Partnership's third party "critical" vendors
(utility providers, banks, etc.) have been contacted to determine their state of
Year 2000 preparedness; and the Operating Partnership is currently in the
process of receiving their responses; (2) the task force has attended Year 2000
seminars and has consulted with external legal counsel and consultants regarding
potential issues facing the Operating Partnership; and (3) an in-house database
has been established to track building and vendor compliance, as well as tenant
requests and the Operating Partnership's corresponding responses.

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


                                       13


<PAGE>   14
Environmental Matters

Compliance with laws and regulations relating to the protection of the
environment, including those regarding the discharge of materials into the
environment, has not had any material effect upon the financial condition or
results of operations of the Operating Partnership.

The 97 properties owned by the Operating Partnership at December 31, 1993, were
each subject to a Phase I environmental audit or update during the twelve-month
period ended December 31, 1993, certain of the properties were subject to Phase
II environmental investigations, and all buildings constructed prior to 1985
have been subject to asbestos detection investigations. In addition, for each of
the properties acquired subsequent to December 31, 1993, and for each parcel of
land purchased for development, a Phase I environmental audit or update was
completed as part of the acquisition due diligence process. These investigations
have not revealed any environmental condition that the Operating Partnership
believes would have a material effect on its business, assets or results of
operations. Independent parties have reported that no asbestos-containing
materials were used in buildings constructed on its properties during or after
1985.

Site assessments have revealed soil and ground water contamination at the
Stender Way II property in Santa Clara, California. A third party is primarily
bearing the costs relating to this environmental condition and the Operating
Partnership believes that its exposure, if any, is not material. Additionally,
three properties located in Stanford Research Park in Palo Alto, California, are
subject to varying degrees of known environmental contamination. The remediation
costs associated with this contamination have also been, and are expected to
continue to be, borne by other parties. Furthermore, the Operating Partnership
has entered into indemnification agreements whereby the Operating Partnership
has been, and is to be, indemnified for liabilities arising from clean-up costs
relating to these three properties. Environmental contamination has been found
to have originated at Walsh at Lafayette, an industrial development project site
in Santa Clara that was acquired by the Operating Partnership in 1995. The
relevant government agency has identified a third party as responsible for
remediation, and the remediation process is continuing. The Operating
Partnership is being indemnified for environmental contamination on the Walsh at
Lafayette property by a third party that was the former owner of the property.

Site assessments have revealed that soil and groundwater at the Operating
Partnership's Montgomery Ward property in Pleasant Hill, California, have been
contaminated with volatile organic compounds. The likely sources of this
contamination are on-site underground storage tanks and a potential off-site
contamination source. To date, no government agency has issued any directives
requiring that a remediation plan be filed or the contamination be cleaned up.
The Spieker partnership that transferred this property to the Operating
Partnership previously filed a lawsuit against the seller to enforce an
indemnity agreement and against certain other potentially responsible parties to
have those parties bear any clean-up costs. Settlement has been reached with
certain of the defendants in the lawsuit, resulting in cash payments to the
Operating Partnership. A trial involving the remaining defendants ended without
any additional cash awards being made. Due to the nature of this environmental
condition and the Operating Partnership's expectation that other parties will be
primarily responsible for the clean-up costs, the Operating Partnership believes
that its exposure, if any, for clean-up costs would not have a material adverse
effect on the Operating Partnership's financial condition, results of operations
or liquidity.

Site assessments have revealed soil and groundwater contamination at the Arden
Square property in Sacramento, California, and the Woodside Central property in
Woodside, California, which have since been sold to Pacific Retail Trust. The
Operating Partnership agreed to indemnify the buyer for the contamination.
However, the Operating Partnership believes that the liabilities and clean-up
costs associated with this contamination are covered under the Operating
Partnership's pollution insurance policy, except to the extent of the deductible
under such policy.

Property owned by GAF Corporation and/or Mattel, Inc. in the vicinity of the
Nimbus Corporate Center property in Beaverton, Oregon was discovered to have
very high levels of soil and groundwater contamination. Site assessments are
currently being conducted to determine the extent, if any, that such
contamination may have affected the Nimbus Corporate Center property. The
Operating Partnership believes that GAF, Mattel and/or other third parties will
bear the liabilities and remediation costs associated with this contamination,
and that, in any event, any exposure the Operating Partnership might have, would
be covered by the Operating Partnership's pollution insurance policy, except to
the extent of the deductible under such policy.


                                       14


<PAGE>   15
Although the environmental investigations conducted to date have not revealed
any environmental liability that the Operating Partnership believes would have a
material adverse effect on the Operating Partnership's business, assets or
results of operations, and the Operating Partnership is not aware of any such
liability, it is possible that these investigations did not reveal all
environmental liabilities or that there are material environmental liabilities
of which the Operating Partnership is unaware. No assurances can be given that
(1) future laws, ordinances, or regulations will not impose any material
environmental liability, or (2) the current environmental condition of the
Properties has not been, or will not be, affected by tenants and occupants of
the Properties, by the condition of properties in the vicinity of the
Properties, or by third parties unrelated to the Operating Partnership.


ITEM 1. BUSINESS

Information related to this Item is located on pages 3-5 and on pages 12-15.

ITEM 2. PROPERTIES

Information related to this Item is located on pages 5-11.

ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which either the Company or
the Properties is a party, or to which any of the assets of the Company or the
Properties are subject.

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

The Company did not submit any matters to a vote of security holders in the
fourth quarter of the fiscal year ended December 31, 1998.

                                     PART II



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

None

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth:

        o       Consolidated operating data presented for the years ended
                December 31, 1998, 1997, 1996, 1995 and 1994.

        o       Consolidated balance sheet data presented as of December 31,
                1998, 1997, 1996, 1995, and 1994.


                                       15


<PAGE>   16
This selected financial data should be read in conjunction with financial
statements (including the notes thereto) of the Operating Partnership included
in Item 8.

                          SUMMARY FINANCIAL INFORMATION
                (amounts in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                              -----------------------
                                           1998           1997           1996           1995            1994
                                         ---------      ---------      ---------      ---------       ---------
<S>                                      <C>            <C>            <C>            <C>             <C>      
OPERATING DATA:
Revenues                                 $ 561,097      $ 331,313      $ 200,699      $ 153,391       $ 121,037
Income from operations before
  disposition of property, minority
  interests and extraordinary items        163,924        110,134         65,764         30,335          13,363
Income before extraordinary items          185,939        130,365         74,091         30,444          13,393
Net income (loss)                          185,939        130,365         74,091        (10,361)         13,393
Net income (loss) available to             133,211        102,305         54,149         (8,837)         10,541
  General Partners
Net income (loss) available to              17,731         14,959          9,901         (1,524)          2,852
  Limited Partners
Net income (loss) per Common
  Operating Unit before                       2.56           2.27           1.74            .90             .49
  extraordinary items (1)
Net income (loss) per Common                  2.56           2.27           1.74           (.31)            .49
  Operating Unit (1)
Distribution per Common Unit:
  General Partners (1)                        2.29           2.08           1.78           1.76            1.60
  Limited Partners (1)                        2.28           1.98           1.72           1.68            1.60
</TABLE>


<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                                 -----------------------
                                           1998            1997           1996           1995           1994
                                         ---------      ---------      ---------      ---------       ---------
<S>                                      <C>            <C>            <C>            <C>             <C>      
BALANCE SHEET DATA:

Investment in real estate (before
  accumulated depreciation)              $4,182,806     $3,252,572     $1,447,173     $1,098,871      $ 870,613
Net investment in real estate            3,942,028      3,083,521      1,319,472        974,259         770,827
Total assets                             4,056,870      3,242,934      1,390,314      1,011,497         809,938
Mortgage loans, net (2)                    110,698         96,502         45,997        112,702         514,098
Unsecured debt                           1,736,500      1,335,000        674,000        377,700              --
Total debt                               1,847,198      1,431,502        719,997        490,402         514,098
Partners' capital                        2,021,814      1,679,841        610,928        468,576         258,760
</TABLE>


<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                                 -----------------------
                                            1998           1997           1996           1995            1994
                                         ---------      ---------      ---------      ---------       ---------
<S>                                      <C>            <C>            <C>            <C>             <C>      
OTHER DATA:
Funds from Operations (3)                $ 215,064      $ 147,912      $  93,293      $  61,428       $  41,935
Cash flow provided (used) by:
  Operating activities                     293,989        191,450        112,581         76,471          47,750
  Investing activities                    (786,502)     (1,697,885)     (387,567)      (200,515)       (161,332)
  Financing activities                     474,801      1,499,727        296,749        121,954          97,378
Total rentable square footage of
  properties at end of period               40,843         34,543         21,430         16,282          13,933
Occupancy rate at end of period               96.4%          94.5%          96.6%          96.9%           97.6%
</TABLE>


(1)     Per unit amounts for the Operating Partnership are computed using the
        weighted average units outstanding during the period. The weighted
        average general partner units and limited partner units outstanding for
        the years ending December 31, 1998, 1997, 1996, 1995 and 1994, are as
        follows:


<TABLE>
<CAPTION>
                                        Diluted Weighted     Diluted Weighted
                                            Average             Average
                   Year Ended       General Partner Units    Limited Partner Units
                   ----------       ---------------------    ---------------------
<S>                                 <C>                      <C>      
                      1998                64,098,182           8,429,646
                      1997                50,186,572           7,209,418
                      1996                35,910,652           6,549,819
                      1995                27,360,000           6,409,742
                      1994                21,192,655           5,876,586
</TABLE>


(2)     Net of discount of approximately $31.6 million as of December 31, 1994.

(3)     Refer to "Funds from Operations" in Item-7 Management's Discussion and
        Analysis of Financial Condition and Results of Operations for discussion
        and definition of the Operating Partnership's Funds from Operations. In
        February 1995, the National Association of Real Estate Investment Trusts
        ("NAREIT") established new guidelines clarifying its definition of Funds
        from Operations and requested that REITs adopt this new definition
        beginning in 1996. The new definition provides that the amortization of
        debt discount and deferred financing costs is no longer to be added back
        to net income to calculate Funds from Operations. In 1996, the Operating
        Partnership substantially implemented the new NAREIT definition for
        calculating Funds from Operations. The amounts presented above for the
        years ended December 31, 1995 and 1994, have been restated to reflect
        the new NAREIT definition. Funds from Operations previously reported by
        the Operating Partnership based on the old NAREIT definition for the
        years ended December 31, 1995 and 1994, were $70,790 and $52,142,
        respectively.


                                       16


<PAGE>   17
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Statements contained in this Item 7, "Management's Discussion and Analysis of
Financial Conditions and Results of Operations," and elsewhere in this Form
10-K, which are not historical facts, may be forward-looking statements. Such
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected, including, but not
limited to, those risks and special considerations set forth in the Operating
Partnership's other SEC filings. Readers are cautioned not to place undue
reliance on these forward-looking statements which speak only as of the date
hereof. The Operating Partnership undertakes no obligation to publicly release
any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

RESULTS OF OPERATIONS

Overview

In 1998, the Operating Partnership focused on maximizing the value of its real
estate portfolio by increasing the cash flow from its properties, by maintaining
high occupancy levels and increasing effective rents, as well as completing
strategic acquisition and development transactions. The Operating Partnership
also continued to focus on maintaining a capital structure that allows the
Operating Partnership to execute its business strategy.

The Operating Partnership continued to experience accelerating rent growth in
its portfolio of properties. For the year ended December 31, 1998, net effective
rents on average were 37.4% higher than the expiring coupon rent on the 8.3
million square feet of second generation space renewed or re-leased. For the
year ended December 31, 1997, roll-over rents grew by 23.0% on approximately 6.2
million square feet of second generation space.

The Operating Partnership continued to increase its presence in its target
markets during 1998. Of the 6.3 million square feet added to its portfolio
during 1998 (the "1998 Acquisitions"), 5.9 million square feet were added in
California. A significant contributor to this increase was the closing of the
Transpacific Development Company (TDC) portfolio. The TDC portfolio consists of
3.1 million square feet of office space for a total investment of $459.3
million. The portfolio added the following: 1.7 million square feet in the Los
Angeles County market for a total investment of $218.9 million; 0.7 million
square feet in the Peninsula market for $136.9 million; 0.4 million square feet
in the Orange County market for $67.0 million and 0.3 million square feet in the
San Diego market for $36.5 million. Two significant acquisitions in the Silicon
Valley region added 0.9 million square feet for a total investment of $189.9
million. The remainder of the acquisitions added 1.3 million square feet in
North-East Bay/Sacramento, CA, 0.6 million square feet in Southern California
and 0.4 million square feet in the Pacific Northwest for a total investment of
$235.6 million. Further breakdown of the 1998 Acquisitions can be found in Part
1 of this Form 10-K.

While the Operating Partnership was able to complete a number of acquisitions
during early 1998, the market for property acquisitions tightened. In all of the
markets that the Operating Partnership operates competition increased and, with
it, the cost of assets. Concurrent with this increase in costs was a decrease in
the initial returns reducing the Operating Partnership's incentive to purchase
new properties. Accordingly, the Operating Partnership purchased fewer assets in
the latter half of the year.

During 1998, the Operating Partnership increased its level of development
activity. The Operating Partnership added eight projects totaling 929,000 square
feet to its development pipeline for a total investment of approximately $110.6
million while it completed six properties during the year adding 889,651 square
feet to its stabilized portfolio for a total investment of $56.6 million. At
December 31, 1998 the Operating Partnership had developments and redevelopments
in process for approximately 3.3 million square feet of office and industrial
properties for a total investment of $377.2 million up from 2.9 million square
feet for a total investment of $284.7 million at the end of 1997. Further
breakdown of the Operating Partnership's developments and redevelopments in
process can be found in Part 1 of this Form 10-K. The developments completed
during 1998 and the developments in process at December 31, 1998, are
collectively referred to as the "Developments." A few of the developments in
process, though not yet completed, were partially leased and occupied during
1998 and, accordingly, revenue and expense amounts for such developments are
included in the Operating Partnership's operating results for the year ended
December 31, 1998.


                                       17


<PAGE>   18
The Operating Partnership continued to strengthen its balance sheet by accessing
both the public and private equity markets and the public debt market. In 1998,
the Company raised approximately $266.2 million in equity capital and issued
$301.5 million of investment grade rated unsecured notes with maturities ranging
from seven to ten years.

During 1998 the Operating Partnership disposed of its final retail property for
a total sales price of $40.9 million and recognized a book gain of approximately
$9.0 million. The Operating Partnership also disposed of six other properties
and two land parcels, for a total sales price of $34.5 million recognizing a
book gain of approximately $11.1 million. Additionally, Spieker Northwest, Inc.
(SNI), an affiliate of Spieker Properties, Inc., recognized net proceeds of
$284.4 million on property disposed of during 1998. These properties were not
consistent with the Operating Partnership's long-term growth strategy due to
location, asset quality, tenant mix or certain other characteristics.

Comparison of 1998 to 1997

The following comparison is of the Operating Partnership's consolidated
operations for the year ended December 31, 1998 to the year ended December 31,
1997.

Rental revenues for 1998 increased by $220.8 million for 68.7% to $542.4
million, as compared with $321.6 million for 1997. Of this increase, $117.6
million was generated by properties acquired during 1997 (the "1997
Acquisitions"), for which the Operating Partnership recognized a full year's
results in 1998 as compared to a partial year's results in the year acquisition.
$86.5 million was generated by the 1998 Acquisitions which were acquired on
various dates throughout 1998. $17.6 million is attributable to the Developments
and $13.7 million is attributable to the 1998 Core Portfolio. The "1998 Core
Portfolio" is defined as properties owned at January 1, 1997 and still owned at
December 31, 1998. Increases in the 1998 Core Portfolio can be attributed to
higher rents on roll-overs, contractual rent increases and increased
occupancies. The increases in rental revenue are partially offset by a decrease
of $14.6 million attributable to the disposition of properties, which were owned
by the Operating Partnership during the year ended December 31, 1997 (the "1998
Property Dispositions").

Interest and other income increased by $9.0 million or 92.4% for the year ended
December 31, 1998, as compared to the year ended December 31, 1997. The net
increase in interest and other income is due to interest income from mortgage
loans made to SNI in relation to SNI's acquisition of non-core assets. These
assets have subsequently been sold. This increase is slightly offset by a
decrease in interest earned on cash balances. Average cash balances for the year
ended December 31, 1998 were $33.9 million as compared to $56.4 million in 1997.

Rental expenses increased by $58.2 million or 87.3% for 1998, as compared with
1997. Real estate taxes increased by $17.6 million or 71.2% in 1998, as compared
to $24.6 million in 1997. The overall increase in rental expenses and real
estate taxes (collectively referred to as "property operating expenses") is
primarily a result of the growth in the total square footage of the Operating
Partnership's portfolio of properties. Of the total $75.7 million increase in
property operating expenses, $36.2 million is attributable to the 1998
Acquisitions, $35.9 million is attributable to the 1997 Acquisitions, $5.6
million is attributable to the Developments, and $2.0 million is attributable to
the 1998 Core Portfolio offset by a $4.0 million decrease attributable to the
1998 Property Dispositions. On a percentage basis, property operating expenses
were 30.8% and 28.4% of rental revenues for 1998 and 1997, respectively. The
increase in property operating expenses as a percentage of rental revenues is
attributable to the increased percentage of office properties in the Operating
Partnership's portfolio. For the year ended December 31, 1998, 69.1% of the
Operating Partnership's net operating income (rental revenues less property
operating expenses) was generated by office properties as compared with 60.1%
for 1997.

Removing the effects of the retail properties which, as of December 31, 1998,
had been completely disposed of, the following analysis of the office and
industrial properties is presented. Rental revenues net of property operating
expenses (referred to as "net operating income") increased by $155.7 million or
71.5% to $373.5 million for 1998, as compared to $217.8 million for 1997. Of
this increase, $81.7 million is attributable to the 1997 Acquisitions, $50.3
million relates to the 1998 Acquisitions, $12.0 is attributable to the
Developments and $11.7 million to the 1998 Core Portfolio.


                                       18


<PAGE>   19
Interest expense increased by $54.1 million or 86.8% to $116.3 million for 1998,
from $62.3 million for 1997. The increase in interest expense is due to
increases in the total average outstanding debt balances. The average
outstanding debt for 1998 was $1.8 billion and $936.0 million in 1997 and is
consistent with the increase in the size of the Operating Partnership's
portfolio of properties.

Depreciation and amortization expenses increased by $41.7 million or 79.1% for
1998, as compared with 1997, due to the 1998 and 1997 Acquisitions and the
completed Developments.

General and administrative expenses and other expenses increased by $4.5 million
for 1998 as compared with 1997, primarily as a result of the increased number of
employees. On a percentage basis, general and administrative expenses were 3.6%
of rental revenues for 1998, as compared with 4.6% for 1997 reflecting economies
of scale associated with the growth of the Operating Partnership.

During 1998, the Operating Partnership disposed of one retail property, two
office properties, four industrial properties and two land parcels resulting in
a gain of $20.1 million.

Net income before minority interests and disposition of property increased by
$53.8 million or 48.8% to $163.9 million for 1998, from $110.1 million for 1997.
The increase in net income is principally due to the 1998 and 1997 Acquisitions.

Comparison of 1997 to 1996

The following comparison is of the Operating Partnership's results for the year
ended December 31, 1997, to the year ended December 31, 1996.

Rental revenues for 1997 increased by $125.1 million or 63.7% to $321.6 million,
as compared with $196.5 million for 1996. Of this increase, $91.9 million was
generated by the 1997 Acquisitions. The 1997 Acquisitions were acquired on
various dates throughout 1997 and, as such, a full year's revenue and expense
were not recognized during the year. $29.5 million of the rental revenue
increase was generated by properties acquired during 1996 (the "1996
Acquisitions"), for which the Operating Partnership recognized a full year's
results in 1997 as compared to a partial year's results in the year of
acquisition. $8.7 million is attributable to the 1997 Core Portfolio and $8.3
million of the rental revenue increase in 1997 was generated by the
Developments. The "1997 Core Portfolio" is defined as properties owned at
January 1, 1996 and still owned at December 31,1997. The increases in rental
revenue are partially offset by a decrease of $13.3 million attributable to the
disposition of properties which were owned by the Operating Partnership during
the year ended December 31, 1996 (the "1997 Property Dispositions").

Interest and other income increased by $5.5 million or 131.0% for 1997, as
compared to 1996. The net increase in interest and other income is due to
interest income from mortgage loans made to SNI, in relation to SNI's
acquisition of non-core assets in the WCB Portfolio and higher average cash
balances of $56.4 million for 1997 as compared to $13.4 million for 1996.

Rental expenses increased by $32.0 million or 92.2% for 1997, as compared with
1996. Real estate taxes increased by $9.1 million or 58.7% in 1997, as compared
to $15.5 million in 1996. The overall increase in rental expenses and real
estate taxes (collectively referred to as "property operating expenses") is
primarily a result of the growth in the total square footage of the Operating
Partnership's portfolio of properties. Of the total $41.1 million increase in
property operating expenses, $30.3 million is attributable to the 1997
Acquisitions, $9.8 million is attributable to the 1996 Acquisitions, $1.9
million is attributable to the Developments, and $1.4 million is attributable to
the 1997 Core Portfolio offset by a $2.3 million decrease attributable to the
1997 Property Dispositions. On a percentage basis, property operating expenses
were 28.4% of rental revenues for 1997 and 25.5% for 1996. The increase in
property operating expenses as a percentage of rental revenues is attributable
to the increased percentage of office properties in the Operating Partnership's
portfolio. For 1997, 60.1% of the Operating Partnership's net operating income
was generated by office properties as compared with 44.9% during 1996.


                                       19


<PAGE>   20
Removing the effects of the retail properties, most of which, at December 31,
1997, had been disposed of, the following analysis of the office and industrial
properties is presented. Rental revenues net of property operating expenses
increased by $95.0 million or 75.9% to $220.2 million for 1997, as compared to
$125.2 million for 1996. Of this increase, $61.6 million and $19.7 million
relates to the 1997 and 1996 Acquisitions, $7.3 million is attributable to the
1997 Core Portfolio, and $6.4 million is attributable to the Developments.

Interest expense increased by $25.1 million or 67.5% to $62.3 million for 1997,
from $37.2 million for 1996. The increase in interest expense is due to
increases in the total average outstanding debt balances. The average
outstanding debt was $936.0 million for 1997 and $554.0 million for 1996. The
increase in the average outstanding debt balance is consistent with the increase
in the size of the Operating Partnership's portfolio of properties.

Depreciation and amortization expenses increased by $15.4 million or 41.2% for
the year ended December 31, 1997, as compared with 1996, due to the 1997 and
1996 Acquisitions and the completed Developments.

General and administrative expenses and other expenses increased by $4.7 million
for the year ended December 31, 1997 as compared with 1996, primarily as a
result of the increased number of employees. On a percentage basis, general and
administrative expenses were 4.6% of rental revenues for 1997, as compared with
5.1% for 1996.

During 1997, the Operating Partnership disposed of nine retail properties
resulting in a gain on disposition of $18.5 million. In addition, the Operating
Partnership disposed of two office properties, one industrial property and one
parking lot resulting in a gain of $1.8 million. This brings the total gain on
disposition of property for 1997 to $20.3 million.

