SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C. 20549
                              FORM 10-K

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

             For the year ended December 31, 1999

                               OR

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

              Commission file number 1-14162

               GLENBOROUGH PROPERTIES, L.P.
  (Exact name of Registrant as specified in its charter)

                   California                                94-3231041
          (State or other jurisdiction                    (I.R.S. Employer
        of incorporation or organization)                Identification No.)

            400 South El Camino Real,                        94402-1708
Suite 1100 San Mateo, California - (650) 343-9300            (Zip Code)
     (Address of principal executive offices
                 and telephone number)

        Securities registered under 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 registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ X ]

State the aggregate market value of the voting stock held by  non-affiliates  of
the Partnership. Not applicable.

                   DOCUMENTS INCORPORATED BY REFERENCE:

EXHIBITS:  The index of exhibits is contained in Part IV herein on page
number 70.


                                       1
<PAGE>

                            TABLE OF CONTENTS


                                                                        Page No.
                           PART I

Item  1       Business                                                        3
Item  2       Properties                                                      6
Item  3       Legal Proceedings                                              13
Item  4       Submission of Matters to a Vote of Security Holders            14

                           PART II

Item  5       Market for Partnership's Common Equity and Related
              Partner Matters                                                14
Item  6       Selected Financial Data                                        14
Item  7       Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                      17
Item  8       Financial Statements and Supplementary Data                    33
Item  9       Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure                                       33

                           PART III

Item 10       Directors and Executive Officers of the Company                33
Item 11       Executive Compensation                                         33
Item 12       Security Ownership of Certain Beneficial Owners and
              Management                                                     33
Item 13       Certain Relationships and Related Transactions                 33

                           PART IV

Item 14       Exhibits, Financial Statements, Schedules and Reports on
              Form 8-K                                                       34

                                       2
<PAGE>

                                     PART I

Item 1.       Business

General Development and Description of Business

Glenborough  Properties,  L.P., a California Limited Partnership (the "Operating
Partnership"),  is engaged  primarily in the ownership,  operation,  management,
leasing,   acquisition,   expansion   and   development   of  various  types  of
income-producing properties. As of December 31, 1999, the Operating Partnership,
directly   and   through   various   subsidiaries,   owned  and   operated   161
income-producing  properties  (the  "Properties,"  and each a  "Property").  The
Properties are comprised of 51 office Properties,  37 office/flex Properties, 24
industrial  Properties,  10 retail Properties,  38 multifamily  Properties and 1
hotel Property, located in 22 states.

The Operating Partnership was organized in the State of California on August 23,
1995.  The  Operating   Partnership  is  the  primary  operating  subsidiary  of
Glenborough Realty Trust Incorporated (the "Company"),  a self-administered  and
self-managed  real estate  investment trust ("REIT").  On December 31, 1995, the
Company completed a consolidation  (the  "Consolidation")  in which eight public
limited   partnerships  (the   "Partnerships,"   collectively  with  Glenborough
Corporation  (defined below), the "GRT Predecessor  Entities"),  merged with and
into the  Company.  The Company (i) issued  5,753,709  shares (the  "Shares") of
$.001 par value  Common  Stock to the  Partnerships  in exchange  for  3,979,376
Operating  Partnership  units; and (ii) merged with Glenborough  Corporation,  a
California Corporation, with the Company being the surviving entity. The Company
then  transferred  certain  real  estate  and  related  assets to the  Operating
Partnership in exchange for a sole general partner  interest of 1% and a limited
partnership  interest  of 85.37%  (88.50%  limited  partnership  interest  as of
December 31, 1999). The Operating Partnership also acquired interests in certain
warehouse   distribution   facilities  from  GPA,  Ltd.,  a  California  limited
partnership ("GPA"). The Operating  Partnership  commenced operations on January
1,  1996.  The  Operating  Partnership  operates  the  assets  acquired  in  the
Consolidation  and in subsequent  acquisitions and intends to continue to invest
in income-producing property directly and through joint ventures.

Effective  April 1, 1998, the Company  contributed to the Operating  Partnership
the  majority  of its  assets,  including  100% of its shares of the  non-voting
preferred stock of Glenborough Corporation ("GC"), formerly known as Glenborough
Realty  Corporation,  as well as all of the Company's tangible personal property
including  furniture  and  fixtures,  all cash and  investments,  and a property
management contract.  As part of that transaction,  the Company also agreed to a
substantial  reduction  in the  asset  management  fees  paid  by the  Operating
Partnership  to the  Company.  In return,  the  Operating  Partnership  canceled
certain  obligations  of the Company to the  Operating  Partnership,  and issued
2,248,869 units of partnership interest to the Company.

Effective   February  15,  1999,  the  Company   contributed  to  the  Operating
Partnership 100% of its shares of the non-voting  preferred stock of Glenborough
Hotel Group ("GHG"). In return, the Operating Partnership issued 67,797 units of
partnership interest to the Company.

The contributions of 100% of the shares of non-voting  preferred stock in GC and
GHG  discussed  above have been  accounted for as a  reorganization  of entities
under common control,  similar to a pooling of interests.  All periods presented
have been restated to give effect to these  transactions  as if they occurred on
December 31, 1995. As a result of the above transactions, the only assets of the
Company that have not been contributed to the Operating  Partnership are (i) its
shares of common stock in twelve  qualified  REIT  subsidiaries,  which  produce
dividends that are not material to the Company,  and (ii) a less than 5% limited
partnership interest in Glenborough Partners.

Since the  Consolidation,  and  consistent  with its  strategy  for growth,  the
Operating Partnership has completed the following transactions:

     Acquired 20  properties  in 1996, 90 properties in 1997, 69 properties
     in 1998 and 10 properties in 1999. The total acquired Properties consist of
     an aggregate of approximately  16.5 million rentable square feet of office,
     office/flex,  industrial and retail space,  9,830 multifamily units and 227

                                       3
<PAGE>

     hotel  suites  and  aggregate  acquisition  costs,  including  third  party
     expenditures   incurred   for  the  purpose  of  these   transactions,   of
     approximately  $1.9  billion.

     From January 1, 1996 to the date of this filing,  sold 63 properties  which
     were comprised of nine office  properties,  15 office/flex  properties,  13
     industrial properties, 19 retail properties, two multifamily properties and
     five hotel  properties,  to redeploy  capital into properties the Operating
     Partnership believes have characteristics more suited to its overall growth
     strategy and operating goals.

     Issued $150 million of unsecured  7.625% Senior Notes which mature on March
     15, 2005. In the second,  third and fourth quarters of 1999,  $58.9 million
     of the Senior Notes were retired at a discount which resulted in a net gain
     on early extinguishment of debt of approximately $3.1 million.

     Entered  into 4  development  alliances  in  1998  through  which  two
     properties were acquired in 1999. The Operating  Partnership currently
     has  3  development  alliances  to  which  it  has  made  advances  of
     approximately  $33 million and a loan of $36.4  million as of December
     31, 1999.

The Associated Companies

Prior to September 30, 1999,  the Operating  Partnership  held 100% of
the non-voting  preferred stock of the following  associated companies
(the "Associated Companies"):

     Glenborough  Corporation ("GC") is the general partner of several real
     estate limited partnerships and provides asset and property management
     services for these partnerships (the "Managed Partnerships").  It also
     provides  partnership  administration,   asset  management,   property
     management  and  development  services  to  a  group  of  unaffiliated
     partnerships  which  include  three public  partnerships  sponsored by
     Rancon Financial  Corporation,  an unaffiliated  corporation which has
     significant real estate assets in the Inland Empire region of Southern
     California (the "Rancon Partnerships").

     Glenborough  Hotel Group  ("GHG") owns an  approximate  36% limited
     partner  interest in a real estate joint venture.

Effective  September 30, 1999, GHG merged with GC. In the merger,  the Operating
Partnership  received  preferred stock of GC in exchange for its preferred stock
of GHG.  The merger was  accounted  for as a  reorganization  of entities  under
common control.

Following the merger,  the Operating  Partnership owns 100% of the 47,500 shares
(representing 95% of total outstanding shares) of non-voting  preferred stock of
GC. Six  individuals,  including  Sandra Boyle,  Frank Austin and Terri Garnick,
executive  officers of the  Company,  own the 2,500 shares  (representing  5% of
total  outstanding   shares)  of  voting  common  stock  of  GC.  The  Operating
Partnership  and GC  intend  that the  Operating  Partnership's  interest  in GC
complies with REIT qualification standards.

The Operating  Partnership,  through its ownership of preferred  stock of GC, is
entitled to receive cumulative,  preferred annual dividends of $1.896 per share,
which GC must pay before it pays any dividends  with respect to the common stock
of GC. Once GC pays the required cumulative preferred dividend,  it will pay any
additional  dividends in equal amounts per share on both the preferred stock and
the common stock at 95% and 5%,  respectively.  Through the preferred stock, the
Operating  Partnership is also entitled to receive a preferred liquidation value
of $169.49 per share plus all  cumulative  and unpaid  dividends.  The preferred
stock is subject to redemption at the option of GC after  December 31, 2005, for
a redemption price of $169.49 per share. As the holder of preferred stock of GC,
the  Operating  Partnership  has no voting power with respect to the election of
the directors of GC; all power to elect directors of GC is held by the owners of
the common stock of GC.

This  structure  is  intended  to  provide  the  Operating  Partnership  with  a
significant  portion  of the  economic  benefits  of the  operations  of GC. The
Operating  Partnership accounts for the financial results of GC using the equity
method.

                                       4
<PAGE>

Employees

The Operating Partnership has no employees. As of December 31, 1999, the Company
and the Associated Companies had approximately 460 full-time employees.

Competition

For Tenants
The  Operating  Partnership's   Properties  compete  for  tenants  with  similar
properties located in their markets.  Management  believes that  characteristics
influencing the  competitiveness of a real estate project include the geographic
location of the property,  the  professionalism  of the property manager and the
maintenance and appearance of the property, in addition to external factors such
as general economic  circumstances,  trends,  and the existence of new competing
properties in the general area in which the Operating  Partnership's  properties
are located.

Additional competitive factors with respect to commercial properties include the
ease of access to the  property,  the  adequacy of related  facilities,  such as
parking,  and the ability to provide  rent  concessions  and  additional  tenant
improvements  commensurate  with local market  conditions.  Such competition may
lead to rent concessions that could adversely affect the Operating Partnership's
cash flow.  Although  the  Operating  Partnership  believes its  Properties  are
competitive with comparable  properties as to those factors within the Operating
Partnership's control,  over-building and other external factors could adversely
affect the ability of the Operating Partnership to attract and retain tenants.

For Acquisitions of Real Estate
The Operating  Partnership  experiences  competition  when attempting to acquire
equity interests in desirable real estate,  including  competition from domestic
and foreign  financial  institutions,  other REITs,  life  insurance  companies,
pension funds, trust funds,  partnerships and individual investors. In competing
for such acquisitions,  the Operating Partnership and the Company have not given
value guarantees in connection with Operating Partnership units or the Company's
stock issued in such acquisitions.

For Capital
The Operating Partnership and the Company compete with other REITs and investors
and owners for debt and equity  financing.  The Operating  Partnership's and the
Company's  ability to  attract  debt and equity  capital at  favorable  rates is
impacted in part by their  positioning  in the  marketplace  relative to similar
investments.  Factors impacting this include,  among other things, the perceived
quality of the Operating Partnership's portfolio and the risk adjustment sources
of capital give to the returns they expect from their investments.  In competing
for capital,  the Company has not entered into any forward equity commitments or
other  arrangements  which would subject the Company to risks tied to changes in
the market value of its equity securities.

Working Capital

The  Operating  Partnership's  practice is to maintain  cash reserves for normal
repairs,  replacements,  improvements,  working capital and other  contingencies
while minimizing interest expense.  Available cash is kept to a minimum by using
available funds to reduce the outstanding balance on the Operating Partnership's
unsecured line of credit and drawing on it when necessary.

Other Factors

The Operating  Partnership's  ability to achieve operational and capital targets
is impacted by economic  conditions in the markets in which its  Properties  are
located and by broader factors such as prevailing interest rates and the general
availability  of capital at  favorable  rates,  both debt and  equity,  for real
estate investments.  Local economic downturns may adversely affect the occupancy
and rental rates of the Operating Partnership's  Properties. A lack of available
capital  may hinder the  Operating  Partnership's  acquisition  and  development
program  or  cause  it to look to other  types  of  transactions,  such as asset
redeployments, to generate needed liquidity.

                                       5
<PAGE>

Compliance with laws and  regulations  regarding the discharge of materials into
the environment,  or otherwise relating to the protection of the environment, is
not expected to have any material effect upon the capital expenditures, earnings
and competitive position of the Operating Partnership.

The Properties have each been subject to Phase I Environmental  Assessments and,
where such an assessment  indicated it was  appropriate,  Phase II Environmental
Assessments  (collectively,  the  "Environmental  Reports") have been conducted.
These reports have not indicated any significant environmental issues.

In the event that  pre-existing  environmental  conditions  not disclosed in the
Environmental Reports which require remediation are subsequently discovered, the
cost of remediation will be borne by the Operating Partnership. Additionally, no
assurances can be given that (i) future laws,  ordinances,  or regulations  will
not impose any material environmental liability,  (ii) 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  or
(iii)  that the  Operating  Partnership  will not  otherwise  incur  significant
liabilities associated with costs of remediation relating to the Properties.

Item 2.       Properties

The Location and Type of the Operating Partnership's Properties

The Operating  Partnership's  161  Properties  are  diversified by type (office,
office/flex,  industrial, retail, multifamily and hotel) and are located in four
geographic  regions and 22 states within the United  States  comprising 32 local
markets.  The  following  table  sets forth the  location,  type and size of the
Properties (by rentable  square feet and/or units) along with average  occupancy
for the year ended December 31, 1999.
<TABLE>
<CAPTION>

                       Office       Office/Flex     Industrial       Retail      Multi-family
                       Square          Square         Square         Square         Units       Hotel Rooms       No. of
Region                 Footage        Footage         Footage       Footage                                     Properties
------------------   ------------   -------------   ------------  -------------  -------------  -------------  -------------
<S>                    <C>            <C>             <C>            <C>             <C>             <C>           <C>
Northwest                984,737      1,043,163         931,831      162,126            -              -            26
Midwest                2,965,165        643,202       1,248,046      377,157           670             -            46
Southeast              2,398,159      1,140,640         581,889      388,714         2,399             -            45
Southwest                511,930        892,014         623,064          -           6,469           227            44
                     ------------   -------------   ------------  -------------  -------------  -------------  -------------

Total                  6,859,991      3,719,019       3,384,830      927,997         9,538           227           161
                     ============   =============   ============  =============  =============  =============  =============

No. of Properties             51             37              24           10            38             1

Average Occupancy            91%            88%             99%          90%           93%           n/a
</TABLE>

For the years ended December 31, 1999, 1998 and 1997, no tenant  contributed 10%
or more of the total rental  revenue of the Operating  Partnership.  The largest
tenant's  annual rent was  approximately  1.7% of total rental  revenues for the
year ended  December  31, 1999. A complete  listing of  Properties  owned by the
Operating  Partnership  at December 31, 1999 is included as part of Schedule III
in Item 14.

Office Properties

The Operating  Partnership owns 51 office  Properties with total rentable square
footage of  6,859,991.  The office  Properties  range in size from 14,255 square
feet to 570,421  square feet, and have lease terms ranging from one to 31 years.
The office  leases  generally  require  the tenant to  reimburse  the  Operating
Partnership  for  increases  in  building  operating  costs over a base  amount.
Certain of the leases  provide for rent increases that are either fixed or based
on a consumer  price index  ("CPI").  For the year ended  December 31, 1999, the
average occupancy of the office Properties was 91%.