Net income before minority interests and disposition of property increased by
$44.3 million or 67.3% to $110.1 million for the year ended December 31, 1997,
from $65.8 million for 1996. The increase in net income is principally due to
the 1997 and 1996 Acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

For the year ended December 31, 1998, cash provided by operating activities
increased by $102.5 million, or 53.5%, to $294.0 million, as compared to $191.5
million for 1997. The increase is primarily due to the increase in net income
resulting from the 1997 and 1998 Acquisitions, the Developments and the 1998
Core Portfolio. Cash used for investing activities decreased by $911.4 million,
or 53.7%, to $786.5 million for 1998, as compared to $1,697.9 million for 1997.
The decrease is attributable to the Operating Partnership's decrease in the
number of acquisitions completed. Cash provided by financing activities
decreased by $1,024.9 million, or 68.3%, to $474.8 million for 1998, as compared
to $1,499.7 million for 1997. During 1998, cash provided by financing activities
consisted primarily of $271.9 million in net proceeds from the sale of Common
and Preferred Stock and Preferred Operating Partnership Units, $301.5 million in
gross proceeds from the issuance of unsecured notes, net borrowings of $100.0
million under a short-term bank facility and net payments of $2.7 million on
mortgage loans. Additionally, payments of distributions increased by $88.0
million to $195.9 million for 1998, as compared with $107.9 million for 1997.
The distribution payment increase is due to the greater number of shares and
units outstanding and a 21% increase in the distribution rate of $.57 per share
for each quarter of 1998 from $.47 per share for the first three quarters of
1997 and $.57 for the fourth quarter of 1997.

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

At December 31, 1998, the Operating Partnership had no material commitments for
capital expenditures related to the renewal or re-leasing of space. The
Operating Partnership believes that the cash provided by operations and its line
of credit provide sufficient sources of liquidity to fund capital expenditure
costs associated with the renewal or re-leasing of space.


                                       20


<PAGE>   21
In 1996, the Company concurrently sold 4,887,500 shares of Common Stock
(including 637,500 shares sold pursuant to the underwriters' exercise of their
over-allotment option) through an underwritten public offering and directly
placed 1,176,470 shares of Class C Common Stock and 135,000 shares of Common
Stock with a limited number of institutional investors at $25.50 per share. The
net proceeds of $151.3 million were contributed to the Operating Partnership and
were used primarily to repay floating rate debt.

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

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

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

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

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

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

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

In 1996, the Operating Partnership issued $375.0 million of investment grade
rated unsecured notes in five tranches as follows: $100.0 million of 6.9% notes
due January 15, 2004, priced to yield 6.97%; $100.0 million of 8.0% medium-term
notes due July 19, 2005; $50.0 million of 7.58% medium-term notes due December
17, 2001; $100.0 million of 7.125% notes due December 1, 2006 priced to yield
7.14%; and $25.0 million of 7.875% notes due December 1, 2016, priced to yield
7.91%. The net proceeds of $372.0 million from these issuances were used to pay
down borrowings on the line of credit and to fund ongoing acquisition and
development of properties.


                                       21


<PAGE>   22
In 1997, the Operating Partnership issued $500.0 million of investment grade
rated debt in three tranches as follows: $150.0 million of 7.125% notes due July
1, 2009; $150.0 million of 7.5% notes due October 1, 2027; $200.0 million of
7.35% notes due December 1, 2017. Net proceeds from the July 1997, September
1997 and December 1997 unsecured debt securities of $489.0 million were used to
repay borrowings on the unsecured line of credit and to fund the ongoing
acquisition and development of properties.

During 1998, the Operating Partnership issued $301.5 million of investment grade
rated unsecured notes in four tranches as follows: $150.0 million of 6.75% notes
due January 15, 2008; $125.0 million of 6.875% notes due February 1, 2005; $1.5
million of 7.0% notes due February 2, 2007 and $25.0 million of 6.880% notes due
April 30, 2007. Net proceeds of $299.1 million were used to repay borrowings on
the unsecured line of credit and to fund the acquisition and development of
properties.

As of December 31, 1998, the Operating Partnership had $1.4 billion of
investment grade rated unsecured debt securities outstanding. The debt
securities have interest rates which vary from 6.65% to 8.0%, and maturity dates
which range from 2000 to 2027.

The Operating Partnership has a $250.0 million unsecured line of credit facility
with interest at London Interbank Offered Rates ("LIBOR") plus .80%. This
facility matures in August 2001. This facility has a competitive bid option that
allows the Operating Partnership to request bids from the lenders for advances
up to $150.0 million. At December 31, 1998, the Operating Partnership had $100.0
million outstanding under the facility. In addition, the Operating Partnership
had $200.0 million outstanding under a separate short-term bank facility at
December 31, 1998. This short-term facility carries interest at LIBOR plus 0.65%
and matures in November 1999.

In addition to the unsecured debt securities and the Facility, the Operating
Partnership has $110.7 million of secured indebtedness (the "Mortgages") at
December 31, 1998. The Mortgages have interest rates varying from 7.37% to 9.88%
and maturity dates from 1999 to 2013. The Mortgages are secured by a first or
second deed of trust on the related properties and generally require monthly
principal and interest payments. The Operating Partnership also has $11.3
million of assessment bonds outstanding as of December 31, 1998.

The Company has the capacity pursuant to shelf registration statements to issue
up to approximately $770.5 million in equity securities and the Operating
Partnership has the capacity to issue up to $813.5 million in debt securities.

FUNDS FROM OPERATIONS

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

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


                                       22


<PAGE>   23
FFO calculation, as management believes this presents a more meaningful picture
of rental income over the reporting period.

The tables below set forth the Operating Partnership's calculation of Funds from
Operations for 1998 and 1997.


<TABLE>
<CAPTION>
                                                 STATEMENT OF FUNDS FROM OPERATIONS
                                                       (amounts in thousands)
                                                            QUARTER ENDED                        
                                         --------------------------------------------------------     YEAR ENDED
1998                                      MARCH 31,      JUNE 30,     SEPTEMBER 30,  DECEMBER 31,    DECEMBER 31,
                                         ---------      ---------     -------------  ------------    ------------
<S>                                      <C>            <C>           <C>            <C>             <C>      
Income from operations before
  disposition of property and
  minority interests:                    $  37,943      $  40,630      $  43,262      $  42,088       $ 163,924
Adjustments:
  Depreciation and
   amortization                             19,366         22,404         23,924         27,813          93,512
  Dividends on Series B
   Preferred Stock                          (2,510)        (2,510)        (2,510)        (2,510)        (10,041)
  Dividends on Series C
   Preferred Stock                          (2,953)        (2,953)        (2,953)        (2,953)        (11,813)
  Dividends on Series E
   Preferred Stock                              --           (600)        (2,000)        (2,000)         (4,600)
  Distributions on Preferred                                                                    
   Operating Partnership Units              (1,266)        (2,223)        (2,527)        (2,527)         (8,542)
  Other, net                                   (14)           (14)           105             36             112
  Straight-lined rent                       (1,640)        (1,508)        (2,408)        (1,932)         (7,488)
                                         ---------      ---------      ---------      ---------       ---------
Funds from Operations                    $  48,926      $  53,226      $  54,893      $  58,015       $ 215,064
                                         =========      =========      =========      =========       =========
Weighted average diluted
  share equivalents
  outstanding                               69,795         72,883         73,639         73,733          72,528
                                         =========      =========      =========      =========       =========
</TABLE>


<TABLE>
<CAPTION>
                                                    STATEMENT OF FUNDS FROM OPERATIONS
                                                         (amounts in thousands)
                                                            QUARTER ENDED                        
                                         --------------------------------------------------------    YEAR ENDED
1997                                     MARCH 31,       JUNE 30,    SEPTEMBER 30,   DECEMBER 31,    DECEMBER 31,
                                         ---------      ---------    -------------   ------------    ------------
<S>                                      <C>            <C>          <C>             <C>             <C>      
Income from operations before
  disposition of property and
  minority interests:                    $  23,812      $  26,111      $  27,051      $  33,160       $ 110,134
Adjustments:
  Depreciation and amortization             10,478         12,276         13,282         16,136          52,172
  Dividends on Series B
   Preferred Stock                          (2,510)        (2,510)        (2,510)        (2,510)        (10,041)
  Dividends on Series C
   Preferred Stock                              --             --             --         (2,658)         (2,658)
  Distributions on Preferred
   Operating Partnership Units                  --             --             --           (402)           (402)
  Other, net                                   187            187            186            186             747
  Straight-lined rent                            3           (579)          (624)          (840)         (2,040)
                                         ---------      ---------      ---------      ---------       ---------
Funds from Operations                    $  31,970      $  35,485      $  37,385      $  43,072       $ 147,912
                                         =========      =========      =========      =========       =========
Weighted average diluted share
  equivalents outstanding                   52,558         56,353         56,459         64,099          57,396
                                         =========      =========      =========      =========       =========
</TABLE>


The sum of quarterly funds from operations data in 1998 and 1997 varies from the
annual data due to rounding.


                                       23


<PAGE>   24
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company uses fixed and variable rate debt to finance its operations. The
information below summarizes the Company's market risks associated with debt
outstanding as of December 31, 1998. The following table presents principal cash
flows and related weighted average interest rates by year of maturity.


                             EXPECTED MATURITY DATE
                                  (in millions)


<TABLE>
<CAPTION>
                              1999          2000          2001          2002         2003        THEREAFTER         TOTAL
                              ----          ----          ----          ----         ----        ----------         -----
<S>                        <C>           <C>           <C>           <C>           <C>            <C>             <C>      
Fixed Rate Debt            $    15.5     $   100.0     $   133.0     $   122.4     $      --      $ 1,176.3       $ 1,547.2
Average Interest Rate           8.99%         6.65%         7.25%         7.21%           --           7.28%           7.25%
Variable Rate Debt         $   200.0            --     $   100.0            --            --             --       $   300.0
Average Interest Rate           5.75%           --          5.90%           --            --             --            5.80%
</TABLE>


The carrying amount of the Company's debt approximates fair value. The Company's
fixed and variable rate debt is described in "Management's Discussion and
Analysis of Financial Condition and Results of Operations." At December 31,
1998, the Company had no interest rate caps or swaps. All of the Company's debt
is denominated in United States dollars. The Company's risk management policies
do not provide for the utilization of financial instruments for trading purposes
and only minimal use for hedging purposes.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

None.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on June 9, 1999.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on June 9, 1999.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by Item 12 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on June 9, 1999.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on June 9, 1999.


                                       24


<PAGE>   25
                                     PART IV


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


<TABLE>
<CAPTION>
                                                                                      Page
                                                                                      ----
<S>                                                                                   <C>
(a)  1. FINANCIAL  STATEMENTS AND REPORT OF ARTHUR ANDERSEN LLP,  INDEPENDENT
        AUDITORS
        Report of Independent Public Accountants                                       28

        Financial Statements:
        Balance Sheets:
          Spieker Properties,  L.P.  Consolidated as of December 31, 1998 and   
             1997                                                                      29
       Statements of Operations:
          Spieker Properties,  L.P. Consolidated for the Years Ended December
             31, 1998, December 31, 1997, and December 31, 1996                        31
        Statements of Partners' Capital:
          Spieker Properties,  L.P. Consolidated for the Years Ended December
             31, 1998, December 31, 1997, and December 31, 1996                        32
        Statements of Cash Flows:                                     
          Spieker Properties,  L.P. Consolidated for the Years Ended December
             31, 1998, December 31, 1997, and December 31, 1996                        33

        Notes to Financial Statements                                                  34

     2. FINANCIAL STATEMENT SCHEDULES
        Schedule  III --  Real  Estate  and  Accumulated  Depreciation  as of   
        December 31, 1998                                                              45
</TABLE>

        All other schedules are omitted because they are not required or the
        required information is shown in the financial statements or notes
        thereto.

(b)     REPORTS ON FORM 8-K

        None.

(c)     EXHIBITS

        The exhibits cited in the following Index to Exhibits are filed herewith
        or are incorporated by reference to exhibits previously filed.


                                       25


<PAGE>   26
   Exhibits (enclosed attachments are sequentially numbered)

<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             ----
<S>            <C>                                                                           <C>
3.1A           Articles of Amendment of Spieker Properties, Inc. (incorporated
               by reference to Exhibit 3.1A to Spieker Properties, Inc.'s Report
               on Form 10-K for the year ended December 31, 1996)

3.2            Bylaws of Spieker Properties, Inc. (1)

3.3            Articles Supplementary of Spieker Properties, Inc. for Series A
               Preferred Stock (incorporated by reference to Exhibit 4.2 to
               Spieker Properties, Inc.'s Report on Form 10-Q for the quarter
               ended March 31, 1994)

3.4            Articles Supplementary of Spieker Properties, Inc. for Class B
               Common Stock (incorporated by reference to Exhibit 4.2 to Spieker
               Properties, Inc.'s Report on Form 10-Q for the quarter ended
               March 31, 1995)

3.5            Articles Supplementary of Spieker Properties, Inc. for the Series
               B Preferred Stock (2)

3.6            Articles Supplementary of Spieker Properties, Inc. for the Class
               C Common Stock (2)

3.7            Articles Supplementary of Spieker Properties, Inc. for the Series
               C Preferred Stock (incorporated by reference to Exhibit 3.1 to
               Spieker Properties, Inc.'s Report on Form 10-Q for the quarter
               ended September 30, 1997)

3.8            Articles Supplementary of Spieker Properties, Inc. for the Series
               D Preferred Stock                                                               

3.9            Articles Supplementary of Spieker Properties, Inc. for the Series
               E Preferred Stock (incorporated by reference to Exhibit 3.1 to
               Spieker Properties, Inc.'s Report on Form 8-K dated June 4, 1998)

3.10           Rights Agreement, which includes as Exhibit A the Form of Rights
               Certificate and Election to Exercise and as Exhibit B the Form of
               Articles Supplementary (incorporated by reference to Exhibit 4 to
               Spieker Properties, Inc.'s Report on Form 8-K dated September 22,
               1998)

4.1            Agreement pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K
               (1)

4.2            Intentionally omitted

4.3            Series A Preferred Stock Purchase Agreement, (incorporated by
               reference to Exhibit 4.1 to Spieker Properties, Inc.'s Form 10-Q
               Report for the quarter ended March 31, 1994)

4.4            Investor Rights Agreement relating to A Series Preferred Stock
               (incorporated by reference to Exhibit 4.3 to Spieker Properties,
               Inc.'s Form 10-Q Report for the quarter ended March 31, 1994)

4.5            Indenture dated as December 6, 1995, among Spieker Properties,
               L.P., Spieker Properties, Inc. and State Bank and Trust, as
               Trustee (2)

4.6            First Supplemental Indenture relating to the 2000 Notes, the 2000
               Note and Guarantee (2)

4.7            Second Supplemental Indenture relating to the 2001 Notes, 2001
               Note and Guarantee (2)


4.8            Third Supplemental Indenture relating to the 2002 Notes, the 2002
               Note and Guarantee (2)

4.9            Fourth Supplemental Indenture relating to the 2004 Notes and the
               2004 Note (2)

4.10           Class B Common Stock Purchase Agreement (incorporated by
               reference to Exhibit 4.1 to Spieker Properties, Inc.'s Form 10-Q
               Report for the quarter ended March 31, 1994)

4.11           Investor's Rights Agreement relating to Class B Common Stocks
               (incorporated by reference to Exhibit 4.3 to Spieker Properties,
               Inc.'s Form 10-Q Report for the quarter ended March 31, 1994)

4.12           Class C Common Stock Purchase Agreement (2)

4.13           Investor's Rights Agreement relating to Class C Common Stock (2)

4.14           Fifth Supplemental Indenture relating to the Medium Term Note
               Program and Forms of Medium Term Notes (incorporated by reference
               to Exhibit 4.1 to Spieker Properties, Inc.'s Quarterly Report on
               Form 10-Q for the quarter ended June 30, 1996)

4.15           Sixth Supplemental Indenture relating to the 7 1/8% Notes Due
               2006 (incorporated by reference to Exhibit 4.1 of Spieker
               Properties, Inc.'s Current Report on Form 8-K filed with the
               Commission on December 19, 1996)

4.16           Seventh Supplemental Indenture relating to the 7 7/8% Notes Due
               2016 (incorporated by reference to Exhibit 4.2 of Spieker
               Properties, Inc.'s Current Report on Form 8-K filed with the
               Commission on December 19, 1996)

4.17           Eighth Supplemental Indenture relating to the 7.125% Notes Due
               2009 (incorporated by reference to Exhibit 4.9 of Spieker
               Properties, Inc.'s Registration statement on Form S-3 (File No.
               333-35997))
</TABLE>


                                       26


<PAGE>   27
   Exhibits (enclosed attachments are sequentially numbered)

<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             ----
<S>            <C>                                                                           <C>
4.18           Ninth Supplemental Indenture relating to the 7.50% Debentures Due
               2027 (incorporated by reference to Exhibit 4.1 Spieker
               Properties, Inc.'s Report on Form 10-Q for the quarter ended
               September 30, 1997)

4.19           Tenth Supplemental Indenture relating to the 7.35% Debentures Due
               2017 (incorporated by reference to Exhibit 4.1 Spieker
               Properties, Inc.'s Current Report on Form 8-K dated January 30,
               1998)

4.20           Eleventh Supplemental Indenture relating to the 6.75% Notes Due
               2008 (incorporated by reference to Exhibit 4.2 Spieker
               Properties, Inc.'s Current Report on Form 8-K dated January 30,
               1998)

4.21           Twelfth Supplemental Indenture relating to the 6.875% Notes Due
               2006 (incorporated by reference to Exhibit 4.3 Spieker
               Properties, Inc.'s Current Report on Form 8-K dated January 30,
               1998)

4.22           Thirteenth Supplemental Indenture relating to the 7% Notes Due
               2007 (incorporated by reference to Exhibit 4.1 Spieker
               Properties, Inc.'s Current Report on Form 8-K dated January 30,
               1998)

10.1           Second Amended and Restated Agreement of Limited Partnership of
               Spieker Properties, L.P.

10.2           First Amendment to Second Amended and Restated Agreement of
               Limited Partnership of Spieker Properties, L.P.

10.3           Credit Agreement among Spieker Properties, L.P., as borrower,
               Wells Fargo Bank, as Agent, Morgan Guaranty Trust Company of New
               York, as Documentation Agent, and the lenders named therein,
               dated as of August 8, 1997, and Loan Notes pursuant to such
               Credit Agreement (incorporated by reference to Exhibit 10.16 to
               Spieker Properties, Inc.'s Current Report on Form 8-K dated
               September 22, 1997)

10.4*          Form of Employment Agreement between the Company and each of
               Warren E. Spieker, Jr., John K. French, Bruce E. Hosford, and
               Dennis E. Singleton (1)

10.5*          Form of Spieker Merit Plan (1)

10.6*          Amended and Restated Spieker Properties, Inc. 1993 Stock
               Incentive Plan (incorporated by reference to Exhibit 4.3 to
               Spieker Properties, Inc.'s Quarterly Report on Form 10-Q for the
               quarter ended June 30, 1996)

10.7           Form of Indemnification Agreement between Spieker Properties,
               Inc. and its directors and officers (incorporated by reference to
               Exhibit 10.21 to Spieker Properties, Inc.'s Registration
               Statement on Form S-11 (File No. 33-67906))

10.8           Form of Land Holding Agreement among Spieker Properties, Inc.,
               Spieker Northwest, Inc., Spieker Properties, L.P. and owner of
               the applicable Land Holding (incorporated by reference to Exhibit
               10.22 to Spieker Properties, Inc.'s Registration Statement on
               Form S-11 (File No. 33-67906))

10.9*          Form of Employee Stock Incentive Pool (incorporated by reference
               to Exhibit 10.35 to Spieker Properties, Inc.'s Registration
               Statement on Form S-11 (File No. 33-67906))

10.10          Form of Excluded Property Agreement between the Operating
               Partnership and certain of the Senior Officers (incorporated by
               reference to Exhibit 10.36 to Spieker Properties, Inc.'s
               Registration Statement on Form S-11 (File No. 33-67906))

10.11*         Amended and Restated Spieker Properties, Inc. 1993 Directors'
               Stock Option Plan (incorporated by reference to Exhibit 4.2 to
               Spieker Properties, Inc.'s Quarterly Report on Form 10-Q for the
               quarter ended June 30, 1996)

10.12          Second Amendment to Second Amended and Restated Agreement of
               United Partnership of Spieker Properties, L.P. (incorporated by
               reference to Exhibit 3.1 to Spieker Properties, L.P.'s Report on
               Form-Q/A for the quarterly period ended June 30, 1998)

10.13          Third Amendment to Second Amended and Restated Agreement to
               Limited Partnership of Spieker Properties, L.P.                                 

12.1           Schedule of Computation of Ratio of Earnings to Combined Fixed
               Charges and Preferred Dividends

21.1           List of Subsidiaries of Spieker Properties, Inc.

23.1           Consent of Independent Public Accountants                                       

27.1           Article 5 Financial Data Schedule (Edgar Filing Only)
</TABLE>


*       Indicates management contract or compensatory plan or arrangement.

(1)     Incorporated by reference to the identically numbered exhibit to the
        Company's Registration Statement on Form S-11 (Registration No.
        33-67906), which became effective on November 10, 1993.

(2)     Incorporated by reference to the identically numbered exhibit to the
        Company's Annual Report on Form 10-K for the year ended December 31,
        1995.


                                       27


<PAGE>   28
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of Spieker Properties, L.P.:

We have audited the accompanying consolidated balance sheets of Spieker
Properties, L.P. (a California limited partnership) as of December 31, 1998 and
1997, and the related consolidated statements of operations, partners' capital
and cash flows for the years ended December 31, 1998, 1997 and 1996. These
consolidated financial statements and the schedule referred to below are the
responsibility of the management of Spieker Properties, L.P. Our responsibility
is to express an opinion on these consolidated financial statements and the
schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Spieker Properties,
L.P. as of December 31, 1998 and 1997, and the results of its operations and its
cash flows for the years ended December 31, 1998, 1997 and 1996, in conformity
with generally accepted accounting principles.

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



San Francisco, California                          ARTHUR ANDERSEN LLP
February 2, 1999


                                       28


<PAGE>   29
                            SPIEKER PROPERTIES, L.P.

                           CONSOLIDATED BALANCE SHEETS

                        AS OF DECEMBER 31, 1998 AND 1997

                             (dollars in thousands)

                                     ASSETS


<TABLE>
<CAPTION>
                                                                         1998              1997
                                                                     -----------       -----------
<S>                                                                  <C>               <C>        
INVESTMENTS IN REAL ESTATE:
  Land, land improvements and leasehold interests                    $   770,670       $   673,686
  Buildings and improvements                                           2,924,290         2,159,581
  Construction in progress                                               255,710            89,509
                                                                     -----------       -----------
                                                                       3,950,670         2,922,776
  Less - accumulated depreciation                                       (240,778)         (169,051)
                                                                     -----------       -----------
                                                                       3,709,892         2,753,725
  Land held for investment                                               131,530            20,935
  Investment in mortgages                                                 28,069           271,675
  Property held for disposition, net                                      72,537            37,186
                                                                     -----------       -----------

     Net investments in real estate                                    3,942,028         3,083,521


CASH AND CASH EQUIVALENTS                                                  4,916            22,628


ACCOUNTS RECEIVABLE,  net of allowance for doubtful accounts of
  $894 and $260 as of December 31, 1998 and 1997                           9,416             8,661


DEFERRED RENT RECEIVABLE                                                  12,746             5,276


RECEIVABLE FROM AFFILIATES                                                   183               294


DEFERRED  FINANCING  AND  LEASING  COSTS,  net  of  accumulated
  amortization  of $14,539 and $10,036 as of December  31, 1998
  and 1997                                                                44,607            30,983


FURNITURE, FIXTURES and EQUIPMENT, net                                     4,495             3,375


PREPAID EXPENSES, DEPOSITS ON PROPERTIES AND OTHER ASSETS
                                                                          17,616            50,892


INVESTMENT IN AFFILIATE                                                   20,863            37,304
                                                                     -----------       -----------
                                                                     $ 4,056,870       $ 3,242,934
                                                                     ===========       ===========
</TABLE>


                                       29


<PAGE>   30
                            SPIEKER PROPERTIES, L.P.

                           CONSOLIDATED BALANCE SHEETS

                        AS OF DECEMBER 31, 1998 AND 1997

                    (dollars in thousands, except unit data)

                        LIABILITIES AND PARTNERS' CAPITAL


<TABLE>
<CAPTION>
                                                                        1998            1997
                                                                     ----------      ----------
<S>                                                                  <C>             <C>       
DEBT:
  Unsecured notes                                                    $1,436,500      $1,135,000
  Unsecured short-term borrowings                                       300,000         200,000
  Mortgage loans                                                        110,698          96,502
                                                                     ----------      ----------
     Total debt                                                       1,847,198       1,431,502
                                                                     ----------      ----------

ASSESSMENT BONDS PAYABLE                                                 11,339          12,672
ACCOUNTS PAYABLE                                                         24,938           9,519
ACCRUED REAL ESTATE TAXES                                                 2,251           1,003
ACCRUED INTEREST                                                         25,263          21,541
UNEARNED RENTAL INCOME                                                   22,635          13,712
DIVIDENDS AND DISTRIBUTIONS PAYABLE                                      44,728          41,110
OTHER ACCRUED EXPENSES AND LIABILITIES                                   56,704          32,034
                                                                     ----------      ----------
     Total liabilities                                                2,035,056       1,563,093
                                                                     ----------      ----------


COMMITMENTS AND CONTINGENCIES (Note 12)                                      --              --

PARTNERS' CAPITAL:
  General  Partners,  including  a  liquidation  preference  of
   $381,250 as of December 31, 1998 and $281,250 for 1997             1,723,462       1,493,828
  Limited Partners                                                      298,352         186,013
                                                                     ----------      ----------
     Total Partners' Capital                                          2,021,814       1,679,841
                                                                     ----------      ----------
                                                                     $4,056,870      $3,242,934
                                                                     ==========      ==========
</TABLE>

        The accompanying notes are an integral part of these statements.


                                       30


<PAGE>   31
                            SPIEKER PROPERTIES, L.P.

                            STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

                 (dollars in thousands, except per unit amounts)


<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31,
                                                                     -----------------------
                                                              1998            1997            1996
                                                           ---------       ---------       ---------
<S>                                                        <C>             <C>             <C>      
REVENUES:
  Rental income                                            $ 542,430       $ 321,609       $ 196,471
  Interest and other income                                   18,667           9,704           4,228
                                                           ---------       ---------       ---------
                                                             561,097         331,313         200,699
                                                           ---------       ---------       ---------
OPERATING EXPENSES:
  Rental expenses                                            124,847          66,654          34,690
  Real estate taxes                                           42,196          24,644          15,510
  Interest expense, including amortization of
   financing costs                                           116,335          62,266          37,235
  Depreciation and amortization                               94,512          52,779          37,385
  General and administrative and other expenses               19,283          14,836          10,115
                                                           ---------       ---------       ---------
                                                             397,173         221,179         134,935
                                                           ---------       ---------       ---------

     Income from operations before disposition of
      property                                               163,924         110,134          65,764
                                                           ---------       ---------       ---------

  GAIN ON DISPOSITION OF PROPERTY                             22,015          20,252           8,350
                                                           ---------       ---------       ---------

     Income from operations before minority
     interests                                               185,939         130,386          74,114
     Minority interests' share in net income                      --             (21)            (23)
                                                           ---------       ---------       ---------
     Net income                                            $ 185,939       $ 130,365       $  74,091
                                                           ---------       ---------       ---------

  Preferred Operating Partnership Unit                        (8,543)           (402)             --
   Distributions
  Preferred Dividends:
     Series B Preferred Stock                                (10,041)        (10,041)        (10,041)
     Series C Preferred Stock                                (11,813)         (2,658)             --
     Series E Preferred Stock                                 (4,600)             --              --
                                                           ---------       ---------       ---------
  Net income available to general and limited
  partners                                                 $ 150,942       $ 117,264       $  64,050
                                                           =========       =========       =========

  General Partner                                          $ 133,211       $ 102,305       $  54,149
                                                           ---------       ---------       ---------
  Limited Partner                                             17,731          14,959           9,901
                                                           ---------       ---------       ---------
     Total                                                 $ 150,942       $ 117,264       $  64,050
                                                           =========       =========       =========

NET INCOME PER COMMON OPERATING PARTNERSHIP UNIT
  Basic earnings per unit                                  $    2.59       $    2.30       $    1.76
                                                           =========       =========       =========
  Diluted earnings per unit                                $    2.56       $    2.27       $    1.74
                                                           =========       =========       =========


DISTRIBUTIONS PER COMMON OPERATING PARTNERSHIP UNITS:
  General Partner                                          $    2.29       $    2.08       $    1.78
                                                           =========       =========       =========
  Limited Partners                                         $    2.28       $    1.98       $    1.72
                                                           =========       =========       =========
</TABLE>


        The accompanying notes are an integral part of these statements.


                                       31


<PAGE>   32
                            SPIEKER PROPERTIES, L.P.

                         STATEMENTS OF PARTNERS' CAPITAL

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
                      (in thousands, except for unit data)


<TABLE>
<CAPTION>
                                                      General        Limited
                                                      Partner         Partner          General         Limited
                                                       Units           Units           Partner          Partner           Total
                                                    -----------     -----------      -----------      -----------      -----------
<S>                                                 <C>             <C>              <C>              <C>              <C>        
BALANCE AT DECEMBER 31,1995                          30,475,232       6,565,356      $   419,847      $    48,729      $   468,576

  Contribution-Proceeds from sale of Class C
   Common Stock                                       1,176,470              --           29,963               --           29,963
  Contribution-Proceeds from sale of Common
   Stock                                              5,022,500              --          121,368               --          121,368
  Conversion of limited partners' interests              15,537         (15,537)             386             (386)              --
  Restricted Stock grant                                  8,000              --               --               --               --
  Non-cash compensation merit fund                           --              --              100               20              120
  Contributions-Exercise of stock options                51,750              --            1,061               --            1,061
  Amortization of deferred compensation                      --              --              388               --              388
  Partner distributions                                      --              --          (73,375)         (11,264)         (84,639)
  Net income                                                 --              --           64,190            9,901           74,091
                                                    -----------     -----------      -----------      -----------      -----------

BALANCE AT DECEMBER 31,1996                          36,749,489       6,549,819      $   563,928      $    47,000      $   610,928
                                                    ===========     ===========      ===========      ===========      ===========

  Contribution-Proceeds from sale of Series C
   Preferred Stock                                           --              --          145,959               --          145,959
  Contribution-Proceeds from sale of Common
   Stock                                             23,573,134              --          822,636               --          822,636
  Sale of Operating Partnership Units                        --             775               --               25               25
  Conversion of Operating Partnership Units to
   Common Stock                                         155,380        (155,380)              --               --               --
  Conversion of Operating Partnership
   Units-Employee Stock Incentive Pool                   14,984         (14,984)             524             (524)              --
  Contribution of property                                   --         941,896               --           97,164           97,164
  Restricted Stock grant                                 41,073              --               --               --               --
  Non-cash compensation merit fund                           --              --              236               36              272
  Contributions-Exercise of stock options               166,200              --            3,425               --            3,425
  Amortization of deferred compensation                      --              --              593               --              593
  Allocation of Operating Partnership interest               --              --          (42,855)          42,855               --
  Partner distributions                                      --              --         (115,622)         (14,647)        (130,269)
  Consolidation Minority interest to Limited
   Partner                                                   --              --               --           (1,257)          (1,257)
  Net income                                                 --              --          115,004           15,361          130,365
                                                    -----------     -----------      -----------      -----------      -----------

BALANCE AT DECEMBER 31, 1997                         60,700,260       7,322,126      $ 1,493,828      $   186,013      $ 1,679,841
                                                    ===========     ===========      ===========      ===========      ===========

  Contribution-Proceeds from sale of Series E
   Preferred Stock                                           --              --           96,401               --           96,401
  Contribution-Proceeds from sale of Common
   Stock                                              2,659,467              --          102,391               --          102,391
  Contribution-Common Stock issued for property         165,984              --            6,900               --            6,900
  Contribution-Proceeds from sale of Preferred
   Operating Units                                           --              --               --           73,124           73,124
  Conversion of Preferred Operating Units to
   Common Stock                                         259,694              --               --               --               --
  Conversion of Operating Partnership Units to          109,032        (109,032)              --               --               --
   Common Stock
  Conversion of Operating Partnership
   Units-Employee Stock Incentive Pool                       --              --           10,840          (10,840)              --
  Contribution of property for Operating
   Partnership Units                                         --       1,689,821               --           69,404           69,404
  Restricted Stock grant                                103,256              --               --               --               --
  Non-cash compensation merit fund                           --              --               --               --               --
  Exercise of stock options                             314,748              --            6,578               --            6,578
  Amortization of deferred compensation                      --              --              730               --              730
  Allocation of Operating Partnership interest               --              --           17,885          (17,885)              --
  Partner distributions                                      --              --         (171,756)         (27,738)        (199,494)
  Net income                                                 --              --          159,665           26,274          185,939
                                                    -----------     -----------      -----------      -----------      -----------

BALANCE AT DECEMBER 31, 1998                         64,312,441       8,902,915      $ 1,723,462      $   298,352      $ 2,021,814
                                                    ===========     ===========      ===========      ===========      ===========
</TABLE>


        The accompanying notes are an integral part of these statements.



                                       32


<PAGE>   33
                            SPIEKER PROPERTIES, L.P.

                            STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31,
                                                                        -----------------------
                                                                 1998             1997             1996
                                                             -----------      -----------      -----------
<S>                                                          <C>              <C>              <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income                                                 $   185,939      $   130,365      $    74,091
  Adjustments to reconcile net income to net cash
   provided by operating activities-
  Depreciation and amortization                                   94,512           52,779           37,385
  Amortization of discount and deferred financing costs            2,283            1,426            1,224
  Non-cash compensation                                               84              865              508
  Minority interests' share in net income                             --               21               23
  Gain on disposition of property                                (22,015)         (20,252)          (8,350)
  Increase in accounts receivable and other assets               (15,077)         (11,935)          (2,891)
  Decrease (increase) in receivables from related
   parties                                                           111             (177)             269
  Decrease in assessment bonds payable                            (1,012)          (1,070)            (849)
  Increase in accounts payable and accrued expenses and
   other liabilities                                              44,194           28,086            2,985
  Increase in accrued real estate taxes                            1,248              272              225
  Increase in accrued interest                                     3,722           11,070            7,961
                                                             -----------      -----------      -----------
   Net cash provided by operating activities                     293,989          191,450          112,581
                                                             -----------      -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to properties                                     (1,141,633)      (1,483,866)        (406,552)
  Reductions (additions) to deposits on properties, net           37,920          (31,473)          (8,974)
  Additions to investment in mortgages                           (11,610)        (257,294)         (14,381)
  Additions to investment in affiliates                          (13,574)         (37,256)              --
  Additions to leasing costs                                     (18,300)          (8,231)          (5,627)
  Proceeds from disposition of property                           73,538          120,235           47,967
  Proceeds from investment in mortgages                          257,142               --               --
  Proceeds from investment in affiliate                           30,015               --               --
                                                             -----------      -----------      -----------
    Net cash used for investing activities                      (786,502)      (1,697,885)        (387,567)
                                                             -----------      -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from debt                                           1,096,500        1,368,000          684,800
  Payments on debt                                              (700,922)        (720,435)        (455,205)
  Payments of financing fees                                      (3,395)         (12,026)          (3,612)
  Payments of distributions                                     (195,877)        (107,857)         (81,626)
  Capital contributions - Stock offerings                        198,792          968,595          151,331
  Capital contributions - Stock options exercised                  6,578            3,425            1,061
  Proceeds from sale of operating partnership units               73,125               25               --
                                                             -----------      -----------      -----------
    Net cash provided by financing activities                    474,801        1,499,727          296,749
                                                             -----------      -----------      -----------
    Net (decrease) increase in cash and cash equivalents         (17,712)          (6,708)          21,763

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                  22,628           29,336            7,573
                                                             -----------      -----------      -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                   $     4,916      $    22,628      $    29,336
                                                             ===========      ===========      ===========
</TABLE>


                                       33



<PAGE>   34



                            SPIEKER PROPERTIES, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (in thousands, except share and unit data)

                           DECEMBER 31, 1998 AND 1997


1. ORGANIZATION AND BASIS OF PRESENTATION

Spieker Properties, L.P. (the "Operating Partnership"), a California limited
partnership, was formed on November 10, 1993 and commenced operations on
November 19, 1993, when Spieker Properties, Inc. (the "Company"), the general
partner in the Operating Partnership, completed its initial public offering
("IPO") on November 18, 1993. As of December 31, 1998, the Company owned an
approximate 87.8 % general and limited partnership interest in the Operating
Partnership. The Operating Partnership specializes in the acquisition,
development, management and leasing of office and industrial properties in
California and Washington, Oregon and Idaho (the "Pacific Northwest").
Substantially all of the business activities of the Company are conducted
through the Operating Partnership.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The Operating Partnership's consolidated financial statements include the
consolidated financial position of the Operating Partnership and its
subsidiaries as of December 31, 1998 and 1997, and its consolidated results of
operations and cash flows for the years ended December 31, 1998, 1997 and 1996.
The Operating Partnership's investment in Spieker Northwest, Inc. (an
unconsolidated Preferred Stock subsidiary) and its investment in Spieker
Griffin/W9 Associates, LLC are accounted for under the equity method. All
significant intercompany balances and transactions have been eliminated in the
consolidated financial statements.

Properties

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

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

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

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

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

The Operating Partnership owns mortgage loans that are secured by real estate.
Certain loans are with an affiliate of the Company (see note 4). The Company
assesses possible impairment of these loans by reviewing the fair value of the



                                       34
<PAGE>   35

underlying real estate. As of December 31, 1998 and 1997, the estimated fair
value of the underlying real estate was in excess of the Operating Partnership's
book value of the mortgage loans.

Construction in Progress

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

Land Held for Investment

The Operating Partnership has costs related to land parcels that are either held
for investment or are in a design and approval process. There were no material
Construction in process costs associated with these land parcels.

Cash and Cash Equivalents

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

Deferred Financing and Leasing Costs

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

Fair Value of Financial Instruments

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

Revenues

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

Interest and Other Income

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

Net Income Per Unit

Per unit amounts for the Operating Partnership are computed using the weighted
average units outstanding during the period. Additionally, earnings used in the
calculation are reduced by dividends owed to Series B, C, D and E preferred unit
holders. The diluted weighted average units outstanding include the dilutive
effect of stock options. The basic and diluted weighted average general partner
units and limited partners units outstanding for the year ended December 31,
1998, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
                                          BASIC WEIGHTED AVERAGE      BASIC WEIGHTED AVERAGE
                                          GENERAL PARTNER UNITS       LIMITED PARTNER UNITS
                                          ----------------------      ----------------------
<S>                                       <C>                         <C>      
       Year ended:
         December 31, 1998                      63,333,898                  8,429,646
         December 31, 1997                      49,424,808                  7,209,418
         December 31, 1996                      35,657,829                  6,549,819
</TABLE>
       
<TABLE>
<CAPTION>
                                        DILUTED WEIGHTED AVERAGE     DILUTED WEIGHTED AVERAGE
                                          GENERAL PARTNER UNITS        LIMITED PARTNER UNITS
                                        ------------------------     ------------------------
<S>                                     <C>                          <C>      
       Year ended:
         December 31, 1998                      64,098,182                  8,429,646
         December 31, 1997                      50,186,572                  7,209,418
         December 31, 1996                      35,910,652                  6,549,819
</TABLE>



                                       35
<PAGE>   36

Reclassifications

Certain items in the 1997 and 1996 financial statements have been reclassified
to conform to the 1998 presentation.

Use of Estimates

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

3. ACQUISITIONS AND DISPOSITIONS

The Operating Partnership acquired the following properties (the "1998
Acquisitions") during the year ended December 31, 1998:

<TABLE>
<CAPTION>
                                                              PROPERTY       TOTAL RENTABLE     INITIAL 
   PROJECT NAME                            LOCATION           TYPE (1)        SQUARE FEET     COST (2)(3)
   ------------------------------------------------------------------------------------------------------
<S>                                        <C>                <C>            <C>              <C>
   The Concourse (4)                       San Jose, CA           O            540,224        $150,300
   Koll Bellefield Center                  Bellevue, WA           O             65,946          10,300
   Santa Monica Business Park (5)          Santa Monica, CA       O            960,081         111,500
   Marina Business Center (5)              Marina Del Rey, CA     O            261,966          28,600
   City Tower (6)                          Orange, CA             O            409,492          66,180
   Skyport Plaza (7)                       San Jose, CA           O            359,600          33,800
   Brea Park Center - Building C           Brea, CA               O             26,856           2,300
   Allegiance Center                       Ontario, CA            O             73,778           5,200
   Ontario Corporate Center                Ontario, CA            O             97,703          10,500
   2600 Michelson (5)                      Irvine, CA             O            391,166          64,600
   Cerritos Towne Center I, II, III (5)    Cerritos, CA           O            332,608          42,700
   Metro Center (5)                        San Mateo, CA          O            711,584         134,900
   Biltmore Commerce Center (5)            Phoenix, AZ            O            262,875          36,600
   Benjamin Franklin Plaza                 Portland, OR           O            273,239          50,100
   San Mateo Bay Center III                San Mateo, CA          O             62,869          16,100
   Kline Center II                         Ontario, CA            O             51,431           4,900
   Gateway 405                             Bellevue, WA           O             34,505           4,900
   Cerritos Towne Center IV (5)            Cerritos, CA           O             80,821          11,500
   Cerritos Towne Center V (5)             Cerritos, CA           O             50,000           5,100
   Hayward Business Park                   Hayward, CA            I            630,944          33,500
   Enterprise Business Park II (8)         Sacramento, CA         I            579,545          24,100
</TABLE>


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

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

   (3)  Does not include the Company's 50% common and preferred interests in
        Spieker Griffin/W9 Associates, L.L.C., which owns Griffin Towers in
        Orange County, California, acquired for approximately $18.0 million in
        April 1998.

   (4)  Does not include $22.1 million allocated to 6.6 acres of land held for
        future development.

   (5)  Previously identified as a part of the Transpacific Development Company
        (TDC) portfolio.

   (6)  Does not include $3.5 million allocated to 10.5 acres of land held for
        future development and $27.6 million allocated to a redevelopment
        property, City Plaza, which is detailed on page 12 "Developments in
        Process."

   (7)  Does not include $23.1 million allocated to 20.0 acres of land held for
        future development.

   (8)  Does not include $1.9 million allocated to 11.7 acres of land held for
        future development.

During the year ended December 31, 1997, the Operating Partnership acquired
12,512,893 square feet of office and industrial property at an initial cost of
$1,535,411 (the "1997 Acquisitions"). The 1998 and 1997 Acquisitions were
recorded using the purchase method of accounting.



                                       36
<PAGE>   37

The Operating Partnership disposed of the following properties (the "1998
Dispositions") during the year ended December 31, 1998:

<TABLE>
<CAPTION>
                                                          PROPERTY      TOTAL RENTABLE
   PROJECT NAME                      LOCATION             TYPE (1)       SQUARE FEET     SALES PRICE (2)
   -----------------------------------------------------------------------------------------------------
<S>                                  <C>                  <C>           <C>              <C>
   Rose Pavilion                     Pleasanton, CA          R            292,902           $40,928
   Camino West Business Park         Carlsbad, CA            O             44,574             2,750
   Fresno Associates I               Fresno, CA              I            175,900             6,463
   Fresno Warehouse II               Fresno, CA              I            122,000             3,934
   Fresno Warehouse III              Fresno, CA              I            100,200             3,653
   McArthur Park                     Santa Ana, CA           O             94,023             7,800
   Vancouver Commerce Park           Portland, OR            I             82,460             3,700
   Commerce Point Land               Ontario, CA             L                  -               929
   Sea Tac Corporate Center          Seattle, WA             L                  -             5,200
</TABLE>

   (1)  "O" indicates office property; "I" indicates industrial property; "R"
        indicates retail property: "L" indicates land.

   (2)  Excludes the net proceeds from the sale of $284.4 million of properties
        held by Spieker Northwest, Inc., an affiliate of Spieker Properties,
        L.P.

During the year ended December 31, 1997, the Operating Partnership disposed of
nine retail properties, two office properties, one industrial property, and one
parking garage for $125,800 (the "1997 Dispositions").

4. TRANSACTIONS WITH AFFILIATES

Revenues and Expenses

The Operating Partnership received $2,848 in 1998, $919 in 1997, and $802 in
1996, for management services provided to certain properties that are controlled
and operated by either Spieker Northwest, Inc. or Spieker Partners related
entities (collectively, "Spieker Partners"). Certain officers of the Spieker
Properties, Inc., are partners in Spieker Partners.

Acquisition of Properties

During the year ended December 31, 1997 the Operating Partnership acquired one
office building and one land parcel from certain senior officers of the Company.
The Operating Partnership paid $5,818 to unaffiliated limited partners, issued
Operating Partnership Units with a value of $7,625 and assumed a mortgage of
$10,991 in relation to the office building. The land parcel was acquired for
$1,486. These acquisitions were subject to approval by the Board of Directors.

Receivable From Affiliates

The $183 receivable from affiliates at December 31, 1998 and the $294 at
December 31, 1997, represents management fees and reimbursements due from
Spieker Northwest, Inc., Spieker Griffin/W9 Associates, LLC and Spieker
Partners.

Investments in Mortgages

Included in Investment in Mortgages are $18,725 at December 31, 1998 and
$257,294 at December 31, 1997 of loans to Spieker Northwest, Inc. (SNI). The
loans are secured by deeds of trust on real property, bear interest at 8.5%, and
mature in 2012. Interest income of $10,748 is included in interest and other
income for the year ended December 31, 1998 and $3,108 for the year ended
December 31, 1997 in relation to these loans.

Investments in Affiliate

The investment in affiliate represents an investment in SNI. The Operating
Partnership owns 95% of the Preferred Stock of SNI. Certain senior officers of
the Company own 100% of the voting stock of SNI. At December 31, 1998 SNI owned
225,815 thousand square feet and at December 31, 1997 owned 2.8 million square
feet of office and industrial property located in various states. In addition,
SNI owns 6 parcels of land totaling 24.6 acres. Certain of these properties are
held for sale at December 31, 1998. In addition to property ownership, SNI
provides property management services to certain properties owned by Spieker
Partners.



                                       37
<PAGE>   38

Summarized condensed financial information of SNI is presented as follows:

<TABLE>
<CAPTION>
                                                      DECEMBER 31,  DECEMBER 31,
                                                         1998          1997
                                                      ------------  ------------ 
<S>                                                   <C>           <C>     
               Balance Sheet:
                  Investments in real estate, net      $ 18,147      $296,094
                  Other assets                           33,705         2,915
                                                       --------      --------
                                                       $ 51,852      $299,009
                                                       ========      ========

                  Mortgages and other                  $ 19,219      $260,520
                  Shareholders' equity                   32,633        38,489
                                                       --------      --------
                                                       $ 51,852      $299,009
                                                       ========      ========
</TABLE>


<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31,
                                                          -----------------------
                                                    1998           1997           1996
                                                  --------       --------       --------
<S>                                               <C>            <C>            <C>     
        Results of Operations:
           Revenues                               $ 20,682       $  6,750       $  1,304
           Interest expense                        (10,748)        (3,108)            --
           Other expenses                           (8,877)        (3,461)        (1,224)
                                                  --------       --------       --------
              Net Income Before Depreciation      $  1,057       $    181       $     80
                                                  ========       ========       ========
</TABLE>

Additionally, investment in affiliates represents the 12.5% common interest and
37.5% preferred interest in Spieker Griffin/W9 Associates, LLC. Spieker
Griffin/W9 Associates, LLC purchased in April 1998 a 535,000 square foot office
complex, which is managed by the Company, located in Orange County, California
for an initial cost of $100,000.