                                       6
<PAGE>

The following table sets forth,  for the periods  specified,  the total rentable
area, average occupancy,  average effective base rent per leased square foot and
total effective annual base rent.
<TABLE>
<CAPTION>

                                              Office Properties
                                        Historical Rent and Occupancy
                                                                     Average Effective       Total Effective
                       Total Rentable       Average Occupancy          Base Rent per         Annual Base Rent
Year                   Area (Sq. Ft.)                                Leased Sq. Ft.(1)        ($000s)(2) (3)
                                                                            (3)
------------------    -----------------    --------------------     --------------------    -------------------
<S>                        <C>                       <C>                <C>                    <C>
1999                       6,859,991                 91%                $   16.78              $  104,751
1998                       7,001,109                 92                     16.04                 103,314
1997                       2,921,361                 93                     15.81                  42,954
1996                         641,923                 94                     13.19                   7,918
1995                         106,076                 97                     11.91                   1,228

(1)  Total Effective Annual Base Rent divided by Average Occupancy in square feet.
     As used herein, "Effective Base Rent" represents base rent less concessions.
(2)  Total  Effective  Annual Base Rent  adjusted  for any free rent given for the
     period.
(3)  In any given year,  base rents are presented on an annualized  basis based on
     results since the acquisition for properties that were acquired during the year.

The following table sets forth the contractual  lease expirations for leases for
the office Properties as of December 31, 1999.

                                              Office Properties (5)
                                                Lease Expirations
                                                                                             Percentage of Total
                         Number of           Rentable Square         Annual Base Rent         Annual Base Rent
Expiration Year       Expiring Leases      Footage Subject to         Under Expiring           Represented by
                                             Expiring Leases          Leases ($000s)         Expiring Leases (1)
------------------    -----------------    --------------------     --------------------    ----------------------
<C>                          <C>                  <C>                   <C>                        <C>
2000 (4)                     234                    977,686             $    17,976                 16.0%
2001                         154                    923,446                  16,060                 14.3
2002                         139                  1,061,241                  20,504                 18.3
2003                          74                    417,586                   8,082                  7.2
2004                          83                    622,923                  11,944                 10.6
Thereafter                   120                  1,973,830                  37,603                 33.6
                      =================    ====================     ====================    ======================
Total                        804                  5,976,712(2)          $   112,169(3)             100.0%
                      =================    ====================     ====================    ======================

(1)  Annual base rent expiring  during each period,  divided by total annual base
     rent (both adjusted for contractual increases).
(2)  This  figure is based on square  footage  actually  leased  (which  excludes
     vacant space),  which accounts for the difference between this figure and "Total
     Rentable Area" in the preceding table (which includes vacant space).
(3)  This  figure is based on square  footage  actually  leased and  incorporates
     contractual  rent  increases  arising  after 1999,  and thus differs from "Total
     Effective  Annual  Base  Rent" in the  preceding  table,  which is based on 1999
     rents.
(4)  Includes leases that have initial terms of less than one year.
(5)  Numbers exclude the corporate headquarters building.
</TABLE>

Office/Flex Properties

The Operating Partnership owns 37 office/flex  Properties  aggregating 3,719,019
square feet. The office/flex Properties are designed for a combination of office
and  warehouse  uses  with  greater  than  10% of the  rentable  square  footage

                                       7
<PAGE>

containing office finish.  The office/flex  Properties range in size from 35,385
square feet to 278,580  square feet, and have lease terms ranging from one to 13
years.  Most of the  office/flex  leases are  "triple  net"  leases  whereby the
tenants are  required to pay their pro rata share of the  Properties'  operating
costs, common area maintenance,  property taxes,  insurance,  and non-structural
repairs.  Some of the leases are  "industrial  gross" leases  whereby the tenant
pays as additional rent its pro rata share of common area maintenance and repair
costs and its share of the increase in taxes and insurance over a specified base
year cost.  Certain of these leases call for fixed or CPI-based rent  increases.
For the year ended December 31, 1999, the average  occupancy of the  office/flex
Properties was 88%.

The following table sets forth,  for the periods  specified,  the total rentable
area, average occupancy,  average effective base rent per leased square foot and
total effective annual base rent.
<TABLE>
<CAPTION>

                                            Office/Flex Properties
                                        Historical Rent and Occupancy
                                                                     Average Effective       Total Effective
                       Total Rentable       Average Occupancy          Base Rent per         Annual Base Rent
Year (4)               Area (Sq. Ft.)                               Leased Sq. Ft. (1)        ($000s)(2) (3)
                                                                            (3)
------------------    -----------------    --------------------     --------------------    -------------------
<S>                        <C>                       <C>                <C>                    <C>
1999                       3,719,019                 88%                $    8.30              $   27,164
1998                       4,560,519                 90                      7.61                  31,235
1997                       3,523,695                 91                      7.17                  22,991
1996                         247,506                 96                      5.50                   1,307

(1)  Total  Effective  Annual Base Rent  divided by Average  Occupancy  in square
     feet.  As  used  herein,   "Effective  Base  Rent"  represents  base  rent  less
     concessions.
(2)  Total  Effective  Annual Base Rent  adjusted for any free rent given for the
     period.
(3)  In any given year, base rents are presented on an annualized  basis based on
     results since the acquisition for properties that were acquired during the year.
(4)  Prior to 1996,  Properties  currently  classified as office/flex  Properties
     were included in industrial Properties. See industrial Properties table below.

The following table sets forth the contractual  lease expirations for leases for
the office/flex Properties as of December 31, 1999.

                                             Office/Flex Properties
                                                Lease Expirations
                                                                                             Percentage of Total
                         Number of           Rentable Square         Annual Base Rent         Annual Base Rent
Expiration Year       Expiring Leases      Footage Subject to         Under Expiring           Represented by
                                             Expiring Leases          Leases ($000s)         Expiring Leases (1)
------------------    -----------------    --------------------     --------------------    ----------------------
<C>                          <C>                  <C>                   <C>                        <C>
2000                         141                    687,119             $     6,046                 20.8%
2001                          77                    485,322                   3,640                 12.5
2002                          68                    539,674                   4,720                 16.2
2003                          38                    464,493                   4,362                 15.0
2004                          33                    373,798                   3,278                 11.3
Thereafter                    23                    697,498                   7,045                 24.2
                      =================    ====================     ====================    ======================
Total                        380                  3,247,904(2)          $    29,091(3)             100.0%
                      =================    ====================     ====================    ======================

(1)  Annual base rent expiring  during each period,  divided by total annual base
     rent (both adjusted for contractual increases).
(2)  This  figure is based on square  footage  actually  leased  (which  excludes
     vacant space),  which accounts for the difference between this figure and "Total
     Rentable Area" in the preceding table (which includes vacant space).
(3)  This  figure is based on square  footage  actually  leased and  incorporates
     contractual  rent  increases  arising  after 1999,  and thus differs from "Total
     Effective  Annual  Base  Rent" in the  preceding  table,  which is based on 1999
     rents.
</TABLE>

                                       8
<PAGE>

Industrial Properties

The Operating  Partnership owns 24 industrial  Properties  aggregating 3,384,830
square feet. The industrial Properties are designed for warehouse,  distribution
and light  manufacturing,  ranging in size from  32,500  square  feet to 474,426
square feet. As of December 31, 1999, 8 of the industrial Properties were leased
to  multiple  tenants,  16 were  leased  to  single  tenants,  and all 16 of the
single-tenant  Properties are adaptable in design to  multi-tenant  use. For the
year ended December 31, 1999, the average occupancy of the industrial Properties
was 99%.

The industrial Properties have leases whose terms range from 1 to 15 years. Most
of the leases are "triple  net" leases  whereby the tenants are  required to pay
their  pro  rata  share  of  the  Properties'   operating  costs,   common  area
maintenance,  property taxes, insurance, and non-structural repairs. Some of the
leases are "industrial  gross" leases whereby the tenant pays as additional rent
its pro rata share of common area  maintenance and repair costs and its share of
the increase in taxes and insurance over a specified base year cost.  Certain of
these leases call for fixed or CPI-based rent increases.

The following table sets forth,  for the periods  specified,  the total rentable
area, average occupancy,  average effective base rent per leased square foot and
total effective annual base rent for the industrial Properties.
<TABLE>
<CAPTION>

                                            Industrial Properties
                                        Historical Rent and Occupancy
                                                                     Average Effective       Total Effective
                       Total Rentable       Average Occupancy          Base Rent per         Annual Base Rent
Year (4)               Area (Sq. Ft.)                                Leased Sq. Ft.(1)        ($000s)(2) (3)
                                                                            (3)
------------------    -----------------    --------------------     --------------------    -------------------
<S>                        <C>                      <C>                 <C>                    <C>
1999                       3,384,830                 99%                $    4.17              $   13,974
1998                       4,098,080                 98                      3.91                  15,703
1997                       3,533,510                 97                      3.36                  11,516
1996                       1,778,862                 99                      2.41                   4,244
1995                       1,491,827                100                      2.29                   3,405

(1)  Total  Effective  Annual Base Rent  divided by Average  Occupancy  in square
     feet.
(2)  Total Effective  Annual Base Rent adjusted for any free rent given for
     the period.
(3)  In any given year,  base rents are  presented on an  annualized
     basis based on results since the  acquisition  for properties that were acquired
     during  the  year.
(4)  Prior to 1996,  Properties  currently  classified as office/flex  Properties
     were included in industrial Properties.

The following table sets forth the contractual  lease expirations for leases for
the industrial Properties as of December 31, 1999.

                                              Industrial Properties
                                                Lease Expirations
                                                                                             Percentage of Total
                         Number of           Rentable Square         Annual Base Rent         Annual Base Rent
Expiration Year       Expiring Leases      Footage Subject to         Under Expiring           Represented by
                                             Expiring Leases          Leases ($000s)         Expiring Leases (1)
------------------    -----------------    --------------------     --------------------    ----------------------
<C>                           <C>                 <C>                   <C>                        <C>
2000                          10                    195,472             $       971                  6.7%
2001                          10                    321,069                   1,450                  9.9
2002                          19                    580,751                   2,820                 19.3
2003                           4                    118,569                     511                  3.5
2004                          12                  1,692,910                   6,508                 44.6
Thereafter                     6                    293,374                   2,329                 16.0
                      =================    ====================     ====================    ======================
Total                         61                  3,202,145(2)          $    14,589(3)             100.0%
                      =================    ====================     ====================    ======================


                                       9
<PAGE>

(1)  Annual  base rent expiring  during each period,  divided by total annual base
     rent (both adjusted for contractual increases).
(2)  This  figure is based on square  footage  actually  leased  (which  excludes
     vacant space),  which accounts for the difference between this figure and "Total
     Rentable Area" in the preceding table (which includes vacant space).
(3)  This  figure is based on square  footage  actually  leased  (which  excludes
     vacant space) and incorporates  contractual  rent increases  arising after 1999,
     and thus differs from "Total Effective Annual Base Rent" in the preceding table,
     which is based on 1999 rents.
</TABLE>

Retail Properties

The Operating  Partnership owns 10 retail  Properties with total rentable square
footage of 927,997. The leases for the retail Properties have terms ranging from
one to 28 years.  Eight of the retail  Properties,  representing  832,286 square
feet or 90% of the total rentable area, are anchored community shopping centers.
The anchor  tenants of these centers are national or regional  hardware  stores,
supermarkets and drug stores.  For the year ended December 31, 1999, the average
occupancy of the retail Properties was 90%.

The leases for the retail  Properties  generally include fixed or CPI-based rent
increases and some include  provisions for the payment of additional  rent based
on a  percentage  of the  tenants'  gross sales that exceed  specified  amounts.
Retail tenants also typically pay as additional rent their pro rata share of the
Properties'  operating costs including common area maintenance,  property taxes,
insurance and  non-structural  repairs.  Some leases contain options to renew at
market rates or specified rates.

The following table sets forth,  for the periods  specified,  the total rentable
area, average occupancy,  average effective base rent per leased square foot and
total effective annual base rent for the retail properties.
<TABLE>
<CAPTION>

                                              Retail Properties
                                        Historical Rent and Occupancy
                                                                     Average Effective       Total Effective
                       Total Rentable       Average Occupancy          Base Rent per         Annual Base Rent
Year                   Area (Sq. Ft.)                                Leased Sq. Ft.(1)        ($000s)(2) (3)
                                                                            (3)
------------------    -----------------    --------------------     --------------------    -------------------
<S>                        <C>                       <C>                <C>                    <C>
1999                         927,997                 90%                $    9.68              $    8,085
1998                       1,239,165                 94                      8.75                  10,192
1997                         979,088                 96                      7.98                   7,501
1996                         630,700                 96                      7.82 (4)               4,726
1995                         285,658                 95                     10.76                   2,915

(1) Total Effective Annual Base Rent divided by Average Occupancy in square feet.
(2) Total Effective Annual Base Rent adjusted for any free rent given for the period.
(3) In any given year,  base rents are presented on an annualized  basis based on results since the acquisition for
    properties that were acquired during the year.
(4) Average  effective base rent per leased square foot declined in 1996 due to the  acquisition of properties with
    lower base rents.

The following table sets forth the contractual  lease expirations for the retail
Properties as of December 31, 1999.

                                       10
<PAGE>


                                                Retail Properties
                                                Lease Expirations
                                                                                             Percentage of Total
                         Number of           Rentable Square         Annual Base Rent         Annual Base Rent
Expiration Year       Expiring Leases      Footage Subject to         Under Expiring           Represented by
                                             Expiring Leases          Leases ($000s)         Expiring Leases (1)
------------------    -----------------    --------------------     --------------------    ----------------------
<C>                          <C>                    <C>                 <C>                        <C>
2000                          42                     81,410             $     1,133                 13.1%
2001                          42                     91,157                   1,105                 12.8
2002                          19                     30,875                     433                  5.0
2003                          21                     60,426                     757                  8.8
2004                          33                    148,628                   1,408                 16.3
Thereafter                    39                    417,038                   3,801                 44.0
                      =================    ====================     ====================    ======================
Total                        196                    829,534(2)          $     8,637(3)             100.0%
                      =================    ====================     ====================    ======================

(1) Annual  base rent  expiring  during  each  period,  divided  by total  annual  base  rent  (both  adjusted  for
    contractual increases).
(2) This figure is based on square footage  actually leased (which  excludes vacant space),  which accounts for the
    difference between this figure and "Total Rentable Area" in the preceding table (which includes vacant space).
(3) This  figure is based on square  footage  actually  leased  (which  excludes  vacant  space)  and  incorporates
    contractual  rent  increases  arising after 1999, and thus differs from "Total  Effective  Annual Base Rent" in
    the preceding table which is based on 1999 rents.
</TABLE>

Tenant Improvements and Leasing Commissions

The following table  summarizes by year the capitalized  tenant  improvement and
leasing  commission  expenditures  incurred  in the  renewal  or  re-leasing  of
previously occupied space since January 1, 1995.
<TABLE>
<CAPTION>

                                Capitalized Tenant Improvements and Leasing Commissions

                                                   1999             1998            1997          1996           1995
Office Properties
<S>                                           <C>                <C>             <C>            <C>            <C>
Square footage renewed or re-leased           1,627,615          579,904         174,354        39,706         79,745
Capitalized tenant improvements and
    commissions ($000s)                         $11,353           $4,263          $  850      $    617        $   468
    Average per square foot of renewed or
    re-leased space                               $6.98            $7.35          $ 4.87      $  15.54 (1)    $  5.87

Office/Flex Properties
Square footage renewed or re-leased             872,066          876,490         138,658        9,000             (2)
Capitalized tenant improvements and
    commissions ($000s)                          $2,675           $3,232         $  418      $     23             (2)
    Average per square foot of renewed or
    re-leased space                              $3.07            $3.69          $ 3.01      $   2.56             (2)

                                                     continued

                                       11
<PAGE>

                          Capitalized Tenant Improvements and Leasing Commissions - continued

                                                   1999             1998            1997          1996           1995

Industrial Properties
<S>                                             <C>            <C>               <C>           <C>            <C>
Square footage renewed or re-leased             457,561          307,896         198,055        60,000        141,523
Capitalized tenant improvements and
    commissions ($000s)                            $840             $370          $  235      $     51        $   114
    Average per square foot of renewed or
    re-leased space                               $1.84            $1.20          $ 1.19      $   0.85        $  0.81

Retail Properties
Square footage renewed or re-leased             113,858           45,894          12,080        32,998         33,294
Capitalized tenant improvements and
    commissions ($000s)                            $522             $283          $   42      $     83        $    98
    Average per square foot of renewed or
    re-leased space                               $4.58            $6.16          $ 3.51      $   2.53        $  2.94

All Properties
Square footage renewed or re-leased           3,071,100        1,810,184         523,147       141,704        254,562
Capitalized tenant improvements and
    commissions ($000s)                         $15,390           $8,148          $1,545          $774        $   680
    Average per square foot of renewed or
    re-leased space                               $5.01            $4.50          $ 2.95         $5.46        $  2.67

(1)  The significant cost of capitalized tenant  improvements and commissions per
     square foot renewed or re-leased in 1996  relative to the other years  presented
     is primarily the result of tenant  improvements  provided in  connection  with a
     lease extension of space for the principal tenant of one property. The lease was
     extended 10 years and expires in 2010.
(2)  Prior to 1996,  Properties  currently  classified as office/flex  Properties
     were included in industrial Properties.
</TABLE>

Multifamily Properties

The Operating  Partnership  owns 38 multifamily  Properties,  aggregating  9,538
units.  All of  the  units  are  rented  to  residential  tenants  on  either  a
month-to-month  basis  or for  terms of one  year or  less.  For the year  ended
December 31, 1999, the multifamily Properties were approximately 93% leased.