5. PROPERTY HELD FOR DISPOSITION

The Operating Partnership continues to review its portfolio and its long-term
strategy for properties. The Operating Partnership will dispose, over time,
assets that do not have a strategic fit in the portfolio. Included in property
held for disposition of $72,537 at December 31, 1998, are thirteen properties.
One of the properties is an office property located in Arizona, four industrial
properties are located in Northern California, six industrial properties and two
land parcels are located in Southern California. The divestiture of the property
is subject to identification of a purchaser, negotiation of acceptable terms and
other customary conditions. Property held for disposition at December 31, 1997,
of $37,186 consisted of two properties, one property was a retail center located
in Northern California and the other was an office property located in Southern
California.

The following summarizes the condensed results of operations of the properties
held for disposition at December 31, 1998 for the years ended December 31, 1998,
1997 and 1996. Some properties held for disposition were acquired during the
periods presented, therefore the Net Operating Income for these periods
presented may not be comparable.


<TABLE>
<CAPTION>
                                          1998          1997          1996
                                         -------       -------       -------
<S>                                      <C>           <C>           <C>    
        Income                           $ 8,013       $ 3,021       $ 1,179
        Property Operating Expenses       (2,451)         (604)         (200)
                                         -------       -------       -------

              Net Operating Income       $ 5,562       $ 2,417       $   979
                                         =======       =======       =======
</TABLE>


6. DEBT

As of December 31, 1998 and 1997, debt consists of the following:

<TABLE>
<CAPTION>
                                                                                          1998            1997
                                                                                       ----------      ----------
<S>                                                                                    <C>             <C>       
     Unsecured investment grade notes, varying fixed interest rates
        from 6.65% to 8.00% payable semi-annually, due from 2000 to 2027               $1,436,500      $1,135,000
     Unsecured short-term borrowings                                                      300,000         200,000
     Mortgage loans, varying interest rates from 7.37% to 9.88%, due 1999 to 2013         110,698          96,502
                                                                                       ----------      ----------
                                                                                       $1,847,198      $1,431,502
                                                                                       ==========      ==========
</TABLE>

The Operating Partnership has an Unsecured Line of Credit Facility (the
"Facility"). The maximum amount available under the Facility is $250,000. The
Facility carries interest at LIBOR (London Interbank Offered Rates) plus 0.80%



                                       38
<PAGE>   39

matures in August 2001, includes an annual administrative fee of $50 and an
annual Facility fee of .20%. The one-month LIBOR at December 31, 1998 was 5.1%.
As of December 31, 1998, the amount drawn on the Facility was $100,000. In
addition, the Company has $200,000 short-term bank facility (the "Bank
Facility") outstanding at December 31, 1998. This short-term Bank Facility
carries interst at LIBOR plus .65% and matures November 1999. The line of credit
Facility and the Bank Facility are subject to financial covenants concerning
leverage, interest coverage and certain other ratios. The Operating Partnership
is currently in compliance with all of the covenants in the line of credit
Facility and the Bank Facility concerning its indebtedness.

Mortgage loans generally require monthly principal and interest payments. The
mortgage loans are secured by deeds of trust on related properties. The gross
book value of real estate assets pledged as collateral under deeds of trust for
mortgage loans at December 31, 1998 was $286,995 and $228,618 at December 31,
1997.

The unsecured notes are subject to financial covenants concerning leverage,
interest coverage and certain other ratios. The Operating Partnership is
currently in compliance with all of the covenants in the unsecured note
agreements governing its indebtedness.

Interest capitalized for the year ended December 31, 1998 was $16,482, $6,338 in
1997 and $3,116 in 1996.

Future Minimum Debt Schedule

The scheduled future minimum debt payments of all debt outstanding including
short-term borrowings as of December 31, 1998, are as follows:

<TABLE>
<CAPTION>
               YEAR                       AMOUNT
            ----------                  ----------
<S>                                     <C>       
               1999                     $  217,572
               2000                        102,272
               2001                        233,801
               2002                        112,158
               2003                          2,569
            Thereafter                   1,178,826
                                        ----------
                                        $1,847,198
                                        ==========
</TABLE>

7. LEASING ACTIVITY

Future minimum rentals due under noncancelable operating leases in effect at
December 31, 1998, with tenants are as follows:


<TABLE>
<CAPTION>
               YEAR                       AMOUNT
            ----------                  ----------
<S>                                     <C>       
               1999                     $  491,575
               2000                        416,531
               2001                        335,850
               2002                        238,935
               2003                        159,284
            Thereafter                     298,365
                                        ----------
                                        $1,940,540
                                        ==========
</TABLE>

In addition to minimum rental payments, tenants pay reimbursements for their pro
rata share of specified operating expenses, which amounted to $147,850 for the
year ended December 31, 1998, $83,170 in 1997 and $44,155 in 1996. These amounts
are included as rental revenue and rental expense in the accompanying statements
of operations. Certain of the leases also provide for the payment of additional
rent based on a percentage of the tenant's revenues. Additional rents under
these leases for the year ended December 31, 1998 was $528, $254 for 1997 and
$362 for 1996. Certain leases contain options to renew.



                                       39
<PAGE>   40

8. PARTNERS' DISTRIBUTIONS PAYABLE

The partner distributions payable at December 31, 1998 and 1997, represents
amounts payable to partners for the quarters then ended.

The unit holders of record as of December 31, 1998, and December 31, 1997, are
as follows:


<TABLE>
<CAPTION>
                                       DECEMBER 31,     DECEMBER 31,
                                          1998             1997
                                       ------------     -----------
<S>                                    <C>              <C>       
     Shares of:
          General Partners              61,916,459      55,772,632
          Limited Partners               8,902,915       7,322,126
          Series A Preferred Units       1,000,000       1,000,000
          Series B Preferred Units       4,250,000       4,250,000
          Series C Preferred Units       6,000,000       6,000,000
          Series D Preferred Units       1,721,831       2,007,495
          Series E Preferred Units       4,000,000              --
</TABLE>

9. INCOME TAXES

Spieker Properties, L.P. and its subsidiary partnerships file federal and state
returns of income. The partnerships pay no income taxes other than an $.8
limited partnership tax, where applicable, to the State of California. Taxable
income or loss is allocable to the partners of the respective partnerships.

The Operating Partnership's consolidated taxable income was $175,247 for the
year ended 1998, $115,525 for 1997 and $76,323 for 1996.

The differences between book income and taxable income primarily result from
timing differences consisting of depreciation expense for tenant improvements
and unearned rental income.

10. PARTNERS' EQUITY

Preferred Units

The 1,000,000 shares of Series A Cumulative Convertible Preferred Stock rank
senior to the Common Units as to dividends and liquidation rights. The preferred
units are convertible into 1,219,512 units of the Operating Partnership. The
distribution per unit, calculated on the converted numbers of units, is equal to
the Common Unit dividend, provided that the dividend yield on the preferred
units may not be less than the initial distribution rate thereof. Distributions
are paid quarterly in arrears. With respect to the payment of distributions and
amounts upon liquidation, the Series A Preferred Unit ranks on parity with the
Series B, Series C and Series E Preferred Units and ranks senior to the Common
Units.

The Series B Preferred Unit distributions are paid quarterly in arrears at 9.45%
of the initial liquidation preference per annum. The Series B Preferred Units
are redeemable on or after December 11, 2000 at the option of the Company in
whole or in part at a redemption price of $25.00 per unit, plus accrued and
unpaid distributions. With respect to the payments of distributions and amounts
upon liquidation, the Series B Preferred Units ranks on parity with the Series
A, Series C and Series E Preferred Units and ranks senior to the Common Units

The Series C Preferred Unit distributions are payable quarterly in arrears at an
annual rate of 7.88% of the initial liquidation preference of $150,000. The
Series C Preferred Units are redeemable after October 10, 2002 at the option of
the Company, in whole or in part, at a redemption price of $25.00 per unit, plus
accrued and unpaid distributions. With respect to the payments of distributions
and amounts upon liquidation, the Series C Preferred Units rank on parity to the
Company's Series A, Series B and Series E Preferred Units and ranks senior to
the Common Units.

In June 1998, the Company sold 4,000,000 shares of Series E Cumulative
Redeemable Preferred Stock for $25.00 per share. These shares are redeemable at
the option of the Company. Dividends are payable at an annual rate of 8.00% of
the redeemable liquidation preference of $100.0 million. The net proceeds of
$96.8 million were contributed by the Company to the Operating Partnership in
exchange for 4,000,000 Series E Cumulative Redeemable Preferred Units with
terms  



                                       40
<PAGE>   41

substantially identical to the Series E Cumulative Redeemable Preferred Stock.
Net proceeds were used principally to repay borrowings on the unsecured line of
credit and to fund the ongoing acquisition and development of property.

During 1998 the Company issued 1,471,260 Operating Partnership Units in
connection with the acquisition of the TDC portfolio and 308,300 Operating
Partnership Units in relation to other acquisitions. The Company also issued in
April 1998, 1,500,000 Series D Cumulative Redeemable Preferred Units to an
institutional investor for $50.00 per unit. Distributions are payable at an
annual rate of 7.6875%. The Series D Preferred Units may be called by the
Operating Partnerships at par on or after April 20, 2003, and have no stated
maturity or mandatory redemption. The Series D Preferred Units are exchangeable
for the Series D Cumulative Redeemable Preferred Stock of the Company on or
after April 20, 2008.

Stockholders Rights Agreement

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

11. EMPLOYEE RETIREMENT AND STOCK PLANS

Retirement Savings Plan

Effective January 1, 1994, the Operating Partnership adopted a retirement
savings plan pursuant to Section 401(k) of the Internal Revenue Code, whereby
participants may contribute a percentage of compensation, but not in excess of
the maximum allowed under the Code. The plan provides for a matching
contribution by the Operating Partnership which amounted to $597 for the year
ended December 31, 1998, $393 for 1997 and $292 for 1996. In addition, the
Operating Partnership may make additional contributions at the discretion of
management. Management authorized additional contributions of $582 for the year
ended December 31, 1998, $337 for 1997 and $230 for 1996.

Stock Incentive Plan

The Company has adopted the Spieker Properties, Inc. 1993 Stock Incentive Plan
(the "Stock Incentive Plan") to provide incentives to attract and retain
officers and key employees. Under the Plan as amended on May 22, 1996, the
number of shares available for option grant is 9.9% of the number of shares of
Common Stock, on a fully-converted basis, outstanding as of the last day of the
immediately preceding quarter, reduced by the number of shares of Common Stock
reserved for issuance under other stock compensation plans of the Company. The
strike price on the shares granted is equal to the market price of the Company's
stock at the grant date. Shares granted under this plan vest over four or five
years.

Information relating to the employee Stock Incentive Plan from January 1, 1996
through December 31, 1998, is as follows:
<TABLE>
<CAPTION>
                                                                                OPTION PRICE
                                                              OPTIONS             PER SHARE
                                                             ----------         -------------
<S>                                                          <C>                <C>          
      Shares under option at January 1, 1996                  1,483,000         $       25.92
      Granted                                                 1,628,000           25.00-31.63
      Exercised                                                 (51,750)                20.50
      Forfeited                                                  (5,750)                20.50
                                                             ----------         -------------
      Shares under option at December 31, 1996                3,053,500           20.50-31.63
      Granted                                                 1,237,500                 35.19
      Exercised                                                (163,950)          20.50-29.25
      Forfeited                                                 (24,000)          20.50-29.25
                                                             ----------         -------------
      Shares under option at December 31, 1997                4,103,050           20.50-35.19
      Granted                                                 1,405,000           34.63-38.75
      Exercised                                                (300,750)          20.50-29.25
      Forfeited                                                (119,800)          20.50-38.75
                                                             ----------         -------------
      Shares under option at December 31, 1998                5,087,500          $20.50-38.75
                                                             ==========         =============
      Options exercisable at December 31, 1998                1,715,700         $       25.92(1)
                                                             ==========         =============
      Shares available for grant at December 31, 1998         1,792,852
                                                             ==========
</TABLE>

   (1)  Represents the average price.



                                       41
<PAGE>   42

Directors Stock Option Plan

On May 22, 1996, the Directors' Stock Option Plan was amended to increase the
number of shares of Common Stock subject to automatic annual option grants to
the Company's independent directors from 500 shares to 4,000 shares, to increase
the number of shares of Common Stock available for option grant from 30,000 to
150,000, and to provide that, in the event of a Change in Control, outstanding
options will become fully vested. To date, 62,000 shares have been granted under
the plan and 7,250 shares have been exercised.

Stock Options

The Company applies APB 25 and related interpretations in accounting for its
stock option plan. Accordingly, no compensation cost has been recognized. Had
compensation cost for the plan been determined based on the fair value at the
grant dates for awards under the plan consistent with the method prescribed by
Statement of Financial Accounting Standard ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," the Company's net income and earnings per share would
not have been materially reduced.

For these disclosure purposes, the fair value of each option grant is estimated
on the date of grant using the Black-Scholes option-pricing model with the
following weighted average assumptions used for grants in 1998 and 1997,
respectively; dividend yield of 6.6% and 5.8%; expected volatility of 18.1% and
18.6%; expected lives of six and seven years; and risk-free interest rates of
4.6% and 6.4%.

12. COMMITMENTS AND CONTINGENCIES

Environmental Matters

The Operating Partnership follows the policy of monitoring its properties for
the presence of hazardous or toxic substances. The Operating Partnership is not
aware of any environmental liability with respect to the properties that would
have a material adverse effect on the Operating Partnership's business, assets
or results of operations. There can be no assurance that such a material
environmental liability does not exist. The existence of any such material
environmental liability would have an adverse effect on the Operating
Partnership's results of operations and cash flow.

Lease Commitments

The Operating Partnership has entered into operating ground leases on certain
land parcels with periods ranging from 16 to 89 years. Future minimum rental
payments required under noncancelable operating ground leases in effect at
December 31, 1998, are as follows:

<TABLE>
<CAPTION>
                YEAR                   AMOUNT
             ----------               --------
<S>                                   <C>     
                1999                  $  7,858
                2000                     7,908
                2001                     7,914
                2002                     7,937
                2003                     9,874
             Thereafter                366,904
                                      --------
                                      $408,395
                                      ========
</TABLE>

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

General Uninsured Losses

The Operating Partnership carries commercial general liability, fire, flood,
extended coverage and rental loss insurance with policy specifications, limits
and deductibles customarily carried for similar properties. There are, however,
certain types of extraordinary losses which may be either uninsurable, or not
economically insurable. Should an uninsured loss occur, the Operating
Partnership could lose its investment in, and anticipated profits and cash flows
from, a property.



                                       42
<PAGE>   43

Certain of the properties are located in areas that are subject to earthquake
activity; the Operating Partnership has therefore obtained excess earthquake
insurance for those properties in higher risk earthquake areas. In the event of
an earthquake, the Operating Partnership is insured for $200,000 of loss (less a
deductible of 5% of total insured value per occurrence), any losses in excess of
$200,000 will be borne by the Operating Partnership.

13. SEGMENT INFORMATION

The Operating Partnership has four operating regions that would comprise
definable segments: Pacific Northwest; North-East Bay, San Francisco/Sacramento,
CA; Silicon Valley; and Southern California. Each region has a Regional Senior
Vice President who is directly responsible for managing all phases of the
region's operations including acquisition, development, leasing and property
management. The Operating Partnership believes that the most relevant
information about the way that its business is managed is through disclosure of
certain data at the operating region level. The accounting policies of the four
regions are the same as those described in the summary of significant accounting
policies. Each of the four operating regions consists of differing mixes of
property types. The following table may not be comparable by the regions listed
below given the differing mixes of properties within the regions. Significant
information used by the Operating Partnership for the reportable segments is as
follows:

<TABLE>
<CAPTION>
                                   Pacific        North - East Bay/      Silicon           Southern
                                  Northwest        Sacramento, CA        Valley           California            Total
                                 ---------------------------------------------------------------------------------------
<S>                              <C>              <C>                  <C>                <C>                <C>        
1998 Revenue                     $   117,920        $   139,126        $   127,756        $   157,628        $   542,430
1997 Revenue                          66,029            103,703             86,792             65,085            321,609
1996 Revenue                          51,578             66,079             59,978             18,836            196,471

1998 Net Operating Income(1)          84,843             95,163             97,326             98,055            375,387
1997 Net Operating Income             48,249             72,552             66,898             42,612            230,311
1996 Net Operating Income             37,603             48,210             48,160             12,298            146,271

1998 Deployable Assets               886,981          1,035,833            826,918          1,076,758          3,826,490
1997 Deployable Assets               761,199            914,453            484,374            694,176          2,854,202
1996 Deployable Assets               285,767            334,310            390,478            272,536          1,283,091
</TABLE>

   (1)  Net operating income (NOI) for the properties is calculated by
        subtracting rental expenses and real estate taxes from rental income.

14. SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                                         YEAR ENDED DECEMBER 31,
                                                                         -----------------------
                                                                   1998            1997            1996
                                                                 --------        --------        --------
<S>                                                              <C>             <C>             <C>     
SUPPLEMENTAL CASH FLOW DISCLOSURE:
   Cash paid for interest                                        $126,812        $ 56,108        $ 31,167

SUPPLEMENTAL DISCLOSURE OF NON-CASH
TRANSACTIONS:
   Debt assumed in relation to property acquisitions               19,394          63,940              --
   Units issued in connection with property acquisitions           69,405          97,164              --
   Increase to land and assessment bond payable                     4,344           8,984           1,283
   Write-off of fully depreciated property                         11,347           3,196          15,469
   Write-off of fully amortized deferred
     financing and leasing costs                                    2,342           2,359           4,696
   Conversion of operating partnership units
     to Common Stock with resulting reduction
     in Limited Partners' interest and
     increase in General Partners' interest                        10,840             524             386
   Property acquired through the issuance of Common Stock           6,900              --              --
</TABLE>




                                       43
<PAGE>   44

15. QUARTERLY FINANCIAL DATA (unaudited)

Summarized quarterly 1998 and 1997 data is as follows:

<TABLE>
<CAPTION>
                                                                      QUARTER
                                           ----------------------------------------------------------
1998                                       MARCH 31,       JUNE 30,      SEPTEMBER 30,   DECEMBER 31,        TOTAL
----                                       ---------       --------      -------------   ------------      ---------
<S>                                        <C>             <C>           <C>             <C>               <C>     
Revenues                                   $125,307        $138,616        $145,790        $151,383        $561,097
Income from operations
  before disposition of
  property and  minority interests           37,943          40,630          43,262          42,088         163,924
Net income                                   35,069          33,789          29,786          31,788         130,431
Income per diluted Common
  Operating Partnership units              $    .58        $    .53        $    .47        $    .50        $   2.07
</TABLE>


<TABLE>
<CAPTION>
                                                                      QUARTER
                                           ----------------------------------------------------------
1997                                       MARCH 31,       JUNE 30,      SEPTEMBER 30,   DECEMBER 31,        TOTAL
----                                       ---------       --------      -------------   ------------      ---------
<S>                                        <C>             <C>           <C>             <C>               <C>     
Revenues                                   $ 66,417        $ 75,878        $ 83,896        $105,122        $331,313
Income from operations
  before disposition of
  property, minority
  interests and extraordinary items          23,812          26,111          27,051          33,160         110,134
Net income                                   19,121          30,997          24,220          25,554          99,890
Income per Operating
  Partnership units                        $    .43        $    .65        $    .50        $    .47        $   2.04
</TABLE>


The sum of quarterly financial data in 1998 and 1997 varies from the annual data
due to rounding.



                                       44
<PAGE>   45
                            SPIEKER PROPERTIES, L.P.
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AS OF DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                                                                                  
                                                                                        INITIAL COST TO COMPANY   
                                                                                  --------------------------------
                                                                 ENCUMBRANCES          LAND AND                   
            PROJECT                           LOCATION          AND LIENS (1)     LEASEHOLD INTEREST     BUILDINGS
------------------------------------------------------------------------------------------------------------------
      NORTH-EAST BAY/SACRAMENTO                                                                                   
<S>                                       <C>                  <C>                <C>                  <C>        
10181 455 University                      Sacramento, CA                               $925,000         $1,305,000
10211 8880 SoCal Center                   Sacramento, CA                              3,252,741          8,493,503
10231 740 University                      Sacramento, CA                                261,250            793,750
10281 Gateway Oaks II                     Sacramento, CA                              1,510,137          4,258,061
10291 Gateway Oaks I                      Sacramento, CA                              2,926,887          9,856,301
10311 701 University                      Sacramento, CA                              1,051,108          3,239,007
10341 The Orchard                         Sacramento, CA                              1,505,937          4,517,810
10351 555 University                      Sacramento, CA                              1,467,023          4,401,069
10361 575 and 601 University              Sacramento, CA                              1,677,507          5,720,244
10391 655 University                      Sacramento, CA                              1,147,733          3,443,200
10681 Point West Executive Ctr.           Sacramento, CA                              2,538,020          5,952,306
10691 Point West Commercenter             Sacramento, CA                              3,443,730          9,025,615
10891 Gateway Oaks III                    Sacramento, CA                              1,151,181          3,344,582
11021 Bayside Corporate Center            Foster City, CA          457,099            2,455,163          7,623,408
11051 3600 American River Dr              Sacramento, CA                              1,059,222          4,274,450
11052 3610 American River Dr              Sacramento, CA                                490,859          1,963,435
11053 3620 American River Dr              Sacramento, CA                              1,033,387          4,133,548
11301 Fidelity Plaza                      Sacramento, CA                              1,354,983          3,695,222
11331 Wood Island Office Complex          Larkspur, CA              53,185            3,796,146         10,090,937
11471 Emeryville Towers                   Emeryville, CA                             29,695,815        101,059,827
11511 555 Twin Dolphin Plaza              Redwood City, CA                            8,181,629         35,100,408
11541 Fountaingrove                       Santa Rosa, CA                 0            4,391,945         11,841,364
11561 Sierra Point                        Brisbane, CA             363,250            2,429,943          8,198,137
11621 Point West Corp Center I            Sacramento, CA                              4,388,722         11,865,803
11651 Point West Corp Center II           Sacramento, CA                              1,000,000              3,983
11681 Lafayette Terrace                   Lafayette, CA                               2,037,282          5,508,225
11801 Gateway Oaks IV                     Sacramento, CA                              1,180,174          7,453,716
11831 San Mateo Baycenter                 San Mateo, CA                               2,464,154         10,422,627
11841 Treat Towers                        Walnut Creek, CA       1,325,000            4,089,868         36,427,480
11851 Johnson Ranch Corp Centre           Roseville, CA                  0            5,707,610         17,049,589
12031 East Roseville Parkway              Roseville, CA                               1,563,207          6,251,699
12081 Vintage Park Office                 Foster City, CA          507,323            7,138,571         14,680,327
12111 Douglas Corporate Center            Roseville, CA            804,807            3,468,131         10,959,465
12121 San Mateo Baycenter II              San Mateo, CA         10,816,420            1,263,543          7,120,618
12161 Port Plaza Land                     W Sacramento, CA         503,734            1,853,178                  0
12171 Concord N Commerce Ctr II           Concord, CA                                   912,711          2,139,551
12401 Metro Center                        Foster City, CA                                     0        134,942,965
12471 Enterprise Business Park I & II     W. Sacramento, CA     10,447,348            4,967,619         14,753,963
12481 Commerce Park West I, II, III       W. Sacramento, CA         98,949            3,135,239          3,358,313
12531 San Mateo BayCenter III             San Mateo, CA                               3,214,450         12,858,586
10091 Terminal St. Warehouse              Sacramento, CA                               $198,113         $1,181,083
10261 Front Street Warehouse              Sacramento, CA                                294,674            908,485
10381 Livermore Commerce Ctr.             Livermore, CA             32,839            1,312,199          3,563,238
10481 Huntwood Business Center            Hayward, CA                3,371              198,026            686,076
10491 Independent Rd Warehouse            Oakland, CA                                   237,380            706,174
10511 Baycenter Business Park II          Hayward, CA              221,126            1,228,225          3,116,626
10521 Keebler Warehouse                   Hayward, CA               86,831              569,642          1,568,210
10531 Fremont Commerce Center             Fremont, CA                                   614,357          1,588,166
10591 Dubuque Business Center             So. San Fran, CA                            2,912,158          3,128,405
10601 Cabot Blvd. Warehouse               Hayward, CA                                 1,550,174          4,531,092
10611 Benicia Commmerce Center            Benicia, CA                                   434,027          3,810,746
</TABLE>