The following table sets forth, for the periods specified,  total units, average
occupancy,  monthly  average  effective  base rent per unit and total  effective
annual base rent for the multifamily Properties.
<TABLE>
<CAPTION>

                                            Multifamily Properties
                                        Historical Rent and Occupancy
                                                                     Average Effective       Total Effective
                                            Average Occupancy          Base Rent per         Annual Base Rent
Year                    Total Units                                 Leased Unit (1) (3)       ($000s)(2) (3)
------------------    -----------------    --------------------     --------------------    -------------------
<S>                         <C>                     <C>                 <C>                    <C>
1999                        9,538                   93%                 $     640              $   68,124
1998                        9,353                   93                        618                  64,507
1997                        2,251                   95                        619                  15,884
1996                          642                   94                        598 (4)               4,328
1995                          104                   94                        630                     739

(1) Total Effective Annual Base Rent divided by average occupied unit.
</TABLE>

                                       12
<PAGE>


(2)  Total  Effective  Annual Base Rent  adjusted for any free rent given for
     the period.
(3)  In any given year,  base rents are presented on an annualized  basis based
     on results since the acquisition for properties that were acquired during
     the year.
(4)  Average  effective  monthly base rent per unit declined in 1996 due to the
     acquisition of properties with lower base rents.

Hotel Properties

Through June 1998, the Operating Partnership leased to GHG six Country Suites by
Carlson  hotels  that it owned.  In 1998,  three of the hotels were sold and the
other three hotels were leased to two other hotel operators. In 1999, two of the
hotels were sold to one of the hotel operators.  The leases  terminated upon the
sales of the properties.  Currently, the Operating Partnership owns one 227 room
hotel located in Scottsdale, Arizona.

Item 3.       Legal Proceedings

Blumberg.  On July 24, 1999,  the Supreme  Court of the United  States  denied a
petition for a writ of certiorari to review the Company's  settlement of a class
action  complaint  originally  filed on February 21, 1995 in connection with the
Consolidation.  No further appeals are possible in this case, and the settlement
amount was paid in full in 1995. Under the settlement, the Company agreed to pay
$855,000  to settle  certain  claims by Anthony  E.  Blumberg,  and others  (the
"Blumberg  Action"),  that the  Company  and others  had,  among  other  things,
breached  their  fiduciary  duty and duty of good  faith  and  fair  dealing  to
investors in the  Partnerships  involved in the  Consolidation.  Certain parties
objected to the  settlement,  but the settlement was approved (or review denied)
by the Superior  Court of the State of  California  in and for San Mateo County,
the  California  state court of appeals,  the  California  Supreme Court and the
Supreme Court of the United States.

BEJ Equity  Partners.  On  December 1, 1995,  a second  class  action  complaint
relating  to the  Consolidation  was  filed in  Federal  District  Court for the
Northern  District of California  (the "BEJ Action").  The plaintiffs in the BEJ
Action  voluntarily stayed the action pending resolution of the Blumberg Action.
Following the resolution of the Blumberg  Action,  the Company filed a motion to
dismiss  the BEJ  Action in January  2000.  As of the date of this  report,  the
plaintiffs had failed to file a timely  responsive  pleading,  so the defendants
intend to move for final dismissal.

The  plaintiffs in the BEJ Action are BEJ Equity  Partners and others,  who as a
group held limited partner interests in certain of the Partnerships  included in
the  Consolidation,  on behalf of themselves and all others similarly  situated.
The defendants are the Company and other  Glenborough  entities  involved in the
Consolidation,   as  well  as  Robert  Batinovich  and  Andrew  Batinovich.  The
Partnerships are named as nominal defendants.

This action alleges certain  disclosure  violations and  substantially  the same
breaches of fiduciary duty as were alleged in the Blumberg Action. The complaint
sought injunctive relief, which was denied at a hearing on December 22, 1995. At
that hearing, the court also deferred all further proceedings in this case until
after the scheduled  January 17, 1996 hearing in the Blumberg Action.  Following
several  stipulated  extensions  of  time  for the  Company  to  respond  to the
complaint, the Company filed a motion to dismiss the case. Plaintiffs in the BEJ
Action  voluntarily stayed the action pending resolution of the Blumberg Action;
such plaintiffs can revive their lawsuit.

It is management's position that the BEJ Action is without merit, and management
intends to pursue a vigorous defense.  However, given the inherent uncertainties
of litigation,  there can be no assurance  that the ultimate  outcome in the BEJ
Action will be in the Company's favor.

Certain other claims and lawsuits have arisen against the Operating  Partnership
and the Company in their normal course of business.  The  Operating  Partnership
and the Company  believe  that such other  claims and  lawsuits  will not have a
material  adverse  effect  on  the  Operating  Partnership's  or  the  Company's
financial position, cash flow or results of operations.

                                       13
<PAGE>

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 year ended December 31, 1999.

                                     PART II

Item 5.       Market for Partnership's Equity and Related Partner Matters

(a)   Market Information

There is no  established  trading  market for the Units issued by the  Operating
Partnership.

Holders

As of December 31, 1999, there were 89 holders of Operating Partnership Units.

Distributions

Since its  organization,  the Operating  Partnership has paid regular  quarterly
distributions to holders of its Units.  During the years ended December 31, 1998
and 1999, the Operating Partnership paid the following quarterly distributions:

                             Distributions               Total
Quarterly Period               Per Unit              Distributions
------------------------    ----------------      ---------------------
1998
First Quarter                  $   0.42              $  17,122,000      (1)
Second Quarter                 $   0.42              $  20,130,000      (2)
Third Quarter                  $   0.42              $  20,650,000      (2)
Fourth Quarter                 $   0.42              $  20,607,000      (2)
1999
First Quarter                  $   0.42              $  20,697,000      (2)
Second Quarter                 $   0.42              $  20,597,000      (2)
Third Quarter                  $   0.42              $  20,182,000      (2)
Fourth Quarter                 $   0.42              $  19,951,000      (3)


(1) Total distributions  include a preferred partner interest  distribution paid
    to the Company of $3,910,000.
(2) Total distributions  include a preferred partner interest  distribution paid
    to the Company of $5,570,000.
(3) Total distributions  include a preferred partner interest  distribution paid
    to the Company of $5,488,000.

The Operating Partnership intends to pay regular quarterly  distributions to its
Unit holders.  Future distributions by the Operating  Partnership will be at the
discretion  of  management  and will  depend upon the actual  operations  of the
Operating Partnership, its financial condition, capital requirements, applicable
legal  restrictions  and such other factors as management  deems  relevant.  The
Operating  Partnership  intends  to  continue  its  policy of  paying  quarterly
distributions, but there can be no assurance that distributions will continue or
be paid at any specific level.

Item 6.       Selected Financial Data

Set forth below are selected financial data for:

         Glenborough  Properties,  L.P.:  Consolidated  balance  sheet data is
         presented as of December 31, 1999,  1998,  1997,  1996 and 1995.
         Consolidated  operating  data is presented for the years ended
         December 31, 1999,  1998, 1997 and 1996, and As Adjusted  consolidated

                                       14
<PAGE>

         operating data is presented for the year ended  December 31, 1995. The
         As Adjusted data assumes the  Consolidation  and related transactions
         occurred on January 1, 1995,  in order to present  the  operations  of
         the  Operating Partnership  for that  period  as if the  Consolidation
         had been in  effect  for that  period.  As Adjusted data is presented
         to provide amounts which are comparable to the  consolidated  results
         of operations of the  Operating  Partnership  for the years ended
         December 31, 1999,  1998,  1997 and 1996.

         The GRT  Predecessor  Entities:  Combined operating data is presented
         for the year ended December 31, 1995.

This selected  financial data should be read in  conjunction  with the financial
statements  of  Glenborough  Properties,  L.P.,  including  the  notes  thereto,
included in Item 14.
<TABLE>
<CAPTION>

                               Historical   Historical   Historical  Historical    As Adjusted   Historical
                                  1999         1998         1997        1996          1995          1995
                               ------------ ----------- ----------- ------------- ------------- -----------

Operating Data:
<S>                             <C>          <C>         <C>         <C>            <C>         <C>
 Rental Revenue.........        $  255,339   $ 227,956   $  61,393   $  17,943      $ 13,495    $ 15,454
 Fees and reimbursements             3,312       2,802         719         311            --      16,019
 Interest and other income           6,404       4,557       1,627       1,070           982       2,698
 Equity in earnings of
     Associated Companies            1,222       1,314       2,743       1,598            --          --
 Equity in loss of joint ventures     (310)         --          --          --            --          --
 Total Revenues(1)......           274,980     241,425      67,973      21,243        14,477      34,171
 Property operating expenses        88,037      75,426      20,904       5,735         4,624       8,576
 General and administrative          9,672      10,682       4,002       1,490           983      15,947
 Interest expense.......            64,782      53,289       9,668       3,913         2,767       2,129
 Depreciation and
   Amortization.........            58,295      50,169      14,829       4,583         3,654       4,762
 Income (loss) from
   operations
   before extraordinary
   item and   Preferred
   Partner Interest
   Distributions........            52,965      47,536      18,570      (1,715)        1,586         524
 Net income (loss) before
   Preferred Partner
   Interest Distributions (2)       53,949      46,136      17,727      (1,901)        1,586         524
 Net income (loss) available
   to general and limited partners  31,669      25,516      17,727      (1,901)        1,586         524
 Per Unit (3):
   Net income (loss) before
     extraordinary item....           0.87        0.77        0.97       (0.24)         0.40          --
 Net income (loss) available
   to general and limited partners    0.89        0.73        0.93       (0.27)         0.40          --

Balance Sheet Data:
 Rental properties, net         $1,647,366   $1,742,439  $ 825,218   $ 161,945            --    $ 77,574
 Mortgage loans receivable,
   net..................            37,582      42,420       3,692       9,905            --       7,216
 Total assets...........         1,795,247   1,878,253     866,879     184,839            --     101,432
 Total debt.............           897,358     922,097     228,299      75,891            --      33,685
 Partners' equity.......           867,264     927,235     626,313     105,632            --      63,223

Other Data:
  Distributions per unit
   (excluding Preferred
   Partner Interest
   Distributions) (4)...              1.68        1.68        1.38        1.22          1.20          --
   Preferred Partner
   Interest Distributions           22,280      20,620          --          --            --          --
 EBIDA(5)...............           168,258     150,521      41,576      13,697            --       9,291
 Cash flow provided by (used
   for):
   Operating activities.            92,004      88,129      19,851       5,477            --     (10,608)
   Investing activities.            82,871    (613,840)   (569,242)    (61,833)           --       8,656
   Financing activities.          (172,531)    526,060     552,276      57,003            --     (17,390)

                                                     continued
</TABLE>

                                       15
<PAGE>

<TABLE>
<CAPTION>


                               Historical   Historical   Historical  Historical    As Adjusted   Historical
                                  1999         1998         1997        1996          1995          1995
                               ------------ ----------- ----------- ------------- ------------- -----------

 Ratios:
<S>                                 <C>          <C>       <C>           <C>              <C>       <C>
 Ratio of Earnings to Fixed
  Charges (6)                         1.75         1.85       2.92        0.56            --         1.41
 Ratio of Earnings to Fixed
  Charges and Preferred
  Partner Interest                    1.31         1.34       2.92        0.56            --        1.41
  Distributions(7)
 Annual Service Charge
  Coverage(8)                         2.49         2.77       4.30        1.65            --          --
 Debt to Total Assets(9)             49.2%        48.9%       26.7%       37.7%           --          --
 Secured Debt to Total               37.2%        36.4%       16.5%       36.1%           --          --
  Assets(10)
 Total Unencumbered Assets
  to Unsecured Debt (11)            281.6%       283.8%     632.9%          --            --          --

(1)  Certain  revenues which are included in the historical  combined amounts for
     1995 are not included on an adjusted  basis.  These revenues are included in the
     financial  statements  of  the  unconsolidated  Associated  Companies,  on an as
     adjusted basis, from which the Operating Partnership receives lease payments and
     the Company and the Operating Partnership receive dividends.

(2)  Historical  1996 net loss reflects  $7,237 of  Consolidation  and litigation
     costs  incurred in connection  with the  Consolidation.  The  Consolidation  and
     litigation  costs were expensed on January 1, 1996, the Operating  Partnership's
     first day of operations.

(3)  As adjusted net income per unit is based upon as adjusted  weighted  average
     units outstanding of 3,979,376 for 1995.

(4)  Historical  distributions  per unit for the years ended  December 31, 1999,
     1998,  1997 and 1996  consist of  distributions  declared  for the periods  then
     ended. As adjusted  distributions  per unit for the year ended December 31, 1995
     are based on $0.30 per unit per quarter.

(5)  EBIDA is computed as income (loss) before  extraordinary items plus interest
     expense, depreciation and amortization, gains (losses) on disposal of properties
     and loss provisions. In 1996, consolidation and litigation costs were also added
     back to net income to determine EBIDA. The Operating  Partnership  believes that
     in addition to net income and cash flows, EBIDA is a useful measure of financial
     performance  because,  together with net income and cash flows,  EBIDA  provides
     investors with an additional  basis to evaluate its ability to incur and service
     debt and to fund acquisitions,  developments and other capital expenditures.  To
     evaluate  EBIDA and the trends it  depicts,  the  components  of EBIDA,  such as
     rental   revenues,   rental   expenses,   real  estate  taxes  and  general  and
     administrative expenses, should be considered.  See "Management's Discussion and
     Analysis of Financial Condition and Results of Operations."  Excluded from EBIDA
     are financing costs such as interest as well as depreciation  and  amortization,
     each of which can significantly  affect the Operating  Partnership's  results of
     operations  and liquidity  and should be considered in evaluating  the Operating
     Partnership's  operating  performance.  Further,  EBIDA does not  represent  net
     income or cash flows from  operating,  financing  and  investing  activities  as
     defined by generally  accepted  accounting  principles and does not  necessarily
     indicate  that  cash  flows  will be  sufficient  to fund  all of the  Operating
     Partnership's  cash needs.  It should not be considered as an alternative to net
     income, as an indicator of the Operating  Partnership's operating performance or
     as an  alternative  to cash flows as a measure of liquidity.  Further,  EBIDA as
     disclosed by other  similar  companies  may not be  comparable  to the Operating
     Partnership's  calculation of EBIDA.  The following table  reconciles net income
     (loss) of the  Operating  Partnership  to EBIDA for the  periods  presented  (in
     thousands):
</TABLE>
<TABLE>
<CAPTION>

                                                                                                        GRT
                                                                                                     Predecessor
                                                            The Operating Partnership                 Entities
                                                 -----------------------------------------------    -------------
                                                          For the Year Ended December 31,
                                                 ----------------------------------------------------------------
                                                 Historical   Historical  Historical  Historical     Historical
                                                    1999         1998        1997        1996           1995
                                                 ----------- ----------- ----------- -----------    -------------
<S>                                               <C>         <C>         <C>         <C>            <C>
                   Net income (loss) before       $  53,949   $  46,136   $  17,727   $  (1,901)     $     524
                      Preferred Partner
                      Interest Distributions
                   Extraordinary item......            (984)      1,400         843         186             --
                   Interest expense........          64,782      53,289       9,668       3,913          2,129
                   Depreciation and                  58,295      50,169      14,829       4,583          4,762
                   amortization
                   Net (gain) loss on sales of
                      real estate assets...          (9,013)     (4,796)     (1,491)       (321)            --
                   Loss on sale of mortgage
                      loan receivable                 1,229          --          --          --             --
                   Loss on interest rate
                      protection agreement.              --       4,323          --          --             --
                   Consolidation and                     --          --          --       7,237             --
                   litigation costs
                   Loss provisions.........              --          --          --          --          1,876
                                                 =========== =========== =========== ===========    =============
                   EBIDA...................       $ 168,258   $ 150,521   $  41,576   $  13,697      $   9,291
                                                 =========== =========== =========== ===========    =============
</TABLE>

                                       16
<PAGE>

(6)  The ratio of  earnings to fixed  charges is  computed as net income  (loss)
     from operations,  before extraordinary items, plus fixed charges (excluding
     capitalized  interest)  divided by fixed charges.  Fixed charges consist of
     interest costs including amortization of deferred financing costs.

(7)  The ratio of  earnings  to fixed  charges and  Preferred  Partner  Interest
     Distributions  is computed as net income  (loss)  from  operations,  before
     extraordinary  items, plus fixed charges (excluding  capitalized  interest)
     divided by fixed charges plus  Preferred  Partner  Interest  Distributions.
     Fixed charges consist of interest costs including  amortization of deferred
     financing costs.

(8)  The annual service  charge  coverage is computed as EBIDA divided by annual
     service  charge.  Annual  Service Charge for any period means the aggregate
     interest expense for such period and the amortization during such period of
     any original issue discount of, debt of the Operating  Partnership  and its
     subsidiaries.

(9)  Debt to total assets is computed as debt divided by total assets.

(10) Secured  debt to total  assets is computed as secured debt divided by total
     assets.

(11) Total   unencumbered   assets  to  unsecured  debt  is  computed  as  total
     unencumbered assets divided by unsecured debt.

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

The following  discussion and analysis of the financial condition and results of
operations of the Operating  Partnership  should be read in conjunction with the
selected financial data in Item 6 and the Consolidated  Financial  Statements of
Glenborough Properties, L.P., including the notes thereto, included in Item 14.

Results of Operations

Comparison  of the year ended  December 31, 1999 to the year ended  December 31,
1998.

Following is a table of net operating  income by property type, for  comparative
purposes, presenting the results for the years ended December 31, 1999 and 1998.
<TABLE>
<CAPTION>

                                      Results of Operations by Property Type
                                  For the Years Ended December 31, 1999 and 1998
                                                  (in thousands)

                                  Office/                               Multi-    Hotel and    Property    Eliminating   Total
                       Office       Flex     Industrial    Retail       family      Other        Total      Entry(1)    Reported

1999
<S>                   <C>          <C>          <C>          <C>         <C>          <C>        <C>          <C>        <C>
Rental Revenue        $120,135     $35,772      $18,694      $11,182     $68,144      $1,412     $255,339           -    $255,339
Operating Expenses      46,840      10,184        4,445        3,640      30,570         420       96,099     ($8,062)     88,037
Net Operating Income    73,295      25,588       14,249        7,542      37,574         992      159,240       8,062     167,302
   Percentage of
    Total NOI              46%         16%           9%           5%         23%          1%         100%


1998
Rental Revenue        $117,746     $36,987      $16,104      $12,072     $40,865      $4,182     $227,956           -    $227,956
Operating Expenses      44,775      10,898        3,609        3,840      17,235         967       81,324     ($5,898)     75,426
Net Operating Income    72,971      26,089       12,495        8,232      23,630       3,215      146,632       5,898     152,530
   Percentage of
    Total NOI              50%         18%           8%           6%         16%          2%         100%


(1)  Eliminating entry represents  internal market level property management fees
     included in operating expenses to provide comparison to industry performance.

Rental Revenue.  Rental revenue increased  $27,383,000,  or 12%, to $255,339,000
for the year ended  December  31,  1999,  from  $227,956,000  for the year ended
December 31,  1998.  The  increase  included  growth in revenue from the office,
</TABLE>

                                       17
<PAGE>

industrial,   and   multifamily   Properties  of   $2,389,000,   $2,590,000  and
$27,279,000, respectively. These increases were partially offset by decreases in
revenue  from the  office/flex,  retail  and  hotel  Properties  of  $1,215,000,
$890,000  and  $2,770,000,  respectively,  due to the 1998 and 1999  sales of 13
office/flex,  three retail and five hotel properties.  Excluding properties that
have been sold,  rental revenue for the year ended  December 31, 1999,  included
$16,504,000 generated from the 1996 Acquisitions, $86,695,000 generated from the
1997  Acquisitions,  $132,370,000  generated  from  the  1998  Acquisitions  and
$6,958,000  generated from the 1999  Acquisitions.  In addition,  $12,812,000 of
rental revenue was generated from 36 properties that were sold in 1999.

Fees and Reimbursements from Affiliates. Fees and reimbursements from affiliates
consist  primarily of property  management fees, asset management fees and lease
commissions  paid  to  the  Operating   Partnership  under  property  and  asset
management  agreements  with the Managed  Partnerships.  This revenue  increased
$510,000,  or 18%, to  $3,312,000  for the year ended  December 31,  1999,  from
$2,802,000 for the year ended December 31, 1998. The change  consists  primarily
of increased transaction fees from GC, which were generated from the disposition
of a property and development fees paid by an affiliated entity, and fees earned
for the management of two properties in which the Operating  Partnership  owns a
10% interest. These management fees did not occur in 1998.

Interest and Other  Income.  Interest and other income  increased  $1,847,000 or
41%, to $6,404,000 for the year ended December 31, 1999, from $4,557,000 for the
year ended  December 31,  1998.  The  increase  primarily  consisted of interest
income on a mortgage loan receivable secured by land located in Aurora, Colorado
which  originated  on June 30,  1998,  and  interest  earned on  lender  impound
accounts and invested cash balances.

Equity in Earnings of  Associated  Companies.  Equity in earnings of  Associated
Companies  decreased  $92,000,  or 7%, to $1,222,000 for the year ended December
31, 1999,  from $1,314,000 for the year ended December 31, 1998. The decrease is
primarily  due to a decrease in earnings  from GC resulting  from a provision to
reduce the carrying  value of management  contracts  with certain of the Managed
Partnerships.  This  decrease  is also due to a decrease  in  earnings  from GHG
resulting  from  the  cancellation  of GHG's  hotel  leases  with the  Operating
Partnership.

Net Gain on Sales of Real Estate Assets and Repayment of Notes  Receivable.  The
net gain on sales of real estate  assets and  repayment of notes  receivable  of
$9,013,000  during the year ended December 31, 1999,  resulted from the sales of
eight office  properties,  13 office/flex  properties,  three retail properties,
seven industrial properties,  one multifamily property, two hotel properties,  a
small  interest  in real  estate  securities  from the  Operating  Partnership's
portfolio,  and a reduction  in the  purchase  price of a hotel sold in 1998 for
which the Operating Partnership received full payment on all seller financing in
1999.  The net  gain on sales  of real  estate  assets  and  repayment  of notes
receivable of $4,796,000 during the year ended December 31, 1998,  resulted from
the sales of one office property,  two office/flex  properties,  four industrial
properties,  one  multifamily  property  and  three  hotel  properties  from the
Operating Partnership's portfolio.

Property Operating Expenses.  Property operating expenses increased $12,611,000,
or 17%, to $88,037,000  for the year ended December 31, 1999,  from  $75,426,000
for the year ended  December 31, 1998.  This  increase  represents  increases in
property operating  expenses  attributable to the 1998 Acquisitions and the 1999
Acquisitions  offset by decreases in property operating expenses due to the 1998
and 1999 sales of properties.

General  and  Administrative  Expenses.   General  and  administrative  expenses
decreased $1,010,000, or 9%, to $9,672,000 for the year ended December 31, 1999,
from $10,682,000 for the year ended December 31, 1998. The decrease is primarily
due to a reduction in staff and  overhead  expenses in response to a decrease in
acquisition  and  marketing  activities  since  mid-1998  and a reduction in the
number of  properties  owned.  As a percentage  of rental  revenue,  general and
administrative expenses decreased from 4.7% for the year ended December 31, 1998
to 3.8% for the year ended December 31, 1999.

Depreciation  and   Amortization.   Depreciation   and  amortization   increased
$8,126,000,  or 16%, to $58,295,000  for the year ended December 31, 1999,  from
$50,169,000  for the year ended December 31, 1998. The increase is primarily due
to depreciation and amortization  associated with the 1998 Acquisitions and 1999
Acquisitions.

Interest Expense. Interest expense increased $11,493,000, or 22%, to $64,782,000
for the year  ended  December  31,  1999,  from  $53,289,000  for the year ended
December  31, 1998.  Substantially  all of the increase was the result of higher

                                       18
<PAGE>

average  borrowings  during the year ended December 31, 1999, as compared to the
year ended December 31, 1998, due to new debt and the assumption of debt related
to the 1998 Acquisitions and 1999 Acquisitions.

Loss on Sale of Mortgage  Loan  Receivable.  During  1999,  a note secured by an
office  property in Phoenix,  Arizona was sold to a third-party at a discount of
$1,229,000.  The  proceeds  of the  sale  were  invested  in the  repurchase  of
preferred stock.

Net  Gain  (Loss)  on  Early   Extinguishment   of  Debt.   Net  gain  on  early
extinguishment  of debt of $984,000  during the year ended  December  31,  1999,
consists of $3,115,000 of net gains on retirement of Senior Notes at a discount,
offset by  $2,026,000  of losses due to  prepayment  penalties  and  $105,000 of
losses due to the  write-off of  unamortized  loan fees upon the early payoff of
four  loans.  These loans were  paid-off  early when more  favorable  terms were
obtained  through  new  financing  (discussed  below)  and  upon the sale of the
properties  securing  the  loans.  Net loss on early  extinguishment  of debt of
$1,400,000  during the year ended  December  31, 1998,  consisted of  prepayment
penalties  and the write-off of  unamortized  loan fees upon the early payoff of
debt.  Various loans were paid-off early when more favorable terms were obtained
through new financing and upon the sale of one of the hotels.

Comparison  of the year ended  December 31, 1998 to the year ended  December 31,
1997.

Following is a table of net operating  income by property type, for  comparative
purposes, presenting the results for the years ended December 31, 1998 and 1997.
<TABLE>
<CAPTION>

               Results of Operations by Property Type
           For the Years Ended December 31, 1998 and 1997
                           (in thousands)

                                  Office/                               Multi-    Hotel and    Property    Eliminating   Total
                       Office       Flex     Industrial    Retail       family      Other        Total      Entry(1)    Reported

1998
<S>                   <C>          <C>          <C>          <C>         <C>          <C>        <C>          <C>        <C>
Rental Revenue        $117,746     $36,987      $16,104      $12,072     $40,865      $4,182     $227,956           -    $227,956
Operating Expenses      44,775      10,898        3,609        3,840      17,235         967       81,324     ($5,898)     75,426
Net Operating Income    72,971      26,089       12,495        8,232      23,630       3,215      146,632       5,898     152,530
   Percentage of
    Total NOI              50%         18%           8%           6%         16%          2%         100%


1997
Rental Revenue         $25,071     $10,354       $7,320       $7,224      $5,536      $5,980      $61,485        ($92)    $61,393
Operating Expenses       9,986       3,062        1,459        2,183       2,309       1,894       20,893          11      20,904
Net Operating Income    15,085       7,292        5,861        5,041       3,227       4,086       40,592        (103)     40,489
   Percentage of
    Total NOI              37%         18%          15%          12%          8%         10%         100%


(1)  Eliminating entry represents  internal market level property management fees
     included in operating expenses to provide comparison to industry performance.
</TABLE>

Rental Revenue. Rental revenue increased $166,563,000,  or 271%, to $227,956,000
for the year  ended  December  31,  1998,  from  $61,393,000  for the year ended
December 31,  1997.  The  increase  included  growth in revenue from the office,
office/flex,  industrial,  retail and  multifamily  Properties  of  $92,675,000,
$26,633,000,   $8,784,000,  $4,848,000  and  $35,329,000,   respectively.  These
increases  were  partially  offset by a $1,798,000  decrease in revenue from the
hotel  Properties  due to the 1998 sales of two hotels.  Rental  revenue for the
year ended December 31, 1998,  included  $17,404,000 of rental revenue generated
from the  acquisition  of 20 properties in 1996,  $96,130,000  of rental revenue
generated  from the  acquisition  of 90 properties in 1997 and  $104,254,000  of
rental revenue generated from the acquisition of 69 properties in 1998.

                                       19
<PAGE>

Fees and Reimbursements from Affiliates. Fees and reimbursements from affiliates
consist  primarily of property  management fees, asset management fees and lease
commissions  paid  to  the  Operating   Partnership  under  property  and  asset
management  agreements  with the Managed  Partnerships.  This revenue  increased
$2,083,000,  or 290%, to $2,802,000 for the year ended  December 31, 1998,  from
$719,000 for the year ended December 31, 1997. The change consisted primarily of
increased lease  commissions  from an affiliated  entity and fees resulting from
the sale of managed properties.

Interest and Other Income.  Interest and other income increased  $2,930,000,  or
180%, to $4,557,000  for the year ended December 31, 1998,  from  $1,627,000 for
the year ended December 31, 1997.  This increase was primarily due to $1,749,000
of interest income on a mortgage loan receivable secured by Gateway Center which
originated on June 30, 1998.  In addition,  in 1998,  the Operating  Partnership
invested approximately $20 million in the securities of a private REIT which was
accounted  for using the  equity  method.  In 1998,  the  Operating  Partnership
recognized  approximately  $990,000 as equity in the  earnings  of this  private
REIT.

Equity in Earnings of  Associated  Companies.  Equity in earnings of  Associated
Companies  decreased  $1,429,000,  or 52%,  to  $1,314,000  for the  year  ended
December 31, 1998,  from  $2,743,000  for the year ended  December 31, 1997. The
decrease was primarily due to a decrease in earnings from GHG resulting from the
June 30, 1998 cancellation of GHG's hotel leases with the Operating Partnership.
The Operating  Partnership cancelled the leases with GHG when it sold two of its
hotels and leased the other four hotels to other  operators.  In December  1998,
one of the remaining  four hotels was sold to one of the operators and two other
hotels were in contract to be sold to another  operator in 1999.  This  decrease
was partially offset by transaction fees earned by GC related to the disposition
of several properties under its management.

Net Gain on Sales of Real Estate Assets and Repayment of Notes  Receivable.  The
net gain on sales of real estate  assets and  repayment of notes  receivable  of
$4,796,000  during the year ended December 31, 1998,  resulted from the sales of
one office property, two office/flex properties, four industrial properties, one
multifamily property and three hotel properties from the Operating Partnership's
portfolio. This net gain was partially offset by a $3.1 million loss on the sale
of the Operating  Partnership's  investment in the securities of a private REIT.
The net gain on sales of real estate assets and repayment of notes receivable of
$1,491,000  during the year ended December 31, 1997,  resulted from the sales of
16 retail properties from the Operating Partnership's portfolio,  which resulted
in a net gain of $839,000,  and the  collection  of a mortgage  loan  receivable
which  had a net  carrying  value  of  $6,700,000.  The  payoff  amount  totaled
$6,863,000, plus a $500,000 note receivable, which, net of legal costs, resulted
in a gain of $652,000.

Property Operating Expenses.  Property operating expenses increased $54,522,000,
or 261%, to $75,426,000 for the year ended December 31, 1998,  from  $20,904,000
for the year ended  December  31, 1997.  This  increase  primarily  consisted of
$22,750,000  attributable to the 1997 Acquisitions and $31,997,000  attributable
to the 1998 Acquisitions.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased  $6,680,000,  or 167%, to $10,682,000  for the year ended December 31,
1998,  from  $4,002,000  for the year ended  December 31, 1997. The increase was
primarily due to increased  salary and overhead  costs  resulting  from the 1997
Acquisitions and 1998 Acquisitions.  As a percentage of rental revenue,  general
and  administrative  expenses  actually  decreased  from 6.5% for the year ended
December 31, 1997 to 4.7% for the year ended December 31, 1998.

Depreciation  and   Amortization.   Depreciation   and  amortization   increased
$35,340,000,  or 238%, to $50,169,000 for the year ended December 31, 1998, from
$14,829,000 for the year ended December 31, 1997. The increase was primarily due
to depreciation and amortization  associated with the 1997 Acquisitions and 1998
Acquisitions.