<TABLE>
<CAPTION>

                                                                                GROSS AMOUNT AT CLOSE OF PERIOD
                                                                ----------------------------------------------------------------
                                                                 ADDITIONS          LAND          BUILDINGS AND                 
                                                                    AND         LAND IMP. AND        BUILDING                   
            PROJECT                           LOCATION          IMPROVEMENTS    LEASEHOLD INT.     IMPROVEMENTS         TOTAL   
--------------------------------------------------------------------------------------------------------------------------------
      NORTH-EAST BAY/SACRAMENTO                                                                                                 
<S>                                       <C>                  <C>              <C>               <C>                 <C>       
10181 455 University                      Sacramento, CA         $786,252          $993,704        $2,074,475         $3,068,179
10211 8880 SoCal Center                   Sacramento, CA        2,811,335         3,804,401        10,546,560         14,350,961
10231 740 University                      Sacramento, CA          173,513           261,250           959,617          1,220,867
10281 Gateway Oaks II                     Sacramento, CA          743,749         1,996,441         4,511,077          6,507,518
10291 Gateway Oaks I                      Sacramento, CA          211,967         2,938,968        10,121,140         13,060,108
10311 701 University                      Sacramento, CA          354,591         1,247,111         3,319,746          4,566,857
10341 The Orchard                         Sacramento, CA        1,124,148         1,539,497         4,977,806          6,517,303
10351 555 University                      Sacramento, CA          708,357         1,484,661         4,799,428          6,284,089
10361 575 and 601 University              Sacramento, CA          723,872         1,915,967         6,174,166          8,090,134
10391 655 University                      Sacramento, CA          281,936         1,159,673         3,645,041          4,804,714
10681 Point West Executive Ctr.           Sacramento, CA        1,260,351         2,573,522         7,139,142          9,712,664
10691 Point West Commercenter             Sacramento, CA        1,084,491         3,443,730         9,877,980         13,321,710
10891 Gateway Oaks III                    Sacramento, CA        1,043,948         1,161,264         4,364,270          5,525,534
11021 Bayside Corporate Center            Foster City, CA         361,860         2,465,778         7,973,761         10,439,539
11051 3600 American River Dr              Sacramento, CA          458,332         1,059,222         4,644,440          5,703,662
11052 3610 American River Dr              Sacramento, CA          248,203           490,859         2,110,797          2,601,656
11053 3620 American River Dr              Sacramento, CA          392,341         1,033,387         4,496,582          5,529,969
11301 Fidelity Plaza                      Sacramento, CA          760,368         1,368,143         3,912,820          5,280,963
11331 Wood Island Office Complex          Larkspur, CA            736,650         3,796,146        10,781,499         14,577,645
11471 Emeryville Towers                   Emeryville, CA       11,766,845        29,695,815       101,271,722        130,967,537
11511 555 Twin Dolphin Plaza              Redwood City, CA        174,722         8,181,629        32,738,206         40,919,835
11541 Fountaingrove                       Santa Rosa, CA          863,062         4,432,734        12,399,983         16,832,717
11561 Sierra Point                        Brisbane, CA            509,568         2,455,517         8,367,988         10,823,505
11621 Point West Corp Center I            Sacramento, CA          952,804         4,388,722        11,888,041         16,276,763
11651 Point West Corp Center II           Sacramento, CA                0         1,000,000                 0          1,000,000
11681 Lafayette Terrace                   Lafayette, CA            56,857         2,037,282         5,565,082          7,602,365
11801 Gateway Oaks IV                     Sacramento, CA          938,428         1,180,174                 0          1,180,174
11831 San Mateo Baycenter                 San Mateo, CA           322,524         2,464,154        10,630,564         13,094,719
11841 Treat Towers                        Walnut Creek, CA           (199)        4,089,868                 0          4,089,868
11851 Johnson Ranch Corp Centre           Roseville, CA           381,692         5,728,033        13,246,387         18,974,420
12031 East Roseville Parkway              Roseville, CA                 0         1,563,207                 0          1,563,207
12081 Vintage Park Office                 Foster City, CA       3,390,089         7,138,571        17,842,517         24,981,088
12111 Douglas Corporate Center            Roseville, CA           633,650         3,468,131        10,959,465         14,427,596
12121 San Mateo Baycenter II              San Mateo, CA        10,905,395         3,439,087        15,764,044         19,203,131
12161 Port Plaza Land                     W Sacramento, CA          1,800         1,853,178                 0          1,853,178
12171 Concord N Commerce Ctr II           Concord, CA             125,002           912,711                 0            912,711
12401 Metro Center                        Foster City, CA         170,570                 0       134,975,118        134,975,118
12471 Enterprise Business Park I & II     W. Sacramento, CA        35,462         4,967,619        14,753,338         19,720,958
12481 Commerce Park West I, II, III       W. Sacramento, CA        96,336         3,135,239         3,358,313          6,493,552
12531 San Mateo BayCenter III             San Mateo, CA            42,444         3,214,450        12,858,586         16,073,036
10091 Terminal St. Warehouse              Sacramento, CA         $205,205          $202,000        $1,382,401         $1,584,401
10261 Front Street Warehouse              Sacramento, CA          174,711           294,674         1,074,551          1,369,225
10381 Livermore Commerce Ctr.             Livermore, CA           877,879         1,499,807         4,253,509          5,753,316
10481 Huntwood Business Center            Hayward, CA           1,324,409           434,534         1,603,115          2,037,649
10491 Independent Rd Warehouse            Oakland, CA             421,106           332,303         1,032,357          1,364,660
10511 Baycenter Business Park II          Hayward, CA           2,233,490         1,781,453         4,765,801          6,547,254
10521 Keebler Warehouse                   Hayward, CA             229,779           605,637         1,761,994          2,367,631
10531 Fremont Commerce Center             Fremont, CA             593,031           708,494         2,087,060          2,795,554
10591 Dubuque Business Center             So. San Fran, CA      2,935,507         3,491,267         5,465,429          8,956,696
10601 Cabot Blvd. Warehouse               Hayward, CA           1,257,050         1,559,831         5,778,486          7,338,317
10611 Benicia Commmerce Center            Benicia, CA           1,185,984           683,781         4,649,614          5,333,395
</TABLE>


<TABLE>
<CAPTION>

                                                                                     CONSTRUCTION     DEPRECIABLE
                                                                     ACCUMULATED        AND/OR           LIVES
            PROJECT                           LOCATION               DEPRECIATION     ACQUISITION       (YEARS)
-----------------------------------------------------------------------------------------------------------------
      NORTH-EAST BAY/SACRAMENTO                                                      
<S>                                       <C>                        <C>            <C>               <C> 
10181 455 University                      Sacramento, CA               $563,070          1987            3-40
10211 8880 SoCal Center                   Sacramento, CA              2,520,977          1989            3-40
10231 740 University                      Sacramento, CA                272,616          1987            3-40
10281 Gateway Oaks II                     Sacramento, CA                976,528          1992            3-40
10291 Gateway Oaks I                      Sacramento, CA              2,147,167          1990            2-40
10311 701 University                      Sacramento, CA                737,417          1991            3-40
10341 The Orchard                         Sacramento, CA              1,109,939          1990            3-40
10351 555 University                      Sacramento, CA              1,089,479          1990            3-40
10361 575 and 601 University              Sacramento, CA              1,468,287          1990            3-40
10391 655 University                      Sacramento, CA                810,223          1990            2-40
10681 Point West Executive Ctr.           Sacramento, CA                927,971          1994           10-40
10691 Point West Commercenter             Sacramento, CA              1,248,749          1994            4-40
10891 Gateway Oaks III                    Sacramento, CA                529,253          1995            2-40
11021 Bayside Corporate Center            Foster City, CA               682,989          1996            7-40
11051 3600 American River Dr              Sacramento, CA                386,762          1995           12-40
11052 3610 American River Dr              Sacramento, CA                180,045          1995            5-40
11053 3620 American River Dr              Sacramento, CA                367,707          1995           12-40
11301 Fidelity Plaza                      Sacramento, CA                290,684          1996            2-40
11331 Wood Island Office Complex          Larkspur, CA                  541,731          1996            4-40
11471 Emeryville Towers                   Emeryville, CA              4,946,971          1997            3-40
11511 555 Twin Dolphin Plaza              Redwood City, CA            1,569,494          1997            5-40
11541 Fountaingrove                       Santa Rosa, CA                559,060          1997            3-40
11561 Sierra Point                        Brisbane, CA                  366,630          1997            3-40
11621 Point West Corp Center I            Sacramento, CA                499,791          1997            3-40
11651 Point West Corp Center II           Sacramento, CA                      0          1997             40
11681 Lafayette Terrace                   Lafayette, CA                 209,281          1997           10-40
11801 Gateway Oaks IV                     Sacramento, CA                      0          1997            5-40
11831 San Mateo Baycenter                 San Mateo, CA               3,496,795          1995            3-40
11841 Treat Towers                        Walnut Creek, CA                    0          1997            6-40
11851 Johnson Ranch Corp Centre           Roseville, CA                 414,375          1997            3-40
12031 East Roseville Parkway              Roseville, CA                       0          1997             40
12081 Vintage Park Office                 Foster City, CA               483,547          1997            7-40
12111 Douglas Corporate Center            Roseville, CA                 296,819          1997            3-40
12121 San Mateo Baycenter II              San Mateo, CA               3,379,134          1997            3-40
12161 Port Plaza Land                     W Sacramento, CA                    0          1997             40
12171 Concord N Commerce Ctr II           Concord, CA                         0          1997            5-40
12401 Metro Center                        Foster City, CA             2,187,058          1998           10-40
12471 Enterprise Business Park I & II     W. Sacramento, CA             307,374          1998            5-40
12481 Commerce Park West I, II, III       W. Sacramento, CA              69,965          1998            2-40
12531 San Mateo BayCenter III             San Mateo, CA                 160,732          1998            4-40
10091 Terminal St. Warehouse              Sacramento, CA               $710,151          1975            3-40
10261 Front Street Warehouse              Sacramento, CA             272,799.20          1988            5-40
10381 Livermore Commerce Ctr.             Livermore, CA            1,062,914.62          1988            3-40
10481 Huntwood Business Center            Hayward, CA                666,052.98          1979            7-40
10491 Independent Rd Warehouse            Oakland, CA                524,081.31          1972            5-40
10511 Baycenter Business Park II          Hayward, CA              1,634,027.96          1984            3-40
10521 Keebler Warehouse                   Hayward, CA                560,881.30          1985           10-40
10531 Fremont Commerce Center             Fremont, CA                552,951.28          1989            5-40
10591 Dubuque Business Center             So. San Fran, CA         1,541,803.65          1986            3-40
10601 Cabot Blvd. Warehouse               Hayward, CA              1,862,215.48          1988            3-40
10611 Benicia Commmerce Center            Benicia, CA              1,072,245.28          1989            3-40
</TABLE>


                                       45


<PAGE>   46
                            SPIEKER PROPERTIES, L.P.
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AS OF DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                                                                               
                                                                                        INITIAL COST
                                                                              ---------------------------------
                                                             ENCUMBRANCES          LAND AND                    
PROJECT                                  LOCATION           AND LIENS (1)     LEASEHOLD INTEREST      BUILDINGS
---------------------------------------------------------------------------------------------------------------
<S>                                   <C>                   <C>              <C>                     <C>       
10621 Montgomery Ward                  Pleasant Hill, CA                             717,750          3,485,901
10631 Eden Landing Bus. Center         Hayward, CA                                 1,152,163          1,940,740
10641 Good Guys Dist. Center           Hayward, CA                7,685            4,923,246          9,254,184
10651 Fleetside Comrce Center          Benicia, CA              355,424            1,080,303          2,952,609
10661 Industrial Dr. Warehouse         Fremont, CA            2,224,289            1,822,496          3,793,609
10711 Redwood Shores                   Redwood City, CA                            3,437,897          3,702,938
10741 Baycenter Business Park I        Hayward, CA                                 1,500,000          4,105,976
10821 732-834 Striker Ave              Sacramento, CA                              1,009,601          2,767,658
10931 Northgate Commerce Ctr           Sacramento, CA                              1,854,097          5,611,557
10941 Doolittle Business Center        San Leandro, CA                               866,075          2,735,652
10951 Benicia Ind I (Stone)            Benicia, CA                                 4,777,806         14,394,164
10961 Benicia Ind I (Getty Ct)         Benicia, CA                                 1,134,212          3,402,635
11041 Concord North Comm Ctr           Concord, CA                                 2,340,139          4,945,766
11071 Benicia Ind II                   Benicia, CA                                 3,891,910         12,137,918
11161 Port of Oakland                  Oakland, CA                                 1,693,760          5,091,125
11281 Baycenter Business Park III      Hayward, CA              178,788            1,248,216          3,775,498
11291 Riverside Business Center        Sacramento, CA           194,221            1,471,099          4,395,800
11551 Seaport Distribution Center      W Sacramento, CA                            1,180,994          4,273,837
11761 Huntwood Business Center         Hayward, CA                                 2,929,335          8,788,004
11771 Fremont Commerce Center          Fremont, CA                                 4,315,601         12,946,802
11881 Milimont R&D                     Fremont, CA                                 1,806,606          5,419,919
11891 Kato R&D                         Fremont, CA                                 2,002,504          6,007,610
12041 W. North Market                  Sacramento, CA                              1,150,545          3,451,632
12051 Overland Court                   W Sacramento, CA         616,816            3,294,800          7,250,436
12091 Vintage Park Industrial          Foster City, CA        1,699,775           25,531,280         70,993,759
12381 Hayward Business Park            Hayward, CA               32,058            8,453,559         25,160,239
12421 Benicia Commerce Center II       Benicia, CA                                 1,722,991          5,298,888
12491 Vasco Business Center            Livermore, CA                               1,313,645          3,301,550
12571 Airway Business Park             Livermore, CA                               3,875,096             15,522
12541 Skyway Landing -Land             San Carlos, CA                            $18,379,610           $962,941
                                                            ---------------------------------------------------
                                       TOTAL                $31,030,338         $246,558,115       $815,281,267
                                                            ===================================================

      SILICON VALLEY
10001 Santa Clara Office Center I      Santa Clara, CA       $1,140,584             $187,326         $1,392,344
10021 Santa Clara Office Center II     Santa Clara, CA                               173,317          2,581,836
10031 Gateway Ofc. Phase I             San Jose, CA                                  721,215          9,010,137
10051 Santa Clara Office Center III    Santa Clara, CA                                36,746          2,193,334
10081 Gateway Ofc. Phase II            San Jose, CA                                1,275,102         40,341,270
10131 The Alameda                      San Jose, CA                                  774,316          4,278,623
10141 Creekside Phase I                San Jose, CA             344,127           10,385,797          8,518,712
10151 North First Ofc. Ctr.            San Jose, CA                                6,698,611          5,900,388
10251 Denny's Restaurant               Santa Clara, CA                               181,634            551,427
10321 Ryan Ranch Ofc. Ctr.             Monterey, CA                                1,048,740          3,951,223
10541 Lockheed Bldg.                   Palo Alto, CA                               1,735,789          6,264,357
10551 Xerox Campus                     Palo Alto, CA                               9,145,484         29,360,411
10561 Foothill Research Ctr.           Palo Alto, CA                               7,474,154         30,819,577
10671 2180 Sand Hill Road              Menlo Park, CA                                685,933          1,939,250
10701 McCarthy                         Milpitas, CA               1,311              845,039          4,219,348
10851 Ryan Ranch Off - Ph II           Monterey, CA                                  565,580          2,012,002
11031 Ryan Ranch Office II Bldg D      Monterey, CA                                  420,000          2,160,535
11151 2290 North First Street          San Jose, CA                                1,222,335          4,891,759
11311 Central Park Plaza               Santa Clara, CA          119,695            9,492,940         25,036,338
11521 Metro Plaza                      San Jose, CA          24,507,919           14,789,132         59,287,827
</TABLE>


<TABLE>
<CAPTION>

                                                                          GROSS AMOUNT AT CLOSE OF PERIOD
                                                           ------------------------------------------------------------
                                                             ADDITIONS          LAND         BUILDINGS AND               
                                                                AND        LAND IMP. AND       BUILDING                  
PROJECT                                  LOCATION          IMPROVEMENTS    LEASEHOLD INT.    IMPROVEMENTS         TOTAL  
-------                                  --------          ------------    --------------    -------------        -----  
<S>                                   <C>                 <C>             <C>               <C>               <C>        
10621 Montgomery Ward                  Pleasant Hill, CA       95,406          717,750        3,581,308         4,299,058
10631 Eden Landing Bus. Center         Hayward, CA            181,182        1,158,197        2,115,888         3,274,085
10641 Good Guys Dist. Center           Hayward, CA            150,352        4,936,467        9,391,315        14,327,782
10651 Fleetside Comrce Center          Benicia, CA            483,625        1,080,303        3,425,992         4,506,295
10661 Industrial Dr. Warehouse         Fremont, CA            171,712        1,822,496        3,965,321         5,787,817
10711 Redwood Shores                   Redwood City, CA     1,614,156        3,796,415        4,833,639         8,630,054
10741 Baycenter Business Park I        Hayward, CA            183,798        1,500,000        4,207,820         5,707,820
10821 732-834 Striker Ave              Sacramento, CA         276,734        1,024,488        2,968,054         3,992,543
10931 Northgate Commerce Ctr           Sacramento, CA         547,873        1,869,659        6,114,203         7,983,862
10941 Doolittle Business Center        San Leandro, CA        118,458          984,533        2,735,652         3,720,185
10951 Benicia Ind I (Stone)            Benicia, CA            641,141        4,777,806       15,000,875        19,778,681
10961 Benicia Ind I (Getty Ct)         Benicia, CA             33,250        1,134,212        3,435,885         4,570,096
11041 Concord North Comm Ctr           Concord, CA          1,556,278        2,344,326        6,497,858         8,842,184
11071 Benicia Ind II                   Benicia, CA          3,129,710        4,107,912       14,980,402        19,088,313
11161 Port of Oakland                  Oakland, CA             83,585        1,708,799        5,159,671         6,868,470
11281 Baycenter Business Park III      Hayward, CA          1,560,997        1,248,216        5,336,495         6,584,711
11291 Riverside Business Center        Sacramento, CA       1,424,884        1,471,099        1,197,507         2,668,606
11551 Seaport Distribution Center      W Sacramento, CA       556,626        1,180,994                -         1,180,994
11761 Huntwood Business Center         Hayward, CA             34,254        2,929,335        8,822,259        11,751,593
11771 Fremont Commerce Center          Fremont, CA            158,006        4,315,601       12,994,086        17,309,687
11881 Milimont R&D                     Fremont, CA                  -        1,806,606        5,419,919         7,226,524
11891 Kato R&D                         Fremont, CA                  -        2,002,504        6,007,610         8,010,115
12041 W. North Market                  Sacramento, CA          35,266        1,150,545        3,451,632         4,602,177
12051 Overland Court                   W Sacramento, CA        23,496        3,294,800        7,250,436        10,545,236
12091 Vintage Park Industrial          Foster City, CA        218,062       25,531,280       70,993,759        96,525,040
12381 Hayward Business Park            Hayward, CA          1,002,166        8,453,559       25,735,966        34,189,525
12421 Benicia Commerce Center II       Benicia, CA                  -        1,722,991                -         1,722,991
12491 Vasco Business Center            Livermore, CA          855,669        1,313,645           (6,607)        1,307,038
12571 Airway Business Park             Livermore, CA                -        3,875,096                -         3,875,096
12541 Skyway Landing -Land             San Carlos, CA              $0      $18,379,610               $0       $18,379,610
                                                          ---------------------------------------------------------------
                                       TOTAL              $72,208,152     $253,312,871     $782,520,961    $1,035,833,832
                                                          ===============================================================

      SILICON VALLEY
10001 Santa Clara Office Center I      Santa Clara, CA     $2,999,512         $806,700       $3,729,002        $4,535,702
10021 Santa Clara Office Center II     Santa Clara, CA      3,020,359          931,364        4,838,333         5,769,697
10031 Gateway Ofc. Phase I             San Jose, CA         4,604,797        1,574,966       12,732,599        14,307,566
10051 Santa Clara Office Center III    Santa Clara, CA      1,995,348          623,340        3,575,404         4,198,744
10081 Gateway Ofc. Phase II            San Jose, CA        15,698,128        3,829,146       31,844,532        35,673,678
10131 The Alameda                      San Jose, CA           972,225          966,236        5,001,398         5,967,633
10141 Creekside Phase I                San Jose, CA         4,046,490       10,965,419       11,985,579        22,950,999
10151 North First Ofc. Ctr.            San Jose, CA         2,836,871        6,973,869        8,446,206        15,420,075
10251 Denny's Restaurant               Santa Clara, CA          1,315          181,634          552,652           734,286
10321 Ryan Ranch Ofc. Ctr.             Monterey, CA         1,796,965        2,093,355        4,735,944         6,829,298
10541 Lockheed Bldg.                   Palo Alto, CA        1,126,913        1,735,789        7,391,270         9,127,059
10551 Xerox Campus                     Palo Alto, CA        5,281,728        9,145,484       34,642,139        43,787,623
10561 Foothill Research Ctr.           Palo Alto, CA        5,584,896        7,474,154       36,404,473        43,878,627
10671 2180 Sand Hill Road              Menlo Park, CA       1,074,015          753,570        2,702,713         3,456,283
10701 McCarthy                         Milpitas, CA           660,931          845,039        4,613,400         5,458,439
10851 Ryan Ranch Off - Ph II           Monterey, CA           457,048          565,580        2,469,051         3,034,631
11031 Ryan Ranch Office II Bldg D      Monterey, CA           571,155          420,000        2,731,690         3,151,690
11151 2290 North First Street          San Jose, CA           585,608        1,222,335        5,477,366         6,699,701
11311 Central Park Plaza               Santa Clara, CA      1,340,177        9,622,273       26,163,153        35,785,427
11521 Metro Plaza                      San Jose, CA           575,266       14,789,132       59,727,455        74,516,587
</TABLE>


<TABLE>
<CAPTION>

                                                                             
                                                               