Interest  Expense.   Interest  expense  increased   $43,621,000,   or  451%,  to
$53,289,000  for the year ended December 31, 1998,  from $9,668,000 for the year
ended  December  31, 1997.  Substantially  all of the increase was the result of
higher average  borrowings  during the year ended December 31, 1998, as compared
to the year ended  December 31, 1997, due to new debt and the assumption of debt
related to the 1997 Acquisitions and 1998 Acquisitions.

                                       20
<PAGE>

Loss  on  Interest  Rate  Protection  Agreement.   During  1998,  the  Operating
Partnership  entered  into a  forward  interest  rate  agreement  to lock in the
risk-free  interest component of a portion of a secured mortgage to be issued in
October 1998. The 10-year Treasury rates decreased during the term of the hedge.
During the fourth quarter of 1998, the Operating Partnership recorded an expense
for its payment of  $4,323,000  to  terminate a portion of the forward  interest
rate  agreement in connection  with a reduction in the amount of the mortgage to
be issued.  The Operating  Partnership's  payment of $6,244,000 in settlement of
the  remaining  portion of the forward  interest  rate  agreement has offset the
reduced financing costs of the $248.8 million mortgage issued in October 1998.

Net Loss on Early  Extinguishment  of Debt. Net loss on early  extinguishment of
debt of  $1,400,000  during the year  ended  December  31,  1998,  consisted  of
prepayment  penalties and the write-off of unamortized  loan fees upon the early
payoff of debt. Various loans were paid-off early when more favorable terms were
obtained through new financing (discussed below) and upon the sale of one of the
hotels.  Net loss on early  extinguishment  of debt of $843,000  during the year
ended December 31, 1997,  resulted from the write-off of  unamortized  loan fees
related to a $50 million  secured line of credit which was replaced  with a $250
million unsecured line of credit (the "Credit Facility") from a commercial bank.

Liquidity and Capital Resources

Cash Flows
For the year ended  December 31,  1999,  cash  provided by operating  activities
increased by $3,875,000 to  $92,004,000  as compared to $88,129,000 in 1998. The
increase is primarily due to an increase in net income (before  depreciation and
amortization,  net gain on sales of real estate assets, loss on sale of mortgage
loan receivable and net gain on early extinguishment of debt) of $10,567,000 due
to the 1998  Acquisitions and 1999  Acquisitions,  offset by an increase in cash
used for other assets and liabilities.  Cash from investing activities increased
by $696,711,000 to $82,871,000 for the year ended December 31, 1999, as compared
to  $613,840,000  of cash used for investing  activities  for the same period in
1998.  The  change is  primarily  due to  decreased  property  acquisitions  and
increased  property  dispositions  from  1998 to 1999.  During  the  year  ended
December 31, 1998, the Operating  Partnership acquired 69 properties as compared
to ten  properties  during the year ended  December  31, 1999 and disposed of 34
properties  in 1999 as  compared  to 11 in  1998.  In  addition,  cash  used for
investments in development and mortgage loans receivable decreased significantly
during the year ended  December 31, 1999 as compared to the same period in 1998.
Cash from financing activities decreased by $698,591,000 to $172,531,000 of cash
used for financing  activities for the year ended December 31, 1999, as compared
to $526,060,000 of cash provided by financing  activities for the same period in
1998.  This change was  primarily  due to a decrease in  contributions  from the
Company of the net  proceeds  from the  issuance  of stock,  a  decrease  in the
proceeds from new debt and an increase in cash used for the retirement of Senior
Notes,  partner  distributions and redemption of units,  offset by a decrease in
the repayment of other debt.  Subsequent to its original formation,  the Company
issued  additional  equity  in the form of  common  and  preferred  shares.  The
proceeds from these offerings were contributed to the Operating Partnership.  As
a result of a preferred  stock  offering in 1998,  the Company holds a preferred
partner  interest which has been accounted for as additional  paid in capital in
the  accompanying  financial  statements.  No  additional  units were  issued in
exchange for this  contribution,  however it entitles the Company to a preferred
partner interest  distribution  sufficient to pay the Company's  preferred stock
distributions,  which are paid at a rate of $1.94 per share.  There have been no
such offerings in 1999. In addition,  in 1998, the Operating  Partnership issued
$150,000,000 of unsecured Senior Notes.

The Operating Partnership expects to meets its short-term liquidity requirements
generally  through its working  capital,  its Credit Facility (as defined below)
and cash generated by operations.  The Operating  Partnership  believes that its
cash generated by operations will be adequate to meet operating requirements and
to make  distributions in both the short and the long-term.  In addition to cash
generated  by  operations,  the Credit  Facility  provides  for working  capital
advances.  However,  there can be no assurance that the Operating  Partnership's
results of  operations  will not fluctuate in the future and at times affect (i)
its  ability  to meet its  operating  requirements  and (ii) the  amount  of its
distributions.

The  Operating  Partnership's  principal  sources of funding  for  acquisitions,
development, expansion and renovation of properties include the unsecured Credit
Facility,  permanent  secured debt financing,  public  unsecured debt financing,

                                       21
<PAGE>

contributions  from the Company,  privately  placed  financing,  the issuance of
Operating Partnership units, proceeds from property sales and cash flow provided
by operations.

Mortgage Loans Receivable
Mortgage loans  receivable  decreased from  $42,420,000 at December 31, 1998, to
$37,582,000 at December 31, 1999.  This decrease was primarily due to the payoff
of two loans totaling $4.3 million and a $1.6 million decrease in a loan secured
by a hotel property  resulting from a subsequent  adjustment to the sales price,
offset by a $1,141,000  loan made by the Operating  Partnership  to the buyer of
one of the hotel properties and accrued interest on a loan made by the Operating
Partnership under a development alliance.

Secured and Unsecured Financing
Mortgage  loans payable  decreased  from  $708,578,000  at December 31, 1998, to
$701,715,000  at December 31, 1999.  This  decrease  resulted from the payoff of
approximately  $167,438,000  of mortgage loans in connection  with 1999 sales of
properties  and  refinancing  of  debt,  and  scheduled  principal  payments  of
approximately  $9,500,000.  This decrease is partially  offset by $39,275,000 of
new mortgage  loans in connection  with 1999  Acquisitions  and new financing of
$130,800,000 (as discussed below).

In March 1999,  the  Operating  Partnership  obtained a $26 million  loan from a
commercial  bank. The loan was  non-recourse and was secured by seven properties
and had a maturity  date of December 22, 1999,  with an option to extend for six
months. The proceeds were used to pay off a loan which was previously secured by
these same  properties and to reduce other debt.  This loan was paid off in June
1999 with proceeds generated from the sales of four properties.

In  August  1999,  the  Operating  Partnership  closed a $97.6  million  secured
financing with a commercial bank ("Secured  Financing").  The proceeds from this
financing, combined with proceeds from a new $7.2 million mortgage and a draw on
the Credit  Facility,  were used to retire a $113.2 million mortgage which would
have  matured in  December of 1999.  The new  financing  is a revolving  line of
credit  maturing  in five years with a  five-year  extension  option,  and bears
interest  at a floating  rate equal to 75 basis  points over the rate for 90-day
mortgage  backed  securities  credit-enhanced  by FNMA.  The  December  31, 1999
interest rate on this loan was 6.53%.

In connection with the Secured Financing, the Operating Partnership entered into
an interest  rate cap  agreement to hedge  increases  in interest  rates above a
specified  level of 11.21%.  The  agreement  is for a term  concurrent  with the
Secured  Financing  instrument,  is indexed to a 90-day LIBOR rate, and is for a
notional amount equal to the maximum amount  available on the Secured  Financing
loan. As of December 31, 1999, the 90-day LIBOR rate was 6.00125%. The Operating
Partnership  paid a fee at the  inception of the cap  agreement,  which is being
amortized as additional interest expense over the life of the agreement.

In November  1999,  through  the  acquisition  of a property  through one of the
Operating Partnership's development alliances, the Operating Partnership assumed
a $10 million  loan from a commercial  bank.  This loan is secured by one office
property,  has a maturity date of June 30, 2000 and bears interest at a floating
rate of LIBOR plus 2.50% (the  December 31, 1999  interest rate on this loan was
8.32%).

In December 1999, the Operating Partnership obtained an unsecured term loan from
a commercial bank whereby, until December 9, 2000, the Operating Partnership can
borrow the lesser of $125 million or the then Loan  Availability  (as  defined).
Any unborrowed  amounts from the loan at December 9, 2000 will be cancelled.  At
December 31, 1999,  $33,865,000  was  outstanding  on the loan.  This loan has a
maturity  date of June 10, 2002 and bears  interest at a floating  rate of LIBOR
plus 1.75%.  The December 31, 1999 interest rate on this loan was 8.25%.

In the second,  third and fourth  quarters of 1999,  the  Operating  Partnership
retired  approximately $58.9 million of unsecured Senior Notes at a discount. As
a result of these  transactions,  a net gain on early  extinguishment of debt of
approximately  $3.1  million was  recorded  which is included in the net gain on
early  extinguishment  of debt on the  accompanying  consolidated  statement  of
income for the year ended December 31, 1999.

                                       22
<PAGE>

In  connection  with the loan  payoffs  discussed  above and the payoff of other
mortgage  debt,  the  Operating   Partnership  recorded  a  net  gain  on  early
extinguishment  of debt of $984,000 for the year ended  December 31, 1999.  This
gain  consists of  $3,115,000  of net gains on  retirement  of Senior  Notes (as
discussed above) offset by $2,026,000 of losses due to prepayment  penalties and
$105,000 of losses due to the write-off of unamortized  loan fees upon the early
payoff of four loans.  These loans were paid-off early when more favorable terms
were obtained through new financing  (discussed  above) and upon the sale of the
properties securing the loans.

The Operating Partnership has an unsecured line of credit provided by a group of
commercial  banks (the  "Credit  Facility").  Outstanding  borrowings  under the
Credit Facility  increased from $63,519,000 at December 31, 1998, to $70,628,000
at  December  31,  1999.  The  increase  was due to  draws of  $177,683,000  for
acquisitions, stock repurchases, purchases of the Operating Partnership's Senior
Notes, and debt refinancing,  offset by pay downs of $170,574,000 generated from
proceeds from the sales of properties and cash from operations. In June 1999, in
order to increase the Operating Partnership's financial flexibility,  the Credit
Facility  was modified to increase  the  commitment  from $100 million to $142.5
million. The interest rate, monthly payments and maturity date of December 2000,
remained  unchanged.  Subsequent  to December  31, 1999,  the maturity  date was
extended to June 2002.

At December 31, 1999, the Operating  Partnership's  total indebtedness  included
fixed-rate debt of $646,763,000 and floating-rate  indebtedness of $250,595,000.
Approximately 65% of the Operating  Partnership's  total assets,  comprising 102
properties, is encumbered by debt at December 31, 1999.

It is the Operating  Partnership's policy to manage its exposure to fluctuations
in market  interest rates through the use of fixed rate debt  instruments to the
extent  possible.  At December  31,  1999,  approximately  28% of the  Operating
Partnership's  outstanding  debt,  including  amounts  borrowed under the Credit
Facility,  were subject to variable rates.  The Operating  Partnership may, from
time to time, enter into interest rate protection  agreements  intended to hedge
the cost of new borrowings that are reasonably assured of completion.  It is not
the  Operating   Partnership's  policy  to  engage  in  hedging  activities  for
previously outstanding debt instruments or for speculative purposes. At December
31, 1999,  the Operating  Partnership  was not a party to any open interest rate
protection  agreements other than the interest rate cap contract associated with
the Secured Financing discussed above.

Equity and Debt Offerings
In  January  1999,  the  Operating  Partnership  and the  Company  filed a shelf
registration  statement  with  the SEC (the  "January  1999  Shelf  Registration
Statement")  to  register  $300  million  of debt  securities  of the  Operating
Partnership  and to  carry  forward  the  remaining  $801.2  million  in  equity
securities  of the Company  from a November  1997 shelf  registration  statement
(declared  effective  by the SEC on December 18,  1997).  The January 1999 Shelf
Registration  Statement  was declared  effective by the SEC on January 25, 1999.
Therefore,  the Operating Partnership and the Company have the capacity pursuant
to the January 1999 Shelf Registration  Statement to issue up to $300 million in
debt  securities  and $801.2  million in equity  securities,  respectively.  The
Operating Partnership and the Company currently have no plans to issue equity or
debt under these shelf registrations.

Development Alliances
The  Operating  Partnership  currently  has  3  development  alliances  for  the
development  of  approximately  885,000 square feet of office,  office/flex  and
distribution  properties and 1,614  multifamily  units in Colorado,  Texas,  New
Jersey,  Kansas and Michigan. As of December 31, 1999, the Operating Partnership
has an investment in these  development  projects of approximately  $33 million.
Under these development alliances,  the Operating Partnership has certain rights
to purchase the properties  upon  completion of  development  over the next five
years. In addition,  the Operating  Partnership has loaned  approximately  $36.4
million  (including  accrued  interest)  under another  development  alliance to
continue the  build-out of a 1,200 acre  master-planned  development  in Denver,
Colorado.

Inflation
Substantially  all of the  leases  at the  office/flex,  industrial  and  retail
Properties  provide  for  pass-through  to tenants of certain  operating  costs,
including real estate taxes,  common area maintenance  expenses,  and insurance.
Leases at the multifamily  properties  generally  provide for an initial term of
one  month or one year and allow for rent  adjustments  at the time of  renewal.
Leases at the  office  Properties  typically  provide  for rent  adjustment  and

                                       23
<PAGE>

pass-through of certain operating  expenses during the term of the lease. All of
these  provisions may permit the Operating  Partnership to increase rental rates
or other charges to tenants in response to rising prices and therefore, serve to
reduce the Operating Partnership's exposure to the adverse effects of inflation.

Forward Looking Statements; Factors That May Affect Operating Results
This Report on Form 10-K contains forward looking  statements within the meaning
of Section 27A of the  Securities  Act of 1933 and Section 21E of the Securities
and  Exchange  Act  of  1934,   including  statements  regarding  the  Operating
Partnership's expectations,  hopes, intentions, beliefs and strategies regarding
the future.  Forward looking statements include statements  regarding  potential
acquisitions,  the  anticipated  performance  of future  acquisitions,  recently
completed  acquisitions and existing  properties,  and statements  regarding the
Operating  Partnership's  financing  activities.  All forward looking statements
included in this  document are based on  information  available to the Operating
Partnership  on the date  hereof.  It is  important  to note that the  Operating
Partnership's  actual  results  could  differ  materially  from those  stated or
implied in such forward looking statements. Some of the factors that could cause
actual results to differ materially are set forth below.

The Limited  Availability of and Competition  for Real Estate  Acquisitions  May
Restrict the Operating Partnership's Ability to Grow
The Operating  Partnership's  growth depends,  in part, upon  acquisitions.  The
Operating  Partnership  cannot be sure that  properties  will be  available  for
acquisition or, if available,  that it will be able to purchase those properties
on favorable  terms. The  unavailability  of such  acquisitions  could limit the
Operating  Partnership's  growth.  Furthermore,  the Operating Partnership faces
competition from several other businesses,  individuals,  fiduciary accounts and
plans and entities in the acquisition, operation and sale of properties. Some of
the Operating  Partnership's  competitors are larger than it is and have greater
financial  resources  than it does.  This  competition  could  cause the cost of
properties it wishes to purchase to rise. If the Operating Partnership is unable
to continue to grow through  acquisitions,  then its results of  operations  and
financial condition could be negatively impacted.

Competition  for Tenants  Could  Adversely  Affect the  Operating  Partnership's
Operations
When space becomes  available at the  Operating  Partnership's  properties,  the
leases  may not be  renewed,  the space may not be leased or  re-leased,  or the
terms of the renewal or re-lease (including the cost of required  renovations or
concessions  to tenants) may be less  favorable to it than the prior lease.  The
Operating  Partnership  has  established  annual  property  budgets that include
estimates  of costs  for  renovation  and  re-leasing  expenses.  The  Operating
Partnership  believes  that  these  estimates  are  reasonable  in light of each
property's  situation;  however,  no assurance can be given that these estimates
will  sufficiently  cover these expenses.  If the Operating  Partnership  cannot
lease all or substantially all of the space at its properties  promptly,  if the
rental  rates  are  significantly  lower  than  expected,  or if  the  Operating
Partnership's  reserves for these purposes prove inadequate,  then the Operating
Partnership's  results of operations and financial condition could be negatively
impacted.

Tenants' Defaults Could Adversely Affect the Operating Partnership's Operations
The Operating  Partnership's  ability to manage its assets is subject to federal
bankruptcy  laws and state  laws  that  limit  creditors'  rights  and  remedies
available  to real  property  owners to collect  delinquent  rents.  If a tenant
becomes insolvent or bankrupt,  the Operating Partnership cannot be sure that it
could  recover  the  premises  from the  tenant  promptly  or from a trustee  or
debtor-in-possession  in any bankruptcy  proceeding relating to that tenant. The
Operating  Partnership  also  cannot be sure that it would  receive  rent in the
proceeding  sufficient to cover its expenses with respect to the premises.  If a
tenant becomes bankrupt,  the federal  bankruptcy code will apply, which in some
instances  may  restrict  the  amount  and   recoverability   of  the  Operating
Partnership's  claims against the tenant.  A tenant's default on its obligations
to the Operating  Partnership  could adversely  affect its results of operations
and financial condition.

Cash Flow May Be Insufficient for Debt Service Requirements
The Operating Partnership intends to incur indebtedness in the future, including
through borrowings under its Credit Facility, to finance property  acquisitions,
retirement of debt and stock repurchases. As a result, the Operating Partnership
expects to be subject to the  following  risks  associated  with debt  financing
including:

                                       24
<PAGE>

     that interest rates may increase;
     that the Operating Partnership's cash flow may be insufficient to meet
     required  payments on its debt;
     and
     that the Operating Partnership may be unable to refinance or repay the
     debt as it comes due.

Debt  Restrictions  May Affect  Operations and  Negatively  Affect the Operating
Partnership's Ability to Repay Indebtedness at Maturity
The Operating  Partnership's  current $142.5 million  unsecured  Credit Facility
contains provisions that restrict the amount of distributions it can make. These
provisions  provide  that  distributions  may  not  exceed  90%  of  funds  from
operations for any fiscal quarter.  If the Operating  Partnership  cannot obtain
acceptable  financing to repay  indebtedness  at  maturity,  it may have to sell
properties to repay  indebtedness  or properties may be foreclosed  upon,  which
could  adversely  affect its  results of  operations,  financial  condition  and
ability to service  debt.  Also, as of December 31, 1999,  approximately  $470.4
million of the  Operating  Partnership's  total  indebtedness  included  secured
mortgages with  cross-collateralization  provisions.  In the event of a default,
the holders of this indebtedness may seek to foreclose upon properties which are
not the primary  collateral for their loan. This may, in turn,  accelerate other
indebtedness secured by these properties.  Foreclosure of properties would cause
a loss to the Operating Partnership of income and asset value.

Fluctuations in Interest Rates May Adversely Affect the Operating  Partnership's
Operations
As of December 31, 1999,  the Operating  Partnership  had  approximately  $250.6
million of variable  interest  rate  indebtedness.  Accordingly,  an increase in
interest rates will adversely affect the Operating  Partnership's net income and
results of operations.

Management of Newly Acquired Properties Could Be Difficult
Since the Consolidation on December 31, 1995, and through December 31, 1999, the
Operating  Partnership  acquired  approximately  $1.9 billion in properties.  To
manage these new properties effectively, the Operating Partnership has sought to
successfully  apply its experience  managing its existing  portfolio to expanded
markets and to an increased  number of  properties.  The  assimilation  of these
properties is a continuing process whose success cannot be assured indefinitely.
Should the Operating Partnership encounter future difficulties in managing these
newly acquired properties, this could adversely affect its results of operations
and financial condition.

Acquisitions Could Adversely Affect Operations
Consistent  with the  Operating  Partnership's  growth  strategy,  the Operating
Partnership  is  continually  pursuing  and  evaluating  potential   acquisition
opportunities.   From  time  to  time  the  Operating  Partnership  is  actively
considering the possible acquisition of specific  properties,  which may include
properties managed by GC or owned by affiliated parties. It is possible that one
or more of such possible  future  acquisitions,  if completed,  could  adversely
affect  the  Operating   Partnership's   results  of  operations  and  financial
condition.

Potential Adverse Consequences of Transactions Involving Conflicts of Interest
The  Operating  Partnership  has  acquired,  and from time to time may  acquire,
properties from partnerships that Robert Batinovich,  the Company's Chairman and
Chief Executive  Officer,  and Andrew  Batinovich,  the Company's  President and
Chief  Operating  Officer,  control,  and in  which  they and  members  of their
families have substantial interests.  These transactions involve or will involve
conflicts of interest.  These transactions also may provide substantial economic
benefits to those individuals such as:

     payments or issuances of partnership units in the Operating Partnership,
     relief or deferral of tax liabilities,
     relief of primary or secondary liability for debt, and
     reduction in exposure to other property-related liabilities.

The Operating  Partnership's  policy provides that interested  directors may not
vote with  regard to  transactions  in which they have a  substantial  interest.
These  transactions  may only be completed if they are approved by a majority of
the disinterested directors,  with the interested directors abstaining.  Despite
this policy and the  presence of  appraisals  or fairness  opinions or review by
parties who have no interest in the  transactions,  the transactions will not be

                                       25
<PAGE>

the  product  of  arm's-length  negotiation.  These  transactions  may not be as
favorable to the Operating  Partnership as transactions  that it negotiates with
unrelated  parties and they could  result in undue  benefit to Robert and Andrew
Batinovich and members of their  families.  None of these parties has guaranteed
that any properties  acquired from entities they control or in which they have a
significant  interest  will be as profitable  as other  investments  made by the
Operating Partnership or will not result in losses.

Dependence on Executive Officers
The Operating Partnership depends on the efforts of Robert Batinovich, its Chief
Executive  Officer and Andrew  Batinovich,  its  President  and Chief  Operating
Officer, and of its other executive officers. The loss of the services of any of
them could  have an adverse  effect on the  Operating  Partnership's  results of
operations  and  financial  condition.  Both Robert and Andrew  Batinovich  have
entered into employment agreements with the Company.

Potential Liability Due to Environmental Matters
Under  federal,  state and local laws relating to protection of the  environment
("Environmental  Laws"),  a current or previous owner or operator of real estate
may be liable for  contamination  resulting  from the  presence or  discharge of
petroleum products or other hazardous or toxic substances on the property. These
owners may be required to  investigate  and  clean-up the  contamination  on the
property as well as the  contamination  which has  migrated  from the  property.
Environmental  Laws  typically  impose  liability  and  clean-up  responsibility
without regard to whether the owner or operator knew of, or was responsible for,
the  presence  of the  contamination.  This  liability  may be joint and several
unless the harm is divisible and there is a reasonable  basis for  allocation of
responsibility.  In addition, the owner or operator of a property may be subject
to claims by third  parties  based on personal  injury,  property  damage and/or
other  costs,  including   investigation  and  clean-up  costs,  resulting  from
environmental contamination.  Environmental Laws may also impose restrictions on
the manner in which a property may be used or transferred or in which businesses
may  be  operated.  These  restrictions  may  require  expenditures.  Under  the
Environmental Laws, any person who arranges for the transportation,  disposal or
treatment of hazardous or toxic  substances  may also be liable for the costs of
investigation  or  clean-up of those  substances  at the  disposal or  treatment
facility,  whether or not the  facility is or ever was owned or operated by that
person.

Tenants of the  Operating  Partnership's  properties  generally  are required by
their leases to operate in compliance  with all applicable  Environmental  Laws,
and to indemnify the Operating  Partnership against any environmental  liability
arising  from  their  activities  on  the  properties.  However,  the  Operating
Partnership  could  be  subject  to  environmental  liability  relating  to  its
management  of the  properties  or strict  liability by virtue of its  ownership
interest in the properties.  Also tenants may not satisfy their  indemnification
obligations under the leases.  The Operating  Partnership is also subject to the
risk that:

     any  environmental  assessments of its properties,  properties being
     considered for acquisition,  or the properties  owned by the  partnerships
     managed by GC may not have  revealed all  potential  environmental
     liabilities,
     any prior  owner or prior or current  operator  of such  properties  may
     have  created  an  environmental condition not known to the Operating
     Partnership, or
     an environmental condition may otherwise exist as to any one or more of
     such properties.

Any one of these  conditions  could  have an  adverse  effect  on the  Operating
Partnership's  results  of  operations  and  financial  condition  or ability to
service debt,  either directly (with respect to its  properties),  or indirectly
(with respect to properties owned by partnerships  managed by GC). Any condition
adversely  affecting the financial  condition of GC could  adversely  affect the
Operating  Partnership by diminishing the value of its interest in GC. Moreover,
future environmental laws,  ordinances or regulations may have an adverse effect
on the Operating  Partnership's  results of operations,  financial condition and
ability to service  debt.  Also,  the current  environmental  condition of those
properties  may be affected by tenants and occupants of the  properties,  by the
condition of land or operations in the vicinity of the  properties  (such as the
presence of underground  storage  tanks),  or by third parties  unrelated to the
Operating Partnership.

                                       26
<PAGE>

Environmental  Assessments  and Potential  Liability Due to  Asbestos-Containing
Materials
Environmental  Laws  also  govern  the  presence,  maintenance  and  removal  of
asbestos-containing    building    materials.    These   laws    require    that
asbestos-containing  building  materials be properly  managed and maintained and
that those who may come into contact with asbestos-containing building materials
be adequately informed and trained.  They also require that special precautions,
including   removal   or  other   abatement,   be   undertaken   in  the   event
asbestos-containing   building  materials  is  disturbed  during  renovation  or
demolition of a building.  These laws may impose fines and penalties on building
owners or operators for failure to comply with these requirements. They also may
allow third  parties to seek  recovery  from owners or  operators  for  personal
injury associated with exposure to asbestos fibers.

All of the properties  that the Operating  Partnership  presently owns have been
subject  to  Phase I  environmental  assessments  by  independent  environmental
consultants.  Some of the Phase I environmental  assessments recommended further
investigations in the form of Phase II environmental assessments, including soil
and groundwater  sampling.  The Operating Partnership has completed all of these
investigations or is in the process of completing them. Certain of the Operating
Partnership's properties have been found to contain asbestos-containing building
materials.  The Operating  Partnership  believes that these  materials have been
adequately  contained and it has  implemented  an  asbestos-containing  building
materials operations and maintenance program for the properties found to contain
asbestos-containing building materials.

Some, but not all, of the properties  owned by  partnerships  managed by GC have
been subject to Phase I environmental  assessments by independent  environmental
consultants.  GC  determines on a  case-by-case  basis whether to obtain Phase I
environmental  assessments on these properties and whether to undertake  further
investigation   or   remediation.    Certain   of   these   properties   contain
asbestos-containing  building  materials.  In each case GC  believes  that these
materials   have   been   adequately    contained   and   has   implemented   an
asbestos-containing  building materials  operations and maintenance  program has
been  implemented  for  the  properties  found  to  contain  asbestos-containing
building materials.

Potential Environmental Liability Resulting From Underground Storage Tanks
Some of the Operating  Partnership's  properties,  as well as properties that it
has previously  owned,  are leased or have been leased to owners or operators of
businesses  that use,  store or  otherwise  handle  petroleum  products or other
hazardous  or toxic  substances.  These  businesses  include dry  cleaners  that
operate  on-site  dry  cleaning  plants  and auto  care  centers.  Some of these
properties  contain,  or may have contained,  underground  storage tanks for the
storage of petroleum  products and other  hazardous or toxic  substances.  These
operations create a potential for the release of those  substances.  Some of the
Operating Partnership's properties are adjacent to or near other properties that
have  contained or currently  contain  underground  storage  tanks used to store
petroleum  products  or other  hazardous  or toxic  substances.  Several  of the
Operating Partnership's  properties have been contaminated with these substances
from on-site  operations  or  operations  on adjacent or nearby  properties.  In
addition,  certain  of the  Operating  Partnership's  properties  are on, or are
adjacent to or near other properties upon which others,  including former owners
or tenants of the properties,  have engaged or may engage in activities that may
release petroleum products or other hazardous or toxic substances.

Environmental  Liabilities May Adversely  Affect  Operating Costs and Ability to
Borrow
The obligation to pay for the cost of complying with existing Environmental Laws
as  well as the  cost of  complying  with  future  legislation  may  affect  the
Operating  Partnership's operating costs. In addition, the presence of petroleum
products  or  other  hazardous  or  toxic  substances  at any  of the  Operating
Partnership's properties, or the failure to remediate those properties properly,
may  adversely  affect  its  ability  to borrow  by using  those  properties  as
collateral.  The cost of defending  against  claims of liability and the cost of
complying  with  Environmental  Laws,  including  investigation  or  clean-up of
contaminated   property,   could  materially   adversely  affect  the  Operating
Partnership's results of operations and financial condition.

General Risks of Ownership of Real Estate
The  Operating  Partnership  is subject  to risks  generally  incidental  to the
ownership of real estate. These risks include:

                                       27
<PAGE>

    - changes in general economic or local conditions;
    - changes in supply of or demand for similar or competing properties in an
      area;
    - the impact of environmental protection laws;
    - changes in interest  rates and  availability  of  financing  which may
      render the sale or  financing of a property difficult or unattractive;
    - changes in tax, real estate and zoning laws; and
    - the  creation of  mechanics'  liens or similar  encumbrances  placed on
      the property by a lessee or other parties without the Operating
      Partnership's knowledge and consent.

Should  any of these  events  occur,  the  Operating  Partnership's  results  of
operations and financial condition could be adversely affected.

General Risks Associated With Management, Leasing and Brokerage Contracts
The Operating  Partnership is subject to the risks generally associated with the
property management,  leasing and brokerage businesses.  These risks include the
risk that:

    - management contracts or service agreements may be terminated;
    - contracts  will not be renewed upon  expiration or will not be renewed on
      terms  consistent  with current terms; and
    - leasing and brokerage activity generally may decline.

In  addition,  the  Operating  Partnership's   acquisition  of  properties  from
partnerships  managed by GC or another  subsidiary could result in a decrease in
revenues to such subsidiary and a corresponding  decrease in dividends  received
by the Operating  Partnership from such subsidiary.  Each of these  developments
could  have  an  adverse  effect  on  the  Operating  Partnership's  results  of
operations and financial condition.

Uninsured Losses May Adversely Affect Operations
The Operating Partnership,  or in certain instances,  tenants of the properties,
carry  comprehensive  liability,  fire and extended coverage with respect to the
properties.   This  coverage  has  policy   specification   and  insured  limits
customarily  carried for similar  properties.  However,  certain types of losses
(such  as  from  earthquakes  and  floods)  may  be  either  uninsurable  or not
economically insurable.  Further, certain of the properties are located in areas
that are subject to earthquake  activity and floods.  Should a property  sustain
damage as a result of an earthquake  or flood,  the  Operating  Partnership  may
incur  losses due to insurance  deductibles,  co-payments  on insured  losses or
uninsured  losses.  Should an uninsured  loss occur,  the Operating  Partnership
could  lose some or all of its  capital  investment,  cash flow and  anticipated
profits related to one or more properties.  This could have an adverse effect on
the Operating Partnership's results of operations and financial condition.

Illiquidity  of  Real  Estate  May  Limit  Our  Ability  to Vary  the  Operating
Partnership's Portfolio
Real estate  investments are relatively  illiquid and,  therefore,  will tend to
limit the  Operating  Partnership's  ability to vary its  portfolio  promptly in
response to changes in economic or other conditions.  In addition,  the Internal
Revenue Code of 1986, as amended (the "Code"),  and individual  agreements  with
sellers of  properties  place limits on the Operating  Partnership's  ability to
sell  properties.  Fifty-five of the  Operating  Partnership's  properties  were
acquired on terms and  conditions  under which they can be disposed of only in a
like-kind  exchange  or other  non-taxable  transaction.  The  agreed  upon time
periods  for  these  restrictions  on  dispositions  vary  from  transaction  to
transaction.