                                                                                   CONSTRUCTION   DEPRECIABLE
                                                                  ACCUMULATED         AND/OR         LIVES
PROJECT                                  LOCATION                 DEPRECIATION     ACQUISITION      (YEARS)
-------                                  --------                 ------------     -----------      -------
<S>                                   <C>                        <C>              <C>             <C>
10621 Montgomery Ward                  Pleasant Hill, CA           881,986.53         1989          35-40
10631 Eden Landing Bus. Center         Hayward, CA                 516,668.86         1990           3-40
10641 Good Guys Dist. Center           Hayward, CA               1,592,498.40         1990           5-40
10651 Fleetside Comrce Center          Benicia, CA                 935,257.87         1990           6-40
10661 Industrial Dr. Warehouse         Fremont, CA                 600,009.36         1993           3-40
10711 Redwood Shores                   Redwood City, CA          1,159,504.16         1987           7-40
10741 Baycenter Business Park I        Hayward, CA                 498,238.92         1994           3-40
10821 732-834 Striker Ave              Sacramento, CA              342,970.38         1995           5-40
10931 Northgate Commerce Ctr           Sacramento, CA              620,983.78         1995          10-40
10941 Doolittle Business Center        San Leandro, CA             206,957.16         1996          12-40
10951 Benicia Ind I (Stone)            Benicia, CA               1,080,062.25         1996            40
10961 Benicia Ind I (Getty Ct)         Benicia, CA                 257,129.45         1996           2-40
11041 Concord North Comm Ctr           Concord, CA                 691,485.49         1995           3-40
11071 Benicia Ind II                   Benicia, CA               1,126,744.26         1996           4-40
11161 Port of Oakland                  Oakland, CA                 347,654.37         1996           3-40
11281 Baycenter Business Park III      Hayward, CA                 187,201.89         1996           5-40
11291 Riverside Business Center        Sacramento, CA              184,973.68         1996           5-40
11551 Seaport Distribution Center      W Sacramento, CA                  0.00         1997           5-40
11761 Huntwood Business Center         Hayward, CA                 299,360.28         1997           3-40
11771 Fremont Commerce Center          Fremont, CA                 436,561.98         1997           1-40
11881 Milimont R&D                     Fremont, CA                 146,789.50         1997            40
11891 Kato R&D                         Fremont, CA                 162,706.18         1997            40
12041 W. North Market                  Sacramento, CA               93,481.70         1997            40
12051 Overland Court                   W Sacramento, CA            196,366.04         1997            40
12091 Vintage Park Industrial          Foster City, CA           1,919,895.46         1997           5-40
12381 Hayward Business Park            Hayward, CA                 627,950.72         1998           3-40
12421 Benicia Commerce Center II       Benicia, CA                       0.00         1998           5-40
12491 Vasco Business Center            Livermore, CA                     0.00         1998           7-40
12571 Airway Business Park             Livermore, CA                     0.00         1998            40
12541 Skyway Landing -Land             San Carlos, CA                      $0         1998            40
                                                                 ------------
                                       TOTAL                      $61,372,180
                                                                 ============

      SILICON VALLEY
10001 Santa Clara Office Center I      Santa Clara, CA             $1,192,080         1977           3-40
10021 Santa Clara Office Center II     Santa Clara, CA              1,778,260         1980           2-40
10031 Gateway Ofc. Phase I             San Jose, CA                 4,849,826         1981           3-40
10051 Santa Clara Office Center III    Santa Clara, CA              1,330,720         1981           3-40
10081 Gateway Ofc. Phase II            San Jose, CA                11,446,399         1983           3-40
10131 The Alameda                      San Jose, CA                 1,649,615         1984           3-40
10141 Creekside Phase I                San Jose, CA                 3,644,208         1985           5-40
10151 North First Ofc. Ctr.            San Jose, CA                 2,638,279         1985           3-40
10251 Denny's Restaurant               Santa Clara, CA                149,528         1988          34-40
10321 Ryan Ranch Ofc. Ctr.             Monterey, CA                 1,422,453         1992           3-40
10541 Lockheed Bldg.                   Palo Alto, CA                2,061,654         1993           8-40
10551 Xerox Campus                     Palo Alto, CA                9,158,558         1993           8-40
10561 Foothill Research Ctr.           Palo Alto, CA               10,619,284         1993           6-40
10671 2180 Sand Hill Road              Menlo Park, CA                 947,074         1973           3-40
10701 McCarthy                         Milpitas, CA                   564,718         1994           1-40
10851 Ryan Ranch Off - Ph II           Monterey, CA                   413,685         1995           3-40
11031 Ryan Ranch Office II Bldg D      Monterey, CA                   283,181         1996           5-40
11151 2290 North First Street          San Jose, CA                   390,270         1996           3-40
11311 Central Park Plaza               Santa Clara, CA              1,400,905         1996           2-40
11521 Metro Plaza                      San Jose, CA                 2,749,512         1997           3-40
</TABLE>


                                       46


<PAGE>   47
                            SPIEKER PROPERTIES, L.P.
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AS OF DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                                                                                          
                                                                                           INITIAL COST            
                                                                                  --------------------------------        
                                                                 ENCUMBRANCES          LAND AND                           
            PROJECT                        LOCATION             AND LIENS (1)     LEASEHOLD INTEREST     BUILDINGS        
------------------------------------------------------------------------------------------------------------------        
<S>                                    <C>                     <C>                <C>                  <C>                
11531 1740 Technology                  San Jose, CA           20,670,230              7,918,598         31,710,229        
11861 100 Moffett                      Mountain View, CA                              1,140,758          3,119,916        
12101 Ryan Ranch Office Lot 2          Monterey, CA                                   1,486,666          2,970,709        
12191 Concourse                        San Jose, CA                                  51,969,773        120,464,859        
12391 Skyprt Plaza                     San Jose, CA                                  31,519,209         25,368,821        
10011 Stender Way II                   Santa Clara, CA                                  118,274            840,169        
10041 Scott Blvd.                      Santa Clara, CA                                  128,623            583,455        
10101 Stender Way I                    Santa Clara, CA                                   98,915            536,920        
10111 Applied Materials I              Santa Clara, CA                                  381,686          1,625,507        
10121 Sunnyvale Business Center        Santa Clara, CA                                  257,035            811,284        
10161 Cupertino Business Center        Cupertino, CA                                  3,876,840          3,970,597        
10191 North American Van Lines         San Jose, CA                                   2,191,699          4,999,710        
10241 Applied Materials II             Santa Clara, CA         1,402,048                651,943          3,392,605        
10271 Aspect Building                  San Jose, CA              129,840              2,223,805          2,265,103        
10301 Cadillac Court                   Milpitas, CA               98,592                959,042          1,493,087        
10331 Ryan Ranch Industrial            Monterey, CA                                     422,500            969,386        
10371 Fremont Bayside                  Fremont, CA             6,435,831              1,245,617          2,704,137        
10421 Patrick Henry Drive              San Jose, CA                6,329                933,058          2,702,038        
10431 COG Warehouse                    Milpitas, CA              471,379              2,616,039          1,907,937        
10451 Okidata Distribution Center      Milpitas, CA              331,613              1,854,892          1,750,086        
10461 Pro Log                          Monterey, CA                                     780,000          1,148,054        
10571 Montague Industr. Center         Palo Alto, CA                                  1,482,000          5,131,899        
10761 2905-2909 Stender Way            Santa Clara, CA                                  385,992          1,174,719        
10781 Meier - Central South            Santa Clara, CA                                2,571,112          7,177,524        
10791 Meier - Mountain View            Santa Clara, CA         3,222,019              5,265,351         14,236,164        
10801 Meier - Central North            Santa Clara, CA                                1,753,361          4,740,570        
10811 Meier - Sunnyvale                Santa Clara, CA                                  352,776            953,800        
10871 Walsh & Lafayette Ind Park       Santa Clara, CA                                3,359,291          7,803,602        
10881 Ridder Park                      San Jose, CA              136,215              1,794,057          4,443,925        
10901 Ryan Ranch - Lot 14B             Monterey, CA                                     311,835            746,295        
10911 Cadillac Court II                Milpitas, CA              167,227                845,833          1,166,712        
11231 Charcot Business Center          San Jose, CA                                   2,988,923          9,091,293        
11241 Airport Service Center           San Jose, CA                                     668,283          2,013,558        
11251 Dixon Landing North              Milpitas, CA                                   6,254,151          8,068,464        
11261 Kifer Road Industrial Park       Sunnyvale, CA                                  3,530,775         10,731,346        
11361 Ravendale at Central             Mountain View, CA                              2,018,673          6,064,095        
11871 Oak Creek                        Milpitas, CA                5,702              2,040,639          6,095,607        
11911 SoCalifornia Circle II           Milpitas, CA                                   2,555,551          7,685,101        
12011 Borregas Avenue                  Sunnyvale, CA                                    780,376          2,341,128        
                                                            ------------------------------------------------------
                                       TOTAL                 $59,190,661           $219,593,139       $559,711,108        
                                                            ======================================================

      SOUTHERN CALIFORNIA
10981 La Jolla Centre II               San Diego, CA                                 $3,252,653        $13,070,059        
10991 One Pacific Heights              San Diego, CA                                  3,089,433          8,365,526        
11011 Pacific Point                    San Diego, CA                                  3,111,202          9,333,605        
11061 Inwood Business Park             Irvine, CA                                     2,232,769          8,956,722        
11141 Carmel Valley Centre             San Diego, CA                                  2,792,159         11,243,482        
11171 Dove Street                      Newport Beach, CA                              1,569,792          6,283,219        
11221 Fairchild Corporate Center       Irvine, CA                                     2,011,443          8,054,128        
11271 One Pacific Plaza                Huntington Beach, CA                           2,020,971          8,088,154        
11321 Corona Corporate Center          Corona, CA                                       743,147          2,986,626        
</TABLE>


<TABLE>
<CAPTION>
                                                                             GROSS AMOUNT AT CLOSE OF PERIOD  
                                                             -------------------------------------------------
                                                              ADDITIONS          LAND          BUILDINGS AND  
                                                                 AND         LAND IMP. AND        BUILDING    
            PROJECT                        LOCATION          IMPROVEMENTS    LEASEHOLD INT.     IMPROVEMENTS  
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>                  <C>              <C>               <C>            
11531 1740 Technology                  San Jose, CA           1,833,408         7,918,598         31,807,104  
11861 100 Moffett                      Mountain View, CA        393,630         1,140,758          3,084,373  
12101 Ryan Ranch Office Lot 2          Monterey, CA             165,921         1,486,666                  -  
12191 Concourse                        San Jose, CA          26,345,244        51,969,773        120,456,272  
12391 Skyprt Plaza                     San Jose, CA           2,344,235        31,519,209         25,368,821  
10011 Stender Way II                   Santa Clara, CA        1,169,652           410,687          1,717,408  
10041 Scott Blvd.                      Santa Clara, CA        1,831,378           554,191          1,989,265  
10101 Stender Way I                    Santa Clara, CA          212,343           152,000            696,177  
10111 Applied Materials I              Santa Clara, CA            3,690           381,686          1,629,197  
10121 Sunnyvale Business Center        Santa Clara, CA          401,585           241,207          1,221,295  
10161 Cupertino Business Center        Cupertino, CA            997,898         4,082,078          4,648,256  
10191 North American Van Lines         San Jose, CA              49,412         2,199,552          5,041,269  
10241 Applied Materials II             Santa Clara, CA        3,040,850         1,270,250          5,815,148  
10271 Aspect Building                  San Jose, CA             281,512         2,229,772          2,540,648  
10301 Cadillac Court                   Milpitas, CA             784,661         1,131,026          2,093,778  
10331 Ryan Ranch Industrial            Monterey, CA             552,521           557,763          1,386,644  
10371 Fremont Bayside                  Fremont, CA              289,429         1,247,069          2,992,114  
10421 Patrick Henry Drive              San Jose, CA           2,277,020           993,156          4,918,960  
10431 COG Warehouse                    Milpitas, CA           1,086,032         3,093,192          2,516,816  
10451 Okidata Distribution Center      Milpitas, CA             358,753         2,210,130          1,753,601  
10461 Pro Log                          Monterey, CA             342,838         1,121,135          1,149,758  
10571 Montague Industr. Center         Palo Alto, CA          6,239,020         2,820,461          9,809,032  
10761 2905-2909 Stender Way            Santa Clara, CA          252,357           385,992          1,391,253  
10781 Meier - Central South            Santa Clara, CA          367,599         2,571,112          7,478,323  
10791 Meier - Mountain View            Santa Clara, CA          113,396         5,265,351         14,349,560  
10801 Meier - Central North            Santa Clara, CA           50,426         1,753,361          4,790,996  
10811 Meier - Sunnyvale                Santa Clara, CA                -           352,776            953,800  
10871 Walsh & Lafayette Ind Park       Santa Clara, CA        1,382,535         3,359,291          9,186,137  
10881 Ridder Park                      San Jose, CA           2,012,184         1,794,057          6,456,109  
10901 Ryan Ranch - Lot 14B             Monterey, CA             260,181           311,835          1,006,476  
10911 Cadillac Court II                Milpitas, CA             667,138           845,833          1,833,850  
11231 Charcot Business Center          San Jose, CA             246,444         3,069,126          9,257,533  
11241 Airport Service Center           San Jose, CA              63,995           692,476          2,033,558  
11251 Dixon Landing North              Milpitas, CA           2,362,984         6,314,112            817,602  
11261 Kifer Road Industrial Park       Sunnyvale, CA            106,852         3,552,325         10,816,647  
11361 Ravendale at Central             Mountain View, CA         43,877         2,031,387          6,095,258  
11871 Oak Creek                        Milpitas, CA                   -         2,040,639          6,095,607  
11911 SoCalifornia Circle II           Milpitas, CA              14,796         2,555,551          7,670,997  
12011 Borregas Avenue                  Sunnyvale, CA            115,946           780,376          2,359,531  
                                                            ------------------------------------------------
                                       TOTAL                114,291,488      $231,925,346       $594,993,534  
                                                            ================================================

      SOUTHERN CALIFORNIA
10981 La Jolla Centre II               San Diego, CA           $634,473        $3,268,743        $13,442,448  
10991 One Pacific Heights              San Diego, CA            129,655         3,101,153          8,469,310  
11011 Pacific Point                    San Diego, CA            337,503         3,111,202          9,659,051  
11061 Inwood Business Park             Irvine, CA             1,013,676         2,251,304          9,195,371  
11141 Carmel Valley Centre             San Diego, CA            603,518         2,796,624         11,487,130  
11171 Dove Street                      Newport Beach, CA        347,914         1,569,792          6,327,675  
11221 Fairchild Corporate Center       Irvine, CA               787,535         2,028,596          8,408,586  
11271 One Pacific Plaza                Huntington Beach, CA     901,540         2,020,971          8,174,026  
11321 Corona Corporate Center          Corona, CA                14,054           743,147          2,998,607  
</TABLE>


<TABLE>
<CAPTION>


                                                                                            CONSTRUCTION     DEPRECIABLE 
                                                                            ACCUMULATED        AND/OR           LIVES    
            PROJECT                        LOCATION                TOTAL    DEPRECIATION     ACQUISITION       (YEARS)   
------------------------------------------------------------------------------------------------------------------------ 
<S>                                    <C>                   <C>            <C>            <C>               <C>         
11531 1740 Technology                  San Jose, CA              39,725,703      1,474,409       1997              3-40
11861 100 Moffett                      Mountain View, CA          4,225,131         83,535       1997               40
12101 Ryan Ranch Office Lot 2          Monterey, CA               1,486,666              -       1997               40
12191 Concourse                        San Jose, CA             172,426,046      3,049,905       1998              2-40
12391 Skyprt Plaza                     San Jose, CA              56,888,030        581,369       1998               40
10011 Stender Way II                   Santa Clara, CA            2,128,095        617,253       1978              4-40
10041 Scott Blvd.                      Santa Clara, CA            2,543,456        664,248       1976              4-40
10101 Stender Way I                    Santa Clara, CA              848,177        306,973       1978             20-40
10111 Applied Materials I              Santa Clara, CA            2,010,883        969,418       1975             20-40
10121 Sunnyvale Business Center        Santa Clara, CA            1,462,502        383,981       1987              4-40
10161 Cupertino Business Center        Cupertino, CA              8,730,335      1,421,275       1985             32-40
10191 North American Van Lines         San Jose, CA               7,240,821      1,328,424       1988             10-40
10241 Applied Materials II             Santa Clara, CA            7,085,398      2,860,489       1979             16-40
10271 Aspect Building                  San Jose, CA               4,770,420        686,420       1989              6-40
10301 Cadillac Court                   Milpitas, CA               3,224,804        869,323       1991              5-40
10331 Ryan Ranch Industrial            Monterey, CA               1,944,407        485,256       1991              5-40
10371 Fremont Bayside                  Fremont, CA                4,239,183        753,751       1990              3-40
10421 Patrick Henry Drive              San Jose, CA               5,912,116      1,626,568       1991             12-40
10431 COG Warehouse                    Milpitas, CA               5,610,008        891,199       1992             11-40
10451 Okidata Distribution Center      Milpitas, CA               3,963,731        343,490       1993              4-40
10461 Pro Log                          Monterey, CA               2,270,893        229,010       1993             12-40
10571 Montague Industr. Center         Palo Alto, CA             12,629,493      4,436,980       1993              5-40
10761 2905-2909 Stender Way            Santa Clara, CA            1,777,245        230,640       1995              6-40
10781 Meier - Central South            Santa Clara, CA           10,049,435        777,310       1995              5-40
10791 Meier - Mountain View            Santa Clara, CA           19,614,910      1,389,235       1995              5-40
10801 Meier - Central North            Santa Clara, CA            6,544,357        460,725       1995               40
10811 Meier - Sunnyvale                Santa Clara, CA            1,306,576         91,406       1995               40
10871 Walsh & Lafayette Ind Park       Santa Clara, CA           12,545,428      1,055,825       1995              5-40
10881 Ridder Park                      San Jose, CA               8,250,165        554,547       1995             10-40
10901 Ryan Ranch - Lot 14B             Monterey, CA               1,318,311        136,479       1995              4-40
10911 Cadillac Court II                Milpitas, CA               2,679,683        333,288       1995              7-40
11231 Charcot Business Center          San Jose, CA              12,326,659        525,153       1996              5-40
11241 Airport Service Center           San Jose, CA               2,726,034        115,655       1996              5-40
11251 Dixon Landing North              Milpitas, CA               7,131,714        121,206       1996              5-40
11261 Kifer Road Industrial Park       Sunnyvale, CA             14,368,973        586,119       1996              4-40
11361 Ravendale at Central             Mountain View, CA          8,126,645        304,620       1996              5-40
11871 Oak Creek                        Milpitas, CA               8,136,245        165,851       1997               40
11911 SoCalifornia Circle II           Milpitas, CA              10,226,548        223,738       1997               40
12011 Borregas Avenue                  Sunnyvale, CA              3,139,907         73,913       1997             12-40
                                                            ------------------------------
                                       TOTAL                   $826,918,880    $89,899,194
                                                            ==============================

      SOUTHERN CALIFORNIA
10981 La Jolla Centre II               San Diego, CA            $16,711,190     $1,148,281       1995              4-40
10991 One Pacific Heights              San Diego, CA             11,570,463        668,502       1995              4-40
11011 Pacific Point                    San Diego, CA             12,770,253        918,702       1995              4-40
11061 Inwood Business Park             Irvine, CA                11,446,676        767,509       1995              3-40
11141 Carmel Valley Centre             San Diego, CA             14,283,754        842,152       1996              1-40
11171 Dove Street                      Newport Beach, CA          7,897,466        414,138       1996              2-40
11221 Fairchild Corporate Center       Irvine, CA                10,437,183        624,687       1996              3-40
11271 One Pacific Plaza                Huntington Beach, CA      10,194,997        452,782       1996              3-40
11321 Corona Corporate Center          Corona, CA                 3,741,754        156,653       1996              3-40
</TABLE>


                                       47


<PAGE>   48
                            SPIEKER PROPERTIES, L.P.
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AS OF DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                                                                                        
                                                                                           INITIAL COST         
                                                                                  --------------------------------      
                                                                 ENCUMBRANCES          LAND AND                         
            PROJECT                        LOCATION             AND LIENS (1)     LEASEHOLD INTEREST     BUILDINGS      
------------------------------------------------------------------------------------------------------------------      
<S>                                    <C>                     <C>                <C>                  <C>              
11341 One Lakeshore Centre             Ontario, CA                65,395              3,899,948         15,321,532      
11351 Pacific View Plaza               San Diego, CA                                  1,404,336          3,808,865      
11381 La Place Court                   Carlsbad, CA                                   1,467,057          5,878,445      
11391 Carmel View Office Plaza         San Diego, CA                                  1,426,649          5,706,594      
11401 The City                         Orange, CA                                     5,586,737         22,370,476      
11431 Centerpark Plaza Two             San Diego, CA                                    882,852          3,536,241      
11451 Camino West                      Carlsbad, CA                                     980,334          3,921,333      
11481 Brea Park Centre                 Brea, CA                                       3,525,337          9,558,103      
11501 The City                         Orange County, CA                              1,309,617          5,300,831      
11571 Pasadena Financial               Pasadena, CA                                   5,353,401         21,417,296      
11581 Century Square                   Pasadena, CA                                   8,318,792         33,284,001      
11591 Brea Corporate Plaza             Brea, CA                                       2,958,418          8,000,717      
11641 McKesson Building                Pasadena, CA                                   5,159,033         13,949,317      
11671 Arboretum Courtyard              Santa Monica, CA                               5,718,678         12,764,799      
11691 Brea Place                       Brea, CA                                       5,254,525         14,206,679      
11711 Sepulveda Center                 Los Angeles, CA                                5,046,469         20,186,465      
11721 Brea Corporate Place             Brea, CA                                       2,388,158         41,631,215      
11781 790 E Colorado Ave               Pasadena, CA                                   3,868,533         15,474,257      
11791 Tower Seventeen                  Irvine, CA              2,488,732              4,006,406         36,058,314      
11811 Noble Corporate Plaza            San Diego, CA                                  4,511,165         12,211,077      
11821 Carlsbad Ranch                   Carlsbad, CA                                   3,873,656          6,463,269      
11921 East Hills Office Park           Anaheim, CA                                    2,166,615          5,935,400      
11931 Stadium Towers Plaza             Anaheim, CA                                    3,910,743         35,358,792      
11971 Centerpoint Irvine I             Irvine, CA                                     1,292,562          3,494,706      
12061 Park Plaza                       San Diego, CA                                  2,550,500          6,873,088      
12071 La Jolla Centre I                La Jolla, CA                                   2,958,803         26,629,223      
12131 Stadium Towers Land              Anaheim, CA                                    3,652,063            362,611      
12141 East Hills Land                  Anaheim, CA                                    1,720,330                  -      
12181 11999 San Vicente                Los Angeles, CA                                3,391,136          9,168,666      
12251 City Tower                       Orange, CA                                     6,617,782         59,562,582      
12261 City Plaza                       Orange, CA                                     5,526,355         22,105,420      
12271 Marina Business Center Bldg 1    Marina Del Rey, CA                             7,731,927         20,904,840      
12281 Marina Business Center Bldg 2-4  Marina Del Rey, CA                                     -                  -      
12291 Cerritos Towne Center I-V        Cerritos, CA                                           -         54,197,825      
12331 2600 Michelson                   Irvine, CA                                     5,800,810         52,282,800      
12341 18581 Teller                     Irvine, CA                                     1,764,831          4,771,580      
12351 Santa Monica Business Park A-L   Santa Monica, CA                                       -         94,067,662      
12361 Santa Monica Business Park M-U   Santa Monica, CA                                       -                  -      
12371 Santa Monica Business Pard SMA   Santa Monica, CA        8,711,647              4,710,231         12,735,067      
12461 Allegiance Center                Ontario, CA                                    1,402,128          3,790,939      
12501 Ontario Corporate Center         Ontario, CA                                    2,097,546          8,390,436      
12521 Parkshore Plaza                  Folsom, CA                                     1,578,273          8,932,396      
12551 Kline Center II                  Ontario, CA                                    1,328,829          3,579,153      
12561 Parkshore Plaza Phase II         Folsom, CA                                     1,634,925            601,081      
10071 Bakersfield Warehouse            Bakersfield, CA                                  519,900          1,623,282      
11001 Carlsbad Airport Plaza           Carlsbad, CA                                   1,532,406          4,609,834      
11191 Stadium Plaza                    Anaheim, CA                                    9,134,965         29,269,756      
11211 Sorrento Vista                   San Diego, CA                                  2,745,889          6,100,721      
11371 Centerpark Plaza One             San Diego, CA                                  1,367,014          5,474,682      
11421 Centerpark Plaza Two             San Diego, CA                                  1,340,092          4,119,510      
11491 Eastgate Technology Park         La Jolla, CA                                   5,870,873         16,771,052      
11941 Pacific Corporate Park           San Diego, CA                                  2,757,590          8,601,592      
</TABLE>