Potential Liability Under the Americans With Disabilities Act
As of January 26,  1992,  all of the  Operating  Partnership's  properties  were
required to be in  compliance  with the  Americans  With  Disabilities  Act. The
Americans  With  Disabilities  Act  generally  requires  that  places  of public
accommodation  be made  accessible  to people  with  disabilities  to the extent
readily  achievable.   Compliance  with  the  Americans  With  Disabilities  Act
requirements  could require  removal of access  barriers.  Non-compliance  could
result in imposition of fines by the federal government,  an award of damages to

                                       28
<PAGE>

private litigants and/or a court order to remove access barriers. Because of the
limited  history  of the  Americans  With  Disabilities  Act,  the impact of its
application to the Operating Partnership's properties,  including the extent and
timing of required renovations, is uncertain.  Pursuant to lease agreements with
tenants in certain of the "single-tenant"  properties, the tenants are obligated
to comply with the Americans With Disabilities Act provisions.  If the Operating
Partnership's  costs are greater than  anticipated or tenants are unable to meet
their  obligations,  the  Operating  Partnership's  results  of  operations  and
financial condition could be adversely affected.

Development Alliances May Adversely Affect Operations
The Operating  Partnership  may, from time to time,  enter into  alliances  with
selected  developers  for the purpose of developing  new projects in which these
developers  have,  in  the  opinion  of  management,  significant  expertise  or
experience.  These projects  generally  require various  governmental  and other
approvals,  the receipt of which cannot be assured. These development activities
also may entail certain risks, including the risk that:

    - management may expend funds on and devote time to projects which may not
      come to fruition;
    - construction   costs  of  a  project  may  exceed  original   estimates,
      possibly  making  the  project uneconomical;
    - occupancy rates and rents at a completed project may be less than
      anticipated; and
    - expenses at a completed development may be higher than anticipated.

In addition,  the partners in development alliances may have significant control
over the operation of the alliance  project.  Therefore,  these investments may,
under  certain  circumstances,  involve risks such as the  possibility  that the
partner might:

    - become bankrupt;
    - have  economic or business  interests or goals that are  inconsistent
      with the  Operating  Partnership's business interest or goals; or
    - be in a position to take action contrary to the Operating Partnership's
      instructions  or requests or contrary to its policies or objectives.

Consequently,  actions  by a partner in a  development  alliance  might  subject
property  owned by the  alliance to  additional  risk.  Although  the  Operating
Partnership will seek to maintain  sufficient  control of any alliance to permit
its objectives to be achieved,  the Operating  Partnership may be unable to take
action without the approval of its development  alliance  partners.  Conversely,
the Operating  Partnership's  development  alliance  partners could take actions
binding  on  the  alliance  without  the  Operating  Partnership's  consent.  In
addition,  should a  partner  in a  development  alliance  become  bankrupt  the
Operating  Partnership  could  become  liable  for the  partner's  share  of the
project's liabilities. These risks may result in a development project adversely
affecting  the  Operating  Partnership's  results of  operations  and  financial
condition.

Material Tax Risks
Since  1996,  the Company has  operated as a REIT under the Code.  However,  the
Company may not be able to maintain  its status as a REIT.  To qualify as a REIT
the Company must satisfy numerous  requirements (some on an annual and quarterly
basis)  established  under highly  technical and complex Code  provisions.  Only
limited judicial or  administrative  interpretation  exists for these provisions
and involves the  determination of various factual matters and circumstances not
entirely  within the  Company's  control.  The  Company  receives  nonqualifying
management  fee  income  and  owns  nonqualifying  preferred  stock  in  certain
subsidiaries.  As a result,  the Company may  approach the income and asset test
limits  imposed by the Code.  There is a risk that the  Company  may not satisfy
these tests. In order to avoid exceeding the asset test limit, for example,  the
Company  may have to reduce its  interest  in its  subsidiaries.  The Company is
relying on the opinion of its tax counsel  regarding its ability to qualify as a
REIT.  This legal  opinion,  however,  is not  binding on the  Internal  Revenue
Service ("IRS").

Consequences of Failure to Qualify as a REIT
If the Company fails to qualify as a REIT in any taxable year, the Company would
be subject to federal  income tax on its taxable income at corporate  rates.  In
addition,  the Company also may be disqualified from treatment as a REIT for the
four taxable years  following  the year in which the Company  failed to qualify.

                                       29
<PAGE>

This would  reduce the  Company's  net  earnings  available  for  investment  or
distribution  to  stockholders  because  of the  additional  tax  liability.  In
addition,  the  Company  would no longer be required  to make  distributions  to
stockholders.

Even if the  Company  continues  to  qualify  as a REIT,  it will be  subject to
certain federal, state and local taxes on its income and property.

Possible  Changes  in Tax  Laws;  Effect  on the  Market  Value  of Real  Estate
Investments
Income tax  treatment  of REITs may be  modified  by  legislative,  judicial  or
administrative  action at any time. These changes may be applied to past as well
as future operations. Legislation,  regulations,  administrative interpretations
or court decisions may significantly change the tax laws with respect to (1) the
qualification  as a REIT or (2) the  federal  income  tax  consequences  of this
qualification.  In addition, the changes might also indirectly affect the market
value of all real estate investments,  and consequently the Company's ability to
realize its investment objectives.

Additional Capital Requirements; Possible Adverse Effects on Holders of Equity
The Operating  Partnership's  ability to continue its growth pattern established
in 1996-1999,  which was funded largely  through the raising of equity  capital,
depends in large part upon its ability to raise additional capital in the future
on  satisfactory  terms.  If the Company raises  additional  capital through the
issuance of additional  equity  securities,  or securities  convertible  into or
exercisable  for equity  securities,  the  interests of holders of the Company's
shares of Common  Stock  could be  diluted.  Likewise,  the  Company's  Board of
Directors is authorized to issue  Preferred Stock and to determine the rights of
the  Preferred  Stock.  Accordingly,  the Board of Directors  may  authorize the
issuance of Preferred Stock with rights which may dilute or otherwise  adversely
affect the interests of holders of the Company's  shares of Common Stock. If the
Operating Partnership raises additional capital through debt financing,  it will
be subject to the risks described below, among others.

The Operating Partnership's  Indebtedness  Restrictions May Adversely Affect its
Ability to Incur Indebtedness
The Company's  organizational  documents  limit its ability to incur  additional
debt if the total debt,  including the additional  debt, would exceed 50% of the
"Borrowing  Base." This debt  limitation  in the  Company's  Charter can only be
amended by an affirmative vote of the majority of all outstanding stock entitled
to vote on such amendment.  The term "Borrowing  Base" is defined as the greater
of Fair Market Value or Total Market Capitalization.  Fair Market Value is based
upon  the  value of the  Operating  Partnership's  assets  as  determined  by an
independent  appraiser.  Total  Market  Capitalization  is the sum of the market
value of the Company's  outstanding capital stock,  including shares issuable on
exercise of redemption  options by holders of units of the limited  partnership,
plus debt. An exception is made for refinancings and borrowings required to make
distributions to maintain the Company's status as a REIT. In light of these debt
restrictions,  it  should be noted  that a change in the value of the  Company's
common  stock could affect the  Borrowing  Base,  and  therefore  the  Operating
Partnership's ability to incur additional indebtedness,  even though such change
in  the  common  stock's  value  is  unrelated  to the  Operating  Partnership's
liquidity.

Limitation  on  Ownership  of Common  Stock And  Stockholder's  Rights  Plan May
Preclude Acquisition of Control
Provisions  of the  Company's  Charter  are  designed  to assist the  Company in
maintaining  its   qualification   as  a  REIT  under  the  Code  by  preventing
concentrated ownership of the Company which might jeopardize REIT qualification.
Among other things, these provisions provide that:

    - any  transfer  or  acquisition  of the  Company's  common or  preferred
      stock that  would  result in its disqualification as a REIT under the Code
      will be void; and
    - if any person  attempts  to acquire  shares of the  Company's  common or
      preferred  stock that after the acquisition  would cause the person to own
      an amount of common  stock and  preferred  stock in excess of a
      predetermined limit, such acquisitions would be void.

                                       30
<PAGE>

Ownership is determined by operation of certain attribution rules set out in the
Code.  Pursuant to Board action, the limit currently is 9.9% of the value of the
outstanding   shares  of  common  stock  and  preferred  stock  (the  "Ownership
Limitation").  The common stock or  preferred  stock the transfer of which would
cause any person to violate  the  Ownership  Limitation,  is  referred to as the
"Excess Shares." A transfer that would violate the Ownership  Limitation will be
void and the  common  stock or  preferred  stock  subject to the  transfer  will
automatically  be  transferred to an  unaffiliated  trustee for the benefit of a
charitable  organization  designated by the Board of Directors until sold by the
trustee to a third party or  purchased by the Company.  This  limitation  on the
ownership of common stock and preferred  stock may preclude the  acquisition  of
control of the  Company by a third  party  without  the  consent of the Board of
Directors.  If the Board of Directors  waives the Ownership  Limitation  for any
person,  the  Ownership  Limitation  will be  proportionally  and  automatically
reduced with regard to all other  persons such that no five persons may own more
than 50% of the value of the common stock and  preferred  stock.  Certain  other
provisions  contained  in the  Company's  Charter  and  Bylaws may also have the
effect of discouraging a third party from making an acquisition proposal for the
Company  and may thereby  inhibit a change in control in the  Company  even if a
change in control would be in the best interests of the stockholders.

In addition,  in July 1998, the Board of Directors adopted a stockholder  rights
plan.  Under the plan,  the Company  declared a dividend of rights on its common
stock.  The  rights  issued  under  the plan  will be  triggered,  with  certain
exceptions,  if and when any person or group  acquires,  or  commences  a tender
offer to  acquire,  15% or more of the  Company's  shares.  The  rights  plan is
intended to prevent abusive hostile  takeover  attempts by requiring a potential
acquirer to negotiate the terms of an  acquisition  with the Board of Directors.
However,  it could have the effect of deterring or preventing an  acquisition of
the Company, even if a majority of the Company's  stockholders would be in favor
of such acquisition,  and could also have the effect of making it more difficult
for a person or group to gain  control  of the  Company  or to  change  existing
management.

Losses Relating to Consolidation
The  Company  was  created  through  the  merger  of  eight  partnerships  and a
corporation (the "Consolidation"). Prior to the completion of the Consolidation,
two lawsuits were filed in 1995  contesting  the fairness of the  Consolidation,
one in California  State court and one in federal court.  The complaints in both
actions  alleged,  among other things,  breaches by the  defendants of fiduciary
duties and inadequate  disclosures.  The State court action was settled over the
objection of certain parties, and the settlement was approved (or review denied)
by the Superior  Court of the State of  California  in and for San Mateo County,
the  California  state court of appeals,  the  California  Supreme Court and the
Supreme Court of the United States. In the federal action, the court in December
of 1995  deferred  all further  proceedings  pending a ruling in the State court
action. Following the final resolution of the State court action, the defendants
in January 2000 filed a motion to dismiss the federal  court  action.  As of the
date of this  report,  the  plaintiffs  had  failed to file a timely  responsive
pleading,  so the  defendants  intend to move for final  dismissal.  The Company
believes  that it is very  unlikely  that  this  litigation  would  result  in a
liability that would exceed the accrued liability by a material amount. However,
given the inherent  uncertainties of litigation,  there can be no assurance that
the ultimate outcomes of these actions will be favorable to the Company.

From time to time the  Operating  Partnership  and the Company  are  involved in
other litigation arising out of their business activities.  Certain other claims
and lawsuits have arisen  against the Operating  Partnership  and the Company in
their normal  course of business.  It is possible that this  litigation  and the
other  litigation  previously  described  could result in significant  losses in
excess of amounts reserved,  which could have an adverse effect on their results
of operations and financial condition.

Uncertainty Due to the Board of Directors' Ability to Change Investment Policies
The Board of Directors may change the Company's  investment  policies  without a
vote of the stockholders. If the Company's investment policies change, the risks
and  potential  rewards  of an  investment  in the shares  may also  change.  In
addition, the methods of implementing the Company's investment policies may vary
as new investment techniques are developed.

Effect of Market Interest Rates on Price of Common Stock
The annual yield on the price paid for shares of the Company's common stock from
distributions by the Company may influence the market price of the shares of its

                                       31
<PAGE>

common stock in public  markets.  An increase in market  interest rates may lead
prospective  purchasers  of the  Company's  common stock to seek a higher annual
yield from their investments.  This may adversely affect the market price of the
Company's common stock.

Shares Available for Future Sale
The Company  cannot  predict the effect,  if any, that future sales of shares of
its common stock or future  conversions  or exercises of  securities  for future
sales will have on the market price of its common  stock.  Sales of  substantial
amounts of the Company's  common stock,  or the perception that such sales could
occur, may adversely affect the prevailing market price for the Company's common
stock.

Item 7A.      Qualitative and Quantitative Information About Market Risk

Interest Rates
The  Operating  Partnership's  primary  market  risk  exposure  is to changes in
interest rates  obtainable on its mortgage loans  receivable and its secured and
unsecured borrowings. The Operating Partnership does not believe that changes in
market  interest  rates will have a material  impact on the  performance or fair
value of its portfolio of mortgage loans receivable.

It is the Operating  Partnership's policy to manage its exposure to fluctuations
in market  interest rates for its borrowings  through the use of fixed rate debt
instruments to the extent that  reasonably  favorable  rates are obtainable with
such  arrangements.  In order to maximize  financial  flexibility  when  selling
properties and minimize potential  prepayment penalties on fixed rate loans, the
Operating  Partnership  has also entered into variable  rate debt  arrangements.
Approximately  28%  and 20% of the  Operating  Partnership's  outstanding  debt,
including  amounts borrowed under the Credit Facility,  were subject to variable
rates at December  31, 1999 and 1998,  respectively.  In  addition,  the average
interest  rate on the  Operating  Partnership's  debt  increased  from  7.08% at
December  31, 1998 to 7.16% at December  31,  1999.  The  Operating  Partnership
reviews  interest  rate  exposure  in the  portfolio  quarterly  in an effort to
minimize the risk of interest rate fluctuations.  The Operating Partnership does
not have any other material  market-sensitive  financial instruments.  It is not
the  Operating   Partnership's  policy  to  engage  in  hedging  activities  for
previously outstanding debt instruments or for speculative or trading purposes.

The  Operating  Partnership  may enter into forward  interest  rate, or similar,
agreements  to  hedge  specific  anticipated  debt  issuances  where  management
believes  the risk of adverse  changes in market rates is  significant.  Under a
forward interest rate agreement, if the referenced interest rate increases,  the
Operating  Partnership  is entitled to a receipt in  settlement of the agreement
that economically  would offset the higher financing cost of the debt issued. If
the referenced interest rate decreases,  the Operating Partnership makes payment
in  settlement of the  agreement,  creating an expense that  economically  would
offset the reduced  financing cost of the debt issued. At December 31, 1999, the
Operating  Partnership  was not a party to any forward  interest rate or similar
agreements other than the interest rate cap contract associated with the Secured
Financing loan discussed above.

The table below provides information about the Operating Partnership's financial
instruments   that  are  sensitive  to  changes  in  interest  rates.  For  debt
obligations,  the table  presents  principal  cash  flows and  related  weighted
average  interest rates by expected  maturity dates.  Weighted  average variable
rates are based on rates in effect at the reporting date.

                                       32
<PAGE>

<TABLE>
<CAPTION>


                                                  Expected Maturity Date
                         -------------------------------------------------------------------------
                                                                                                                   Fair
                            2000        2001        2002         2003        2004     Thereafter      Total        Value
                                                      (in thousands)

<S>                      <C>         <C>         <C>          <C>         <C>         <C>          <C>          <C>
Secured Fixed            $   61,441  $   15,435  $  14,301    $   37,849  $  27,791   $   398,796  $  555,613   $  555,613
Average interest rate         6.83%       7.93%      7.46%         7.64%      7.38%         6.80%       6.94%

Secured Variable         $   41,402  $    7,100  $       -    $        -  $  97,600   $       -    $  146,102   $  146,102
Average interest rate         8.41%       8.50%          -             -      6.53%           -         7.16%

Unsecured Fixed          $        -  $       -   $       -    $        -  $       -   $    91,150  $   91,150   $   91,150
Average interest rate             -          -           -             -          -         7.63%       7.63%

Unsecured Variable       $   70,628  $        -  $  33,865    $        -  $       -   $         -  $  104,493   $  104,493
Average interest rate         7.75%           -       8.25%            -          -             -       7.91%
</TABLE>

The Operating  Partnership  believes that the interest  rates given in the table
for fixed rate borrowings  approximate the rates the Operating Partnership could
currently  obtain for  instruments  of similar terms and maturities and that the
fair values of such instruments approximate carrying value at December 31, 1999.