<TABLE>
<CAPTION>
                                                                                GROSS AMOUNT AT CLOSE OF PERIOD  
                                                                -------------------------------------------------
                                                                 ADDITIONS          LAND          BUILDINGS AND  
                                                                    AND         LAND IMP. AND        BUILDING    
            PROJECT                        LOCATION             IMPROVEMENTS    LEASEHOLD INT.     IMPROVEMENTS  
-------------------------------------------------------------- --------------------------------------------------
<S>                                    <C>                     <C>              <C>               <C>            
11341 One Lakeshore Centre             Ontario, CA                 521,032         3,899,948         15,758,209  
11351 Pacific View Plaza               San Diego, CA               335,135         1,425,500          4,110,344  
11381 La Place Court                   Carlsbad, CA                470,820         1,506,454          6,127,515  
11391 Carmel View Office Plaza         San Diego, CA               169,475         1,426,649          5,860,361  
11401 The City                         Orange, CA                3,971,304         5,586,737         24,681,037  
11431 Centerpark Plaza Two             San Diego, CA                77,852           882,852          3,584,887  
11451 Camino West                      Carlsbad, CA                 65,115           980,334          3,967,178  
11481 Brea Park Centre                 Brea, CA                  1,036,995         3,525,337          9,932,885  
11501 The City                         Orange County, CA         5,614,838         1,345,692         10,862,100  
11571 Pasadena Financial               Pasadena, CA                 32,403         5,353,401         21,450,670  
11581 Century Square                   Pasadena, CA                 49,114         8,318,792         33,286,002  
11591 Brea Corporate Plaza             Brea, CA                    909,111         3,011,503          8,164,213  
11641 McKesson Building                Pasadena, CA                121,852         5,159,033         13,949,317  
11671 Arboretum Courtyard              Santa Monica, CA                  -         5,718,678                  -  
11691 Brea Place                       Brea, CA                    428,302         5,254,525         14,326,082  
11711 Sepulveda Center                 Los Angeles, CA             755,807         5,046,469         20,216,152  
11721 Brea Corporate Place             Brea, CA                    298,388         2,388,158         41,108,760  
11781 790 E Colorado Ave               Pasadena, CA                131,637         3,868,533         15,474,257  
11791 Tower Seventeen                  Irvine, CA                  502,934         4,006,406         36,197,281  
11811 Noble Corporate Plaza            San Diego, CA               104,550         4,511,165         12,281,957  
11821 Carlsbad Ranch                   Carlsbad, CA                 54,567         3,873,656                  -  
11921 East Hills Office Park           Anaheim, CA                  12,237         2,166,615          5,870,121  
11931 Stadium Towers Plaza             Anaheim, CA                 840,813         3,910,743         35,196,106  
11971 Centerpoint Irvine I             Irvine, CA                  109,364         1,292,562          3,494,706  
12061 Park Plaza                       San Diego, CA               324,805         2,550,500          6,960,289  
12071 La Jolla Centre I                La Jolla, CA                459,849         2,958,803         26,995,550  
12131 Stadium Towers Land              Anaheim, CA                       -         3,652,063              1,025  
12141 East Hills Land                  Anaheim, CA                       -         1,720,330                  -  
12181 11999 San Vicente                Los Angeles, CA             346,825         3,391,136          9,168,666  
12251 City Tower                       Orange, CA                  827,520         6,617,782         59,765,360  
12261 City Plaza                       Orange, CA                4,482,747         5,526,355         22,421,413  
12271 Marina Business Center Bldg 1    Marina Del Rey, CA           91,889         7,731,927         20,904,840  
12281 Marina Business Center Bldg 2-4  Marina Del Rey, CA          619,001                 -                  -  
12291 Cerritos Towne Center I-V        Cerritos, CA              5,360,482                 -         54,201,521  
12331 2600 Michelson                   Irvine, CA                  445,032         5,800,810         52,282,800  
12341 18581 Teller                     Irvine, CA                  255,949         1,764,831          4,771,580  
12351 Santa Monica Business Park A-L   Santa Monica, CA            378,593                 -         94,067,662  
12361 Santa Monica Business Park M-U   Santa Monica, CA            293,751                 -                  -  
12371 Santa Monica Business Pard SMA   Santa Monica, CA            495,727         4,710,231         12,738,317  
12461 Allegiance Center                Ontario, CA                 329,650         1,402,128          3,790,939  
12501 Ontario Corporate Center         Ontario, CA                  38,181         2,097,546          8,390,436  
12521 Parkshore Plaza                  Folsom, CA                1,373,418         1,578,273                 21  
12551 Kline Center II                  Ontario, CA                   6,165         1,328,829          3,579,153  
12561 Parkshore Plaza Phase II         Folsom, CA                        -         1,634,925                  -  
10071 Bakersfield Warehouse            Bakersfield, CA           2,004,571         1,090,739          3,057,014  
11001 Carlsbad Airport Plaza           Carlsbad, CA                128,728         1,532,406          4,732,138  
11191 Stadium Plaza                    Anaheim, CA               2,104,186         9,134,965         31,134,952  
11211 Sorrento Vista                   San Diego, CA               823,665         2,745,889          6,924,386  
11371 Centerpark Plaza One             San Diego, CA               338,326         1,367,014          5,801,393  
11421 Centerpark Plaza Two             San Diego, CA               144,528         1,340,092          4,264,038  
11491 Eastgate Technology Park         La Jolla, CA              1,454,492         5,870,873                  -  
11941 Pacific Corporate Park           San Diego, CA               169,692         2,818,139          8,707,050  
</TABLE>


<TABLE>
<CAPTION>


                                                                                             CONSTRUCTION     DEPRECIABLE 
                                                                             ACCUMULATED        AND/OR           LIVES    
            PROJECT                        LOCATION                 TOTAL    DEPRECIATION     ACQUISITION       (YEARS)   
------------------------------------------------------------------------------------------------------------------------- 
<S>                                    <C>                    <C>            <C>            <C>               <C>         
11341 One Lakeshore Centre             Ontario, CA                19,658,157        875,163       1996              3-40
11351 Pacific View Plaza               San Diego, CA               5,535,843        258,668       1996              2-40
11381 La Place Court                   Carlsbad, CA                7,633,969        353,160       1997              4-30
11391 Carmel View Office Plaza         San Diego, CA               7,287,009        291,085       1997              3-40
11401 The City                         Orange, CA                 30,267,774      1,750,085       1996              5-40
11431 Centerpark Plaza Two             San Diego, CA               4,467,739        180,147       1997              3-40
11451 Camino West                      Carlsbad, CA                4,947,511        199,527       1997              3-40
11481 Brea Park Centre                 Brea, CA                   13,458,222        571,266       1997              3-40
11501 The City                         Orange County, CA          12,207,791        556,356       1996             10-40
11571 Pasadena Financial               Pasadena, CA               26,804,071        937,922       1997              5-40
11581 Century Square                   Pasadena, CA               41,604,795      1,456,376       1997             10-40
11591 Brea Corporate Plaza             Brea, CA                   11,175,716        358,683       1997              3-40
11641 McKesson Building                Pasadena, CA               19,108,350        552,161       1997              1-40
11671 Arboretum Courtyard              Santa Monica, CA            5,718,678              -       1997               40
11691 Brea Place                       Brea, CA                   19,580,607        516,098       1997              5-40
11711 Sepulveda Center                 Los Angeles, CA            25,262,621        680,828       1997              3-40
11721 Brea Corporate Place             Brea, CA                   43,496,918      1,464,560       1997             12-40
11781 790 E Colorado Ave               Pasadena, CA               19,342,790        515,760       1997               40
11791 Tower Seventeen                  Irvine, CA                 40,203,687      1,136,224       1997              3-40
11811 Noble Corporate Plaza            San Diego, CA              16,793,122        418,285       1997              3-40
11821 Carlsbad Ranch                   Carlsbad, CA                3,873,656              -       1997               40
11921 East Hills Office Park           Anaheim, CA                 8,036,735        161,607       1997              5-10
11931 Stadium Towers Plaza             Anaheim, CA                39,106,849        955,035       1997              3-40
11971 Centerpoint Irvine I             Irvine, CA                  4,787,268         95,390       1997              5-40
12061 Park Plaza                       San Diego, CA               9,510,788        210,069       1997              3-40
12071 La Jolla Centre I                La Jolla, CA               29,954,352        892,925       1997               40
12131 Stadium Towers Land              Anaheim, CA                 3,653,088              -       1997               40
12141 East Hills Land                  Anaheim, CA                 1,720,330              -       1997               40
12181 11999 San Vicente                Los Angeles, CA            12,559,802        248,294       1997              2-40
12251 City Tower                       Orange, CA                 66,383,142      1,391,787       1998              2-40
12261 City Plaza                       Orange, CA                 27,947,769        532,282       1998              3-40
12271 Marina Business Center Bldg 1    Marina Del Rey, CA         28,636,767        498,037       1998              1-40
12281 Marina Business Center Bldg 2-4  Marina Del Rey, CA                  -              -       1998              5-40
12291 Cerritos Towne Center I-V        Cerritos, CA               54,201,521        716,247       1998              5-40
12331 2600 Michelson                   Irvine, CA                 58,083,610        977,162       1998              3-40
12341 18581 Teller                     Irvine, CA                  6,536,411         89,467       1998               40
12351 Santa Monica Business Park A-L   Santa Monica, CA           94,067,662      2,136,331       1998              4-40
12361 Santa Monica Business Park M-U   Santa Monica, CA                    -              -       1998              5-9
12371 Santa Monica Business Pard SMA   Santa Monica, CA           17,448,547        286,123       1998              3-40
12461 Allegiance Center                Ontario, CA                 5,193,067         71,080       1998              2-40
12501 Ontario Corporate Center         Ontario, CA                10,487,982        174,801       1998              4-40
12521 Parkshore Plaza                  Folsom, CA                  1,578,295              -       1998              4-40
12551 Kline Center II                  Ontario, CA                 4,907,982         22,370       1998               40
12561 Parkshore Plaza Phase II         Folsom, CA                  1,634,925              -       1998               40
10071 Bakersfield Warehouse            Bakersfield, CA             4,147,753      1,137,920       1982             20-40
11001 Carlsbad Airport Plaza           Carlsbad, CA                6,264,544        420,273       1995              5-40
11191 Stadium Plaza                    Anaheim, CA                40,269,918      1,912,092       1996              3-40
11211 Sorrento Vista                   San Diego, CA               9,670,275        309,703       1996              3-40
11371 Centerpark Plaza One             San Diego, CA               7,168,407        321,352       1997              3-40
11421 Centerpark Plaza Two             San Diego, CA               5,604,131        256,714       1997              3-40
11491 Eastgate Technology Park         La Jolla, CA                5,870,873              -       1997              7-40
11941 Pacific Corporate Park           San Diego, CA              11,525,189        291,354       1997              2-40
</TABLE>


                                       48


<PAGE>   49
                            SPIEKER PROPERTIES, L.P.
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AS OF DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                                                                                         
                                                                                            INITIAL COST           
                                                                                  --------------------------------       
                                                                 ENCUMBRANCES          LAND AND                          
            PROJECT                        LOCATION             AND LIENS (1)     LEASEHOLD INTEREST     BUILDINGS       
------------------------------------------------------------------------------------------------------------------       
<S>                                    <C>                     <C>                <C>                  <C>               
11951 Sorrento Tech I, II & III        San Diego, CA                                  2,686,323          7,270,872       
11961 Westridge I                      San Diego, CA                                  1,712,464          4,630,094       
12431 SoCalifornia Federal Land        Orange, CA                                       130,102                  -       
12451 City South Land                  Orange, CA                                     1,117,832              1,750       
12511 Carlsbad Centerpointe-Land       Carlsbad, CA                                   4,776,886            672,211       
                                                            ------------------------------------------------------
                                       TOTAL                 $11,265,774           $195,292,393       $910,320,972       
                                                            ======================================================

      PACIFIC NORTHWEST
20021 Federal Way Office               Fed Way, WA                                     $297,202           $765,990       
20041 Bellevue Gtwy I                  Bellevue, WA                                   2,681,773          6,059,838       
20051 Bellevue Gateway II              Bellevue, WA                                   1,201,588          4,859,552       
20061 Main Street Office               Bellevue, WA               12,375              1,917,015          1,385,821       
20181 North Creek Parkway Centre       Bothell, WA                                    6,104,971         16,506,048       
20211 Bellefield Office Park           Bellevue, WA           12,410,003              6,573,539         29,775,354       
20241 10700 Building                   Bellevue, WA                8,128                 24,384          4,668,923       
20281 ABAM Building                    Federal Way, WA                                1,332,001          3,601,961       
20311 Washington Park I & II           Federal Way, WA                                2,116,789          4,033,560       
20341 Southgate Office 
       Plaza I, II & III               Renton, WA                  9,382              4,972,280         26,037,740       
20351 Plaza Center                     Bellevue, WA               54,504              8,118,890         72,519,863       
20371 Gateway 405                      Bellevue, WA                                   1,328,676          3,590,766       
40001 Key Financial Tower              Boise, ID                                        236,500          2,864,931       
30091 5550 Macadam Office              Portland, OR                                     764,081          3,646,922       
30111 River Forum                      Portland, OR                                   2,462,767         16,637,177       
30121 Kruse Way                        Portland, OR                    -              2,785,451          7,911,320       
30131 4004 S.W. Kruse Way Place        Lake Oswego, OR                 -                981,486          4,012,624       
30171 4949 Meadows Building            Lake Oswego, OR           208,998              2,661,561         11,027,806       
30191 Riverside Centre                 Portland, OR                                           -          9,291,612       
30241 One Pacific Square               Portland, OR               26,721              3,612,427         32,258,089       
30261 Kruseway Plaza I & II            Lake Oswego, OR                 -              4,140,680         11,195,672       
30271 Kruse Woods                      Lake Oswego, OR            15,286             29,282,892         64,599,227       
30281 4800 Meadows                     Lake Oswego, OR           104,785              1,766,115          7,953,618       
30301 Benjamin Franklin Plaza          Portland, OR                                   5,009,308         45,084,342       
20001 West Valley Business Ctr         Kent, WA                   47,625                681,200          2,124,967       
20011 Cascade Comrce. Park             Kent, WA                   36,443              2,430,989          5,005,502       
20031 Valley Freeway Bus. Center       Kent, WA                                       1,061,293          2,243,650       
20071 Woodinville Corp. Center I       Woodinville, WA                                1,321,071          3,712,131       
20081 Woodinville Corp. Center II      Woodinville, WA                                1,851,708          6,391,154       
20111 Georgetown Center                Seattle, WA                                    4,274,197          4,165,405       
20121 City Commerce Park               Seattle, WA                                    1,855,377          2,548,461       
20151 Millcreek Distribution Ctr       Kent, WA                        -              2,541,162          7,738,028       
20161 Sea-Tac Industrial Park          SeaTac, WA                                     1,953,528          5,538,926       
20171 Valley Industrial Park           Kent, WA                   23,961              6,765,505         17,221,447       
20221 Woodinville Corp Ctr             Woodinville, WA                                2,588,694          5,996,128       
20231 Everett Industrial Center        Everett, WA                     -              1,863,532          5,585,864       
20251 Everett 526                      Everett, WA                                    1,087,615          3,284,524       
20261 Southcenter West Business Park   Tukwila, WA                                                       6,451,183       
20271 Kirkland 118 Commerce Ctr        Kirkland, WA                                   1,195,205          2,827,215       
20321 Redmond Heights Tech Center      Redmond, WA                32,760              3,136,545          9,256,994       
40011 Cole Rd. Warehouse               Boise, ID                 290,220                103,617            416,506       
30001 Park 217 I                       Portland, OR                                   1,359,958          2,346,881       
30011 Park 217 Phase II                Portland, OR                                     490,845          1,762,678       
30021 Park 217 Phase III               Portland, OR                                     101,555            601,310       
</TABLE>



<TABLE>
<CAPTION>
                                                                               GROSS AMOUNT AT CLOSE OF PERIOD  
                                                               -------------------------------------------------
                                                                ADDITIONS          LAND          BUILDINGS AND  
                                                                   AND         LAND IMP. AND        BUILDING    
            PROJECT                        LOCATION            IMPROVEMENTS    LEASEHOLD INT.     IMPROVEMENTS  
------------------------------------------------------------- --------------------------------------------------
<S>                                    <C>                    <C>              <C>               <C>            
11951 Sorrento Tech I, II & III        San Diego, CA               15,860         2,686,323          7,263,117  
11961 Westridge I                      San Diego, CA                   $0        $1,712,464         $4,630,094  
12431 SoCalifornia Federal Land        Orange, CA                       -           130,102                  -  
12451 City South Land                  Orange, CA                       -         1,117,832                  -  
12511 Carlsbad Centerpointe-Land       Carlsbad, CA                     -         4,776,886                226  
                                                            --------------------------------------------------
                                       TOTAL                  $44,697,146      $196,141,464       $880,616,324  
                                                            ==================================================

      PACIFIC NORTHWEST
20021 Federal Way Office               Fed Way, WA               $182,405          $297,202           $948,395  
20041 Bellevue Gtwy I                  Bellevue, WA             7,264,000         4,526,668         11,478,942  
20051 Bellevue Gateway II              Bellevue, WA             2,665,096         1,867,498          6,848,534  
20061 Main Street Office               Bellevue, WA               572,012         1,927,586          1,936,123  
20181 North Creek Parkway Centre       Bothell, WA                386,831         6,129,225         16,900,024  
20211 Bellefield Office Park           Bellevue, WA             8,730,799         7,697,616         37,067,981  
20241 10700 Building                   Bellevue, WA               221,763            24,384          4,715,797  
20281 ABAM Building                    Federal Way, WA            245,170         1,332,001          3,837,297  
20311 Washington Park I & II           Federal Way, WA            255,372         2,116,789          4,087,120  
20341 Southgate Office 
       Plaza I, II & III               Renton, WA                 340,167         4,972,280         26,103,668  
20351 Plaza Center                     Bellevue, WA             1,619,342         8,118,890         72,721,584  
20371 Gateway 405                      Bellevue, WA                     -         1,328,676          3,590,766  
40001 Key Financial Tower              Boise, ID                5,142,190           302,677          7,946,269  
30091 5550 Macadam Office              Portland, OR               277,825           765,083          3,933,350  
30111 River Forum                      Portland, OR             1,029,149         2,462,767         17,665,196  
30121 Kruse Way                        Portland, OR             1,131,991         2,825,101          8,953,060  
30131 4004 S.W. Kruse Way Place        Lake Oswego, OR          1,481,426         1,422,662          5,052,875  
30171 4949 Meadows Building            Lake Oswego, OR          2,696,850         3,646,668         12,869,848  
30191 Riverside Centre                 Portland, OR                88,514                 -          9,380,127  
30241 One Pacific Square               Portland, OR               317,443         3,612,427         32,551,144  
30261 Kruseway Plaza I & II            Lake Oswego, OR            355,033         4,140,680         11,478,546  
30271 Kruse Woods                      Lake Oswego, OR          4,279,483        29,849,197         67,186,721  
30281 4800 Meadows                     Lake Oswego, OR            278,021         1,766,115                  -  
30301 Benjamin Franklin Plaza          Portland, OR             1,188,152         5,009,308         46,258,431  
20001 West Valley Business Ctr         Kent, WA                 2,326,083         1,286,458          3,762,664  
20011 Cascade Comrce. Park             Kent, WA                 1,733,661         3,129,620          6,045,827  
20031 Valley Freeway Bus. Center       Kent, WA                   243,262         1,262,572          2,285,633  
20071 Woodinville Corp. Center I       Woodinville, WA            505,971         1,740,944          3,803,578  
20081 Woodinville Corp. Center II      Woodinville, WA          2,882,949         4,258,675          6,867,137  
20111 Georgetown Center                Seattle, WA                555,602         4,517,411          4,474,248  
20121 City Commerce Park               Seattle, WA              1,390,407         2,218,399          3,575,846  
20151 Millcreek Distribution Ctr       Kent, WA                   167,040         2,541,162          7,902,498  
20161 Sea-Tac Industrial Park          SeaTac, WA                  70,634         1,953,528          5,609,560  
20171 Valley Industrial Park           Kent, WA                   929,941         6,981,280         17,755,964  
20221 Woodinville Corp Ctr             Woodinville, WA          3,625,747         4,160,957          8,049,613  
20231 Everett Industrial Center        Everett, WA                666,675         1,863,532          6,252,530  
20251 Everett 526                      Everett, WA                 15,046         1,087,615          3,299,569  
20261 Southcenter West Business Park   Tukwila, WA                163,221                 -          6,589,725  
20271 Kirkland 118 Commerce Ctr        Kirkland, WA             2,138,077         2,299,292          3,861,180  
20321 Redmond Heights Tech Center      Redmond, WA                113,857         3,174,399          9,332,997  
40011 Cole Rd. Warehouse               Boise, ID                  330,616           114,465            736,274  
30001 Park 217 I                       Portland, OR             3,672,759         2,483,105          4,885,166  
30011 Park 217 Phase II                Portland, OR             1,500,008           780,261          2,973,270  
30021 Park 217 Phase III               Portland, OR               216,628           132,615            771,904  
</TABLE>





<TABLE>
<CAPTION> 


                                                                                            CONSTRUCTION     DEPRECIABLE 
                                                                            ACCUMULATED        AND/OR           LIVES    
            PROJECT                        LOCATION                TOTAL    DEPRECIATION     ACQUISITION       (YEARS)   
------------------------------------------------------------------------------------------------------------------------ 
<S>                                    <C>                   <C>            <C>            <C>               <C>         
11951 Sorrento Tech I, II & III        San Diego, CA              9,949,440        197,451       1997               40
11961 Westridge I                      San Diego, CA             $6,342,558       $126,140       1997               40
12431 SoCalifornia Federal Land        Orange, CA                   130,102              -       1998               40
12451 City South Land                  Orange, CA                 1,117,832              -       1998               40
12511 Carlsbad Centerpointe-Land       Carlsbad, CA               4,777,112              -       1998               40
                                                            ------------------------------
                                       TOTAL                 $1,076,757,788    $33,497,765
                                                            ==============================

      PACIFIC NORTHWEST
20021 Federal Way Office               Fed Way, WA               $1,245,597       $234,331       1989             20-40
20041 Bellevue Gtwy I                  Bellevue, WA              16,005,611      3,380,704       1985              2-40
20051 Bellevue Gateway II              Bellevue, WA               8,716,033      1,784,725       1988              3-40
20061 Main Street Office               Bellevue, WA               3,863,709        499,193       1990              2-40
20181 North Creek Parkway Centre       Bothell, WA               23,029,249        848,818       1997              5-40
20211 Bellefield Office Park           Bellevue, WA              44,765,597      2,916,132       1995              3-40
20241 10700 Building                   Bellevue, WA               4,740,181        401,068       1996              5-40
20281 ABAM Building                    Federal Way, WA            5,169,298         99,874       1997              7-40
20311 Washington Park I & II           Federal Way, WA            6,203,910        136,785       1997              6-40
20341 Southgate Office 
       Plaza I, II & III               Renton, WA                31,075,948        813,891       1997               40
20351 Plaza Center                     Bellevue, WA              80,840,475      2,130,448       1997              3-40
20371 Gateway 405                      Bellevue, WA               4,919,442          7,481       1997               40
40001 Key Financial Tower              Boise, ID                  8,248,946      2,943,233       1977              5-40
30091 5550 Macadam Office              Portland, OR               4,698,433        979,604       1990              3-40
30111 River Forum                      Portland, OR              20,127,963      2,255,217       1994              5-40
30121 Kruse Way                        Portland, OR              11,778,161      1,029,134       1994              5-40
30131 4004 S.W. Kruse Way Place        Lake Oswego, OR            6,475,536        866,876       1995              3-40
30171 4949 Meadows Building            Lake Oswego, OR           16,516,515        604,067       1996              5-40
30191 Riverside Centre                 Portland, OR               9,380,127        432,270       1997              5-40
30241 One Pacific Square               Portland, OR              36,163,570        893,827       1997              1-40
30261 Kruseway Plaza I & II            Lake Oswego, OR           15,619,226        335,490       1997              4-40
30271 Kruse Woods                      Lake Oswego, OR           97,035,918      1,689,652       1997              1-40
30281 4800 Meadows                     Lake Oswego, OR            1,766,115              -       1997              5-40
30301 Benjamin Franklin Plaza          Portland, OR              51,267,739        761,692       1998              3-40
20001 West Valley Business Ctr         Kent, WA                   5,049,122      1,495,232       1980             20-40
20011 Cascade Comrce. Park             Kent, WA                   9,175,447      1,448,041       1989              5-40
20031 Valley Freeway Bus. Center       Kent, WA                   3,548,205        576,680       1990              7-40
20071 Woodinville Corp. Center I       Woodinville, WA            5,544,522      1,192,763       1988              3-40
20081 Woodinville Corp. Center II      Woodinville, WA           11,125,812      1,970,737       1991              4-40
20111 Georgetown Center                Seattle, WA                8,991,659      1,404,857       1984              5-40
20121 City Commerce Park               Seattle, WA                5,794,244      1,018,487       1988              5-40
20151 Millcreek Distribution Ctr       Kent, WA                  10,443,661        883,085       1994              5-40
20161 Sea-Tac Industrial Park          SeaTac, WA                 7,563,088        598,906       1994              4-40
20171 Valley Industrial Park           Kent, WA                  24,737,244      1,967,727       1994              3-40
20221 Woodinville Corp Ctr             Woodinville, WA           12,210,570      1,261,609       1995              5-40
20231 Everett Industrial Center        Everett, WA                8,116,062        450,510       1996             12-40
20251 Everett 526                      Everett, WA                4,387,184        214,366       1996             12-40
20261 Southcenter West Business Park   Tukwila, WA                6,589,725        330,811       1997              2-40
20271 Kirkland 118 Commerce Ctr        Kirkland, WA               6,160,472        135,739       1997              4-40
20321 Redmond Heights Tech Center      Redmond, WA               12,507,396        310,072       1997              1-40
40011 Cole Rd. Warehouse               Boise, ID                    850,739        265,587       1976              6-40
30001 Park 217 I                       Portland, OR               7,368,272      1,918,460       1980              5-40
30011 Park 217 Phase II                Portland, OR               3,753,531      1,119,871       1981             10-40
30021 Park 217 Phase III               Portland, OR                 904,519        390,157       1981              5-40
</TABLE>


                                       49


<PAGE>   50
                            SPIEKER PROPERTIES, L.P.
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AS OF DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                                                                                        
                                                                                           INITIAL COST          
                                                                                  --------------------------------      
                                                                 ENCUMBRANCES          LAND AND                         
            PROJECT                        LOCATION             AND LIENS (1)     LEASEHOLD INTEREST     BUILDINGS      
------------------------------------------------------------------------------------------------------------------      
<S>                                    <C>                     <C>                <C>                  <C>              
30041 Swan Island                      Portland, OR              823,039                290,504            758,714      
30051 Columbia Commerce Park           Portland, OR                                   1,939,782          6,606,003      
30071 Nelson Business Center I&II      Tigard, OR                 23,732              3,454,590          5,905,233      
30081 SW Commerce Ctr.                 Portland, OR                                     499,146          1,390,426      
30101 Columbia IV                      Portland, OR               55,468                889,345          4,430,444      
30141 Marine Dr Distribution  Ctr      Portland, OR                                   1,166,743          3,509,787      
30151 Marine Drive Dist. Ctr II        Portland, OR                                     622,307          1,958,595      
30161 Airport Way Commerce Park        Portland, OR              423,037              2,134,252          3,791,017      
30181 Marine Drive Dist. Ctr III       Portland, OR                                   1,760,241          4,444,965      
30201 158th Commerce Park              Portland, OR              191,190              2,871,441          7,384,928      
30211 Nimbus Corp. Ctr                 Beaverton, OR              91,103             17,726,282         52,792,538      
30221 Parkway Industrial               Wilsonville, OR                                1,878,731          5,619,196      
30231 Kelley Point Distribution Ctr    Portland, OR                                   4,108,593         12,325,778      
30251 Wilsonville                      Wilsonville, OR            66,677             10,384,072         19,747,622      
30311 181st Commerce Park              Gresham, Or                                    7,582,642            183,357      
30291 Kruse Oaks-Land                  Lake Oswego, OR                               13,218,483          1,014,203      
                                                            ------------------------------------------------------
                                       TOTAL                 $14,955,437           $197,563,123       $617,370,518      
                                                            ======================================================

                                       GRAND TOTAL          $116,442,210           $859,006,771     $2,902,683,865      
                                                            ======================================================
</TABLE>


<TABLE>
<CAPTION>
                                                                              GROSS AMOUNT AT CLOSE OF PERIOD  
                                                              -------------------------------------------------
                                                               ADDITIONS          LAND          BUILDINGS AND  
                                                                  AND         LAND IMP. AND        BUILDING    
            PROJECT                        LOCATION           IMPROVEMENTS    LEASEHOLD INT.     IMPROVEMENTS  
----------------------------------------------------------   --------------------------------------------------
<S>                                    <C>                   <C>              <C>               <C>            
30041 Swan Island                      Portland, OR              452,115           369,011          1,132,321  
30051 Columbia Commerce Park           Portland, OR            2,415,648         2,527,306          8,379,959  
30071 Nelson Business Center I&II      Tigard, OR              4,204,250         4,944,462          8,641,217  
30081 SW Commerce Ctr.                 Portland, OR              804,796           707,816          1,989,916  
30101 Columbia IV                      Portland, OR               37,876           889,345          4,468,320  
30141 Marine Dr Distribution  Ctr      Portland, OR            1,519,766         1,870,511          4,325,785  
30151 Marine Drive Dist. Ctr II        Portland, OR              508,085         1,117,248          1,971,739  
30161 Airport Way Commerce Park        Portland, OR            2,321,247         3,187,202          5,054,362  
30181 Marine Drive Dist. Ctr III       Portland, OR            1,926,941         2,862,229          5,269,918  
30201 158th Commerce Park              Portland, OR            4,360,752         5,298,199          9,318,001  
30211 Nimbus Corp. Ctr                 Beaverton, OR           1,783,551        17,732,570         54,506,985  
30221 Parkway Industrial               Wilsonville, OR            46,336         1,878,731          5,665,532  
30231 Kelley Point Distribution Ctr    Portland, OR              614,223         4,108,593         12,940,000  
30251 Wilsonville                      Wilsonville, OR           418,437        10,398,044         20,148,193  
30311 181st Commerce Park              Gresham, Or                     -         7,582,642                  -  
30291 Kruse Oaks-Land                  Lake Oswego, OR                 -        13,218,483                318  
                                                          ---------------------------------------------------
                                       TOTAL                 $85,411,238      $220,820,179       $666,159,546  
                                                          ===================================================

                                       GRAND TOTAL          $316,608,024      $902,199,860     $2,924,290,366  
                                                          ===================================================
</TABLE>



<TABLE>
<CAPTION>


                                                                                           CONSTRUCTION     DEPRECIABLE 
                                                                           ACCUMULATED        AND/OR           LIVES    
            PROJECT                        LOCATION               TOTAL    DEPRECIATION     ACQUISITION       (YEARS)   
----------------------------------------------------------------------------------------------------------------------- 
<S>                                    <C>                  <C>            <C>            <C>               <C>         
30041 Swan Island                      Portland, OR              1,501,333        452,896       1978              5-40
30051 Columbia Commerce Park           Portland, OR             10,907,265      2,066,942       1988              3-40
30071 Nelson Business Center I&II      Tigard, OR               13,585,678      1,882,075       1990              3-40
30081 SW Commerce Ctr.                 Portland, OR              2,697,732        592,543       1989              5-40
30101 Columbia IV                      Portland, OR              5,357,664        524,374       1994               40
30141 Marine Dr Distribution  Ctr      Portland, OR              6,196,296        691,222       1995              5-40
30151 Marine Drive Dist. Ctr II        Portland, OR              3,088,987        154,017       1996              5-40
30161 Airport Way Commerce Park        Portland, OR              8,241,563        667,153       1996              3-40
30181 Marine Drive Dist. Ctr III       Portland, OR              8,132,147        342,105       1996              4-40
30201 158th Commerce Park              Portland, OR             14,616,199        307,669       1997              2-40
30211 Nimbus Corp. Ctr                 Beaverton, OR            72,239,555      2,056,285       1997              4-40
30221 Parkway Industrial               Wilsonville, OR           7,544,263        201,343       1997             12-40
30231 Kelley Point Distribution Ctr    Portland, OR             17,048,593        465,953       1997              3-40
30251 Wilsonville                      Wilsonville, OR          30,546,237        606,773       1997              5-40
30311 181st Commerce Park              Gresham, Or               7,582,642              -       1998               40
30291 Kruse Oaks-Land                  Lake Oswego, OR          13,218,801              -       1998               40
                                                           ------------------------------
                                       TOTAL                  $886,979,725    $56,009,558
                                                           ==============================

                                       GRAND TOTAL          $3,826,490,225   $240,778,697
                                                           ==============================
</TABLE>


                                       50


<PAGE>   51

16. REAL ESTATE AND ACCUMULATED DEPRECIATION

A summary of activity for real estate and accumulated depreciation is as follows
(in thousands):


<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                                         -----------------------
                                                 1998             1997             1996
                                              -----------      -----------      -----------
<S>                                           <C>              <C>              <C>        
     REAL ESTATE:
        Balance at beginning of year          $ 2,943,711      $ 1,315,060      $ 1,098,871
          Acquisition of properties and
            limited partners' interests         1,141,633        1,526,012          340,298
          Improvements                            102,308          127,889           67,537
          Cost of real estate disposed of         (18,549)         (15,804)         (42,206)
          Property held for disposition           (75,556)          (6,250)        (133,971)
          Disposition of and write-off of
            fully depreciated property            (11,347)          (3,196)         (15,469)
                                              -----------      -----------      -----------
        Balance at end of year                $ 4,082,200      $ 2,943,711      $ 1,315,060
                                              ===========      ===========      ===========

     ACCUMULATED DEPRECIATION:
        Balance at beginning of year          $   169,051      $   127,701      $   124,612
          Depreciation expense                     87,638           48,536           33,487
          Disposal of property                     (2,152)          (3,834)          (3,102)
          Property held for disposition            (2,412)            (156)         (11,827)
          Disposition of and write-off of
            fully depreciated property            (11,347)          (3,196)         (15,469)
                                              -----------      -----------      -----------
        Balance at end of year                $   240,778      $   169,051      $   127,701
                                              ===========      ===========      ===========
</TABLE>



The aggregate cost for federal income tax purposes of real estate as of December
31, 1998, was $3,759,241.



                                       51
<PAGE>   52

SIGNATURES


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


                                   SPIEKER PROPERTIES, L.P.
                                   (Registrant)

Dated:  March 30, 1999            /s/  Warren E. Spieker, Jr
      -------------------          -------------------------------------------
                                   Warren E. Spieker, Jr.
                                   Chairman of the Board, Director and Chief
                                   Executive Officer


Dated:  March 30, 1999             /s/ Dennis E. Singleton
      -------------------          ------------------------------------------
                                   Dennis E. Singleton
                                   Vice Chairman of the Board


Dated:  March 30, 1999             /s/ John K. French
      -------------------          -------------------------------------------
                                   John K. French
                                   Director, Executive Vice President and Chief
                                   Operating Officer


Dated:  March 30, 1999             /s/ John A. Foster
      -------------------          -------------------------------------------
                                   John A. Foster
                                   Executive Vice President and Chief Investment
                                   Officer


Dated:  March 30, 1999             /s/ Craig G. Vought
      -------------------          ------------------------------------------- 
                                   Craig G. Vought
                                   Executive Vice President and Chief Financial
                                   Officer


Dated:  March 30, 1999             /s/ Harold M. Messmer
      -------------------          -------------------------------------------
                                   Harold M. Messmer
                                   Director


Dated:  March 30, 1999             /s/ Elke Strunka
      -------------------          -------------------------------------------
                                   Elke Strunka
                                   Vice President and Principal Accounting 
                                   Officer



                                       52
<PAGE>   53


SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in Menlo Park,
California on the 25th day of March, 1999.

                                        SPIEKER PROPERTIES, L.P.



                                        By: /s/ Elke Strunka
                                           -------------------------------------
                                           Elke Strunka
                                           Vice President and Principal 
                                           Accounting Officer



                                       53
<PAGE>   54

                                 EXHIBIT INDEX



<TABLE>
<CAPTION>
  NO.                                   DESCRIPTION                                          PAGE
------                                  -----------                                          ----
<S>            <C>                                                                           <C>
3.1A           Articles of Amendment of Spieker Properties, Inc. (incorporated
               by reference to Exhibit 3.1A to Spieker Properties, Inc.'s Report
               on Form 10-K for the year ended December 31, 1996)

3.2            Bylaws of Spieker Properties, Inc. (1)

3.3            Articles Supplementary of Spieker Properties, Inc. for Series A
               Preferred Stock (incorporated by reference to Exhibit 4.2 to
               Spieker Properties, Inc.'s Report on Form 10-Q for the quarter
               ended March 31, 1994)

3.4            Articles Supplementary of Spieker Properties, Inc. for Class B
               Common Stock (incorporated by reference to Exhibit 4.2 to Spieker
               Properties, Inc.'s Report on Form 10-Q for the quarter ended
               March 31, 1995)

3.5            Articles Supplementary of Spieker Properties, Inc. for the Series
               B Preferred Stock (2)

3.6            Articles Supplementary of Spieker Properties, Inc. for the Class
               C Common Stock (2)

3.7            Articles Supplementary of Spieker Properties, Inc. for the Series
               C Preferred Stock (incorporated by reference to Exhibit 3.1 to
               Spieker Properties, Inc.'s Report on Form 10-Q for the quarter
               ended September 30, 1997)

3.8            Articles Supplementary of Spieker Properties, Inc. for the Series
               D Preferred Stock                                                               

3.9            Articles Supplementary of Spieker Properties, Inc. for the Series
               E Preferred Stock (incorporated by reference to Exhibit 3.1 to
               Spieker Properties, Inc.'s Report on Form 8-K dated June 4, 1998)

3.10           Rights Agreement, which includes as Exhibit A the Form of Rights
               Certificate and Election to Exercise and as Exhibit B the Form of
               Articles Supplementary (incorporated by reference to Exhibit 4 to
               Spieker Properties, Inc.'s Report on Form 8-K dated September 22,
               1998)

4.1            Agreement pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K
               (1)

4.2            Intentionally omitted

4.3            Series A Preferred Stock Purchase Agreement, (incorporated by
               reference to Exhibit 4.1 to Spieker Properties, Inc.'s Form 10-Q
               Report for the quarter ended March 31, 1994)

4.4            Investor Rights Agreement relating to A Series Preferred Stock
               (incorporated by reference to Exhibit 4.3 to Spieker Properties,
               Inc.'s Form 10-Q Report for the quarter ended March 31, 1994)

4.5            Indenture dated as December 6, 1995, among Spieker Properties,
               L.P., Spieker Properties, Inc. and State Bank and Trust, as
               Trustee (2)

4.6            First Supplemental Indenture relating to the 2000 Notes, the 2000
               Note and Guarantee (2)

4.7            Second Supplemental Indenture relating to the 2001 Notes, 2001
               Note and Guarantee (2)


4.8            Third Supplemental Indenture relating to the 2002 Notes, the 2002
               Note and Guarantee (2)

4.9            Fourth Supplemental Indenture relating to the 2004 Notes and the
               2004 Note (2)

4.10           Class B Common Stock Purchase Agreement (incorporated by
               reference to Exhibit 4.1 to Spieker Properties, Inc.'s Form 10-Q
               Report for the quarter ended March 31, 1994)

4.11           Investor's Rights Agreement relating to Class B Common Stocks
               (incorporated by reference to Exhibit 4.3 to Spieker Properties,
               Inc.'s Form 10-Q Report for the quarter ended March 31, 1994)

4.12           Class C Common Stock Purchase Agreement (2)

4.13           Investor's Rights Agreement relating to Class C Common Stock (2)

4.14           Fifth Supplemental Indenture relating to the Medium Term Note
               Program and Forms of Medium Term Notes (incorporated by reference
               to Exhibit 4.1 to Spieker Properties, Inc.'s Quarterly Report on
               Form 10-Q for the quarter ended June 30, 1996)

4.15           Sixth Supplemental Indenture relating to the 7 1/8% Notes Due
               2006 (incorporated by reference to Exhibit 4.1 of Spieker
               Properties, Inc.'s Current Report on Form 8-K filed with the
               Commission on December 19, 1996)

4.16           Seventh Supplemental Indenture relating to the 7 7/8% Notes Due
               2016 (incorporated by reference to Exhibit 4.2 of Spieker
               Properties, Inc.'s Current Report on Form 8-K filed with the
               Commission on December 19, 1996)

4.17           Eighth Supplemental Indenture relating to the 7.125% Notes Due
               2009 (incorporated by reference to Exhibit 4.9 of Spieker
               Properties, Inc.'s Registration statement on Form S-3 (File No.
               333-35997))
</TABLE>


                                       26


<PAGE>   55
                                 EXHIBIT INDEX



<TABLE>
<CAPTION>
  NO.                                   DESCRIPTION                                          PAGE
------                                  -----------                                          ----
<S>            <C>                                                                           <C>
4.18           Ninth Supplemental Indenture relating to the 7.50% Debentures Due
               2027 (incorporated by reference to Exhibit 4.1 Spieker
               Properties, Inc.'s Report on Form 10-Q for the quarter ended
               September 30, 1997)

4.19           Tenth Supplemental Indenture relating to the 7.35% Debentures Due
               2017 (incorporated by reference to Exhibit 4.1 Spieker
               Properties, Inc.'s Current Report on Form 8-K dated January 30,
               1998)

4.20           Eleventh Supplemental Indenture relating to the 6.75% Notes Due
               2008 (incorporated by reference to Exhibit 4.2 Spieker
               Properties, Inc.'s Current Report on Form 8-K dated January 30,
               1998)

4.21           Twelfth Supplemental Indenture relating to the 6.875% Notes Due
               2006 (incorporated by reference to Exhibit 4.3 Spieker
               Properties, Inc.'s Current Report on Form 8-K dated January 30,
               1998)

4.22           Thirteenth Supplemental Indenture relating to the 7% Notes Due
               2007 (incorporated by reference to Exhibit 4.1 Spieker
               Properties, Inc.'s Current Report on Form 8-K dated January 30,
               1998)

10.1           Second Amended and Restated Agreement of Limited Partnership of
               Spieker Properties, L.P.

10.2           First Amendment to Second Amended and Restated Agreement of
               Limited Partnership of Spieker Properties, L.P.

10.3           Credit Agreement among Spieker Properties, L.P., as borrower,
               Wells Fargo Bank, as Agent, Morgan Guaranty Trust Company of New
               York, as Documentation Agent, and the lenders named therein,
               dated as of August 8, 1997, and Loan Notes pursuant to such
               Credit Agreement (incorporated by reference to Exhibit 10.16 to
               Spieker Properties, Inc.'s Current Report on Form 8-K dated
               September 22, 1997)

10.4*          Form of Employment Agreement between the Company and each of
               Warren E. Spieker, Jr., John K. French, Bruce E. Hosford, and
               Dennis E. Singleton (1)

10.5*          Form of Spieker Merit Plan (1)

10.6*          Amended and Restated Spieker Properties, Inc. 1993 Stock
               Incentive Plan (incorporated by reference to Exhibit 4.3 to
               Spieker Properties, Inc.'s Quarterly Report on Form 10-Q for the
               quarter ended June 30, 1996)

10.7           Form of Indemnification Agreement between Spieker Properties,
               Inc. and its directors and officers (incorporated by reference to
               Exhibit 10.21 to Spieker Properties, Inc.'s Registration
               Statement on Form S-11 (File No. 33-67906))

10.8           Form of Land Holding Agreement among Spieker Properties, Inc.,
               Spieker Northwest, Inc., Spieker Properties, L.P. and owner of
               the applicable Land Holding (incorporated by reference to Exhibit
               10.22 to Spieker Properties, Inc.'s Registration Statement on
               Form S-11 (File No. 33-67906))

10.9*          Form of Employee Stock Incentive Pool (incorporated by reference
               to Exhibit 10.35 to Spieker Properties, Inc.'s Registration
               Statement on Form S-11 (File No. 33-67906))

10.10          Form of Excluded Property Agreement between the Operating
               Partnership and certain of the Senior Officers (incorporated by
               reference to Exhibit 10.36 to Spieker Properties, Inc.'s
               Registration Statement on Form S-11 (File No. 33-67906))

10.11*         Amended and Restated Spieker Properties, Inc. 1993 Directors'
               Stock Option Plan (incorporated by reference to Exhibit 4.2 to
               Spieker Properties, Inc.'s Quarterly Report on Form 10-Q for the
               quarter ended June 30, 1996)

10.12          Second Amendment to Second Amended and Restated Agreement of
               United Partnership of Spieker Properties, L.P. (incorporated by
               reference to Exhibit 3.1 to Spieker Properties, L.P.'s Report on
               Form-Q/A for the quarterly period ended June 30, 1998)

10.13          Third Amendment to Second Amended and Restated Agreement to
               Limited Partnership of Spieker Properties, L.P.                                 

12.1           Schedule of Computation of Ratio of Earnings to Combined Fixed
               Charges and Preferred Dividends

21.1           List of Subsidiaries of Spieker Properties, Inc.

23.1           Consent of Independent Public Accountants                                       

27.1           Article 5 Financial Data Schedule (Edgar Filing Only)
</TABLE>


*       Indicates management contract or compensatory plan or arrangement.

(1)     Incorporated by reference to the identically numbered exhibit to the
        Company's Registration Statement on Form S-11 (Registration No.
        33-67906), which became effective on November 10, 1993.

(2)     Incorporated by reference to the identically numbered exhibit to the
        Company's Annual Report on Form 10-K for the year ended December 31,
        1995.