A change of 1/8% in the index rate to which the Operating Partnership's variable
rate debt is tied would  change the annual  interest  incurred by the  Operating
Partnership  by $313,000,  based upon the balances  outstanding on variable rate
instruments at December 31, 1999.

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 Company

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 May 5, 2000.

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 May 5, 2000.

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 May 5, 2000.

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 May 5, 2000.

                                       33
<PAGE>

<TABLE>
<CAPTION>

                                                       PART IV

Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
                                                                                                          Page No.
<S>  <C> <C>                                                                                                 <C>
(a)  (1) Financial Statements

         Report of Independent Public Accountants                                                            35

         Consolidated Balance Sheets at December 31, 1999 and 1998                                           36

         Consolidated Statements of Income for the years ended December 31, 1999, 1998 and 1997              37

         Consolidated Statements of Partners' Equity for the years ended December 31, 1999,
              1998 and 1997                                                                                  38

         Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997          39

         Notes to Consolidated Financial Statements                                                          41

     (2) Financial Statement Schedules

         Schedule III - Real Estate and Accumulated Depreciation                                             59

         Schedule IV - Mortgage Loans Receivable, Secured by Real Estate                                     67

     (3) Exhibits to Financial Statements

         The Exhibit Index attached hereto is hereby incorporated by reference to this Item.                 70

(b)  Reports on Form 8-K (incorporated herein by reference)

     On  October  26,  1999,  the  Company  filed  a  report  on Form  8-K
     with  respect  to Supplemental Information for the quarter ended September
     30, 1999.

     On  January  26,  2000,  the  Company  filed  a  report  on Form  8-K
     with  respect  to Supplemental Information for the quarter ended December
     31, 1999.

</TABLE>

                                       34
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of GLENBOROUGH PROPERTIES, L.P.:


We have audited the  accompanying  consolidated  balance  sheets of  GLENBOROUGH
PROPERTIES, L.P., as of December 31, 1999 and 1998, and the related consolidated
statements  of  income,  partners'  equity  and cash  flows for the years  ended
December 31, 1999, 1998 and 1997. These  consolidated  financial  statements and
the  schedules  referred  to  below  are  the  responsibility  of the  Operating
Partnership's  management.  Our responsibility is to express an opinion on these
consolidated financial statements and schedules 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  consolidated  financial  position  of
GLENBOROUGH  PROPERTIES,  L.P.,  as of  December  31,  1999  and  1998,  and the
consolidated  results of its  operations  and its cash flows for the years ended
December  31,  1999,  1998 and  1997,  in  conformity  with  generally  accepted
accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
consolidated  financial statements taken as a whole. The accompanying  schedules
listed in the index to financial  statements and schedules are presented for the
purpose of complying with the Securities and Exchange Commission's rules and are
not a  required  part of the  basic  consolidated  financial  statements.  These
schedules have been subjected to the auditing  procedures  applied in our audits
of the basic consolidated  financial  statements and, in our opinion, are fairly
stated in all material respects in relation to the basic consolidated  financial
statements taken as a whole.



ARTHUR ANDERSEN LLP



San Francisco, California
March 1, 2000

                                       35
<PAGE>

<TABLE>
<CAPTION>

                      GLENBOROUGH PROPERTIES, L.P.
                      CONSOLIDATED BALANCE SHEETS
                    As of December 31, 1999 and 1998
                  (in thousands, except share amounts)


                                                                                   1999                   1998
                                                                               --------------        ---------------
ASSETS
<S>                                                                            <C>                   <C>
     Rental properties, gross                                                  $   1,761,536         $   1,793,530
     Accumulated depreciation                                                       (114,170)              (72,951)
                                                                               --------------        ---------------
     Rental properties, net                                                        1,647,366             1,720,579

     Rental properties held for sale, gross                                                -                31,778
     Accumulated depreciation                                                              -                (9,918)
                                                                               --------------        ---------------
     Rental properties held for sale, net                                                  -                21,860

     Investments in Development                                                       33,298                35,131
     Investments in Associated Companies                                               9,404                 8,807
     Mortgage loans receivable                                                        37,582                42,420
     Cash and cash equivalents                                                         6,363                 4,019
     Other assets                                                                     61,234                45,437
                                                                               --------------        ---------------

         TOTAL ASSETS                                                          $   1,795,247         $   1,878,253
                                                                               ==============        ===============

LIABILITIES AND PARTNERS' EQUITY
Liabilities:
     Mortgage loans                                                            $     701,715         $     708,578
     Unsecured term debt                                                             125,015               150,000
     Unsecured bank line                                                              70,628                63,519
     Other liabilities                                                                30,625                28,921
                                                                               --------------        ---------------
       Total liabilities                                                             927,983               951,018
                                                                               --------------        ---------------

Commitments and contingencies                                                              -                     -

Partners' Equity:
     General partner, 344,358 and 359,777 units issued and outstanding at
       December 31, 1999 and 1998, respectively                                        8,245                 9,066
     Limited partners, 34,091,414 and 35,617,954 issued
       and outstanding at December 31, 1999 and 1998, respectively
                                                                                     859,019               918,169
                                                                               --------------        ---------------
       Total partners' equity                                                        867,264               927,235
                                                                               --------------        ---------------

           TOTAL LIABILITIES AND PARTNERS'
              EQUITY                                                           $   1,795,247         $   1,878,253
                                                                               ==============        ===============



          See accompanying notes to consolidated financial statements
</TABLE>

                                       36
<PAGE>

<TABLE>
<CAPTION>

                    GLENBOROUGH PROPERTIES, L.P.
                 CONSOLIDATED STATEMENTS OF INCOME
        For the years ended December 31, 1999, 1998 and 1997
              (in thousands, except per share amounts)

                                                                     1999               1998              1997
                                                                ----------------   ----------------  ----------------
  REVENUE
<S>                                                             <C>                <C>               <C>
       Rental revenue                                           $     255,339      $     227,956     $      61,393
       Fees and reimbursements from affiliates                          3,312              2,802               719
       Interest and other income                                        6,404              4,557             1,627
       Equity in earnings of Associated Companies                       1,222              1,314             2,743
       Equity in loss of joint ventures                                  (310)                 -                 -
       Net gain on sales of real estate assets and repayment
          of notes receivable                                           9,013              4,796             1,491
                                                                ----------------   ----------------  ----------------
                Total revenue                                         274,980            241,425            67,973
                                                                ----------------   ----------------  ----------------

  EXPENSES
       Property operating expenses                                     88,037             75,426            20,904
       General and administrative                                       9,672             10,682             4,002
       Depreciation and amortization                                   58,295             50,169            14,829
       Interest expense                                                64,782             53,289             9,668
       Loss on sale of mortgage loan receivable                         1,229                  -                 -
       Loss on interest rate protection agreement                           -              4,323                 -
                                                                ----------------   ----------------  ----------------
               Total expenses                                         222,015            193,889            49,403
                                                                ----------------   ----------------  ----------------

  Income from operations before extraordinary item                     52,965             47,536            18,570
  Extraordinary item:
  Net gain (loss) on early extinguishment of debt                         984             (1,400)             (843)
                                                                ----------------   ----------------  ----------------
  Net income                                                           53,949             46,136            17,727
  Preferred partner interest distributions                            (22,280)           (20,620)                -
                                                                ================   ================  ================
  Net income available to general and limited partners          $      31,669      $      25,516     $      17,727
                                                                ================   ================  ================

  Per Partnership Unit Data:
  Net income before extraordinary item                          $       0.87       $       0.77      $       0.97
  Extraordinary item                                                    0.02              (0.04)            (0.04)
                                                                ----------------   ----------------  ----------------
  Net income available to general and limited partners          $       0.89       $       0.73      $       0.93
                                                                ================   ================  ================
  Weighted average number of partnership units outstanding
                                                                   35,427,601         35,036,393        19,093,111
                                                                ================   ================  ================


          See accompanying notes to consolidated financial statements

</TABLE>

                                       37
<PAGE>

<TABLE>
<CAPTION>

                    GLENBOROUGH PROPERTIES, L.P.
            CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
        For the years ended December 31, 1999, 1998 and 1997
                           (in thousands)


                                                          General            Limited Partners
                                                          Partner                                        Total
                                                     -------------------    -------------------    ------------------

<S>                                                      <C>                  <C>                      <C>
Balance at December 31, 1996                             $   1,056            $     104,576            $   105,632

Contributions                                                5,283                  523,010                528,293

Distributions                                                 (253)                 (25,086)               (25,339)

Net income                                                     177                   17,550                 17,727
                                                     -------------------    -------------------    ------------------

Balance at December 31, 1997                                 6,263                  620,050                626,313

Contributions                                                3,316                  328,241                331,557

Distributions                                                 (767)                 (75,970)               (76,737)

Unrealized loss on marketable securities                        (1)                     (33)                   (34)

Net income                                                     255                   45,881                 46,136
                                                     -------------------    -------------------    ------------------

Balance at December 31, 1998                                 9,066                  918,169                927,235

Contributions                                                   28                    2,711                  2,739

Distributions                                                 (821)                 (81,284)               (82,105)

Redemption of units                                           (296)                 (29,339)               (29,635)

Acquisition of Operating Partnership units                     (50)                  (4,903)                (4,953)

Unrealized gain on marketable securities                         1                       33                     34

Net income                                                     317                   53,632                 53,949
                                                     -------------------    -------------------    ------------------

Balance at December 31, 1999                             $   8,245            $     859,019            $   867,264
                                                     ===================    ===================    ==================


          See accompanying notes to consolidated financial statements
</TABLE>

                                       38
<PAGE>

<TABLE>
<CAPTION>

                 GLENBOROUGH PROPERTIES, L.P.
            CONSOLIDATED STATEMENTS OF CASH FLOWS
     For the years ended December 31, 1999, 1998 and 1997
                        (in thousands)

                                                                       1999               1998               1997
                                                                  ---------------    ---------------     --------------
Cash flows from operating activities:
<S>                                                               <C>                <C>                 <C>
     Net income                                                   $      53,949      $      46,136       $      17,727
     Adjustments to reconcile net income to
       net cash provided by operating activities:
         Depreciation and amortization                                   58,295             50,169              14,829
         Amortization of loan fees, included in
           interest expense                                               2,035              1,563                 221
         Equity in earnings of Associated Companies                      (1,222)            (1,314)             (2,743)
         Net gain on sales of real estate assets and
           repayment of notes receivable                                 (9,013)            (4,796)            (1,491)
         Loss on sale of mortgage loan receivable                         1,229                  -                   -
         (Gain) loss on early extinguishment of debt                       (984)             1,400                 843
         Changes in certain assets and liabilities, net                 (12,285)            (5,029)             (9,535)
                                                                  ---------------    ---------------     --------------
           Net cash provided by operating activities                     92,004             88,129              19,851
                                                                  ---------------    ---------------     --------------

Cash flows from investing activities:
     Net proceeds from sales of real estate assets                      144,846             73,339              12,950
     Additions to real estate assets                                    (51,824)          (626,161)           (586,965)
     Investments in development                                          (9,606)           (25,745)                  -
     Investments in joint ventures                                       (5,679)                 -                   -
     Additions to mortgage loans receivable                              (2,795)           (39,613)             (1,855)
     Principal receipts on mortgage loans receivable                      4,255                885               8,068
     Reductions in principal on mortgage loans receivable                 2,149                  -                   -
     Payments from affiliates                                               900                  -                   -
     Investments in Associated Companies                                      -                  -              (3,700)
     Distributions from Associated Companies                                625              3,455               2,260
                                                                  ---------------    ---------------     --------------
           Net cash provided by (used for) investing
                activities                                               82,871           (613,840)           (569,242)
                                                                  ---------------    ---------------     --------------

Cash flows from financing activities:
     Proceeds from borrowings                                           342,348            696,618             467,689
     Repayment of borrowings                                           (347,427)          (511,696)           (375,909)
     Payments into lender impound accounts, net                            (690)           (11,061)               (281)
     Proceeds from issuance of Senior Notes                                   -            150,000                   -
     Retirement of Senior Notes (less gain on retirement of
         $3,115 in 1999)                                                (55,735)                 -                   -
     Prepayment penalties on loan payoffs                                (2,026)                 -                   -
     Partner contributions                                                2,739            278,936             486,116
     Partner distributions                                              (82,105)           (76,737)            (25,339)
     Redemption of units                                                (29,635)                 -                   -
                                                                  ---------------    ---------------     --------------
              Net cash provided by (used for) financing
                activities                                             (172,531)           526,060             552,276
                                                                  ---------------    ---------------     --------------

                                                     continued

          See accompanying notes to consolidated financial statements
</TABLE>

                                       39
<PAGE>

<TABLE>
<CAPTION>
                      GLENBOROUGH PROPERTIES, L.P.
            CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
          For the years ended December 31, 1999, 1998 and 1997
                             (in thousands)

                                                                       1999               1998               1997
                                                                  ---------------    ---------------     --------------

<S>                                                               <C>                <C>                 <C>
Net increase in cash and cash equivalents                         $       2,344      $         349       $       2,885

Cash and cash equivalents at beginning of year                            4,019              3,670                 785
                                                                  ---------------    ---------------     --------------

Cash and cash equivalents at end of year                          $       6,363      $       4,019       $       3,670
                                                                  ===============    ===============     ==============

Supplemental disclosure of cash flow information:

     Cash paid for interest (net of capitalized interest of
         $2,675 and $1,108 in 1999 and 1998, respectively)        $      63,316      $      46,608       $       9,373
                                                                  ===============    ===============     ==============

Supplemental disclosure of Non-Cash Investing and Financing
     Activities:

     Acquisition of real estate through assumption of first
         trust deed notes payable                                 $      39,275      $     358,876       $      60,628
                                                                  ===============    ===============     ==============

     Acquisition of real estate through issuance of
         Operating Partnership units                              $           -      $      52,621       $      42,177
                                                                  ===============    ===============     ==============


         See accompanying notes to consolidated financial statements
</TABLE>

                                       40
<PAGE>


                       GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998


Note 1.      ORGANIZATION

Glenborough  Properties,  L.P., a California Limited Partnership (the "Operating
Partnership")  was organized in the State of California on August 23, 1995.  The
Operating  Partnership is the primary operating subsidiary of Glenborough Realty
Trust Incorporated (the "Company"),  a  self-administered  and self-managed real
estate investment trust ("REIT").  On December 31, 1995, the Company completed a
consolidation (the  "Consolidation") in which eight public limited  partnerships
(the "Partnerships,"  collectively with Glenborough Corporation (defined below),
the "GRT Predecessor  Entities"),  merged with and into the Company. The Company
(i) issued  5,753,709  shares (the  "Shares") of $.001 par value Common Stock to
the Partnerships in exchange for 3,979,376 Operating Partnership units; and (ii)
merged with Glenborough Corporation, a California Corporation,  with the Company
being the surviving entity. The Company then transferred certain real estate and
related  assets to the  Operating  Partnership  in exchange  for a sole  general
partner  interest of 1% and a limited  partnership  interest  of 85.37%  (88.50%
limited partnership interest as of December 31, 1999). The Operating Partnership
also acquired interests in certain warehouse  distribution  facilities from GPA,
Ltd.,  a California  limited  partnership  ("GPA").  The  Operating  Partnership
commenced operations on January 1, 1996.

Subsequent to its original  formation,  the Company issued  additional equity in
the form of common and preferred shares.  The proceeds from these offerings were
contributed  to the Operating  Partnership.  As a result of its preferred  stock
offering,  the  Company  holds a  preferred  partner  interest  which  has  been
accounted  for as  additional  paid in  capital  in the  accompanying  financial
statements.  No additional units were issued in exchange for this  contribution,
however it entitles  the Company to a preferred  partner  interest  distribution
sufficient to pay the Company's preferred stock distributions, which are paid at
a rate of $1.94 per share.

The Operating Partnership,  directly and through subsidiary entities, is engaged
primarily  in  the  ownership,  operation,   management,  leasing,  acquisition,
expansion and development of various types of income-producing properties. As of
December  31,  1999,  the  Operating  Partnership,   directly  and  through  the
subsidiaries  in which it and the Company own 100% of the  ownership  interests,
controls a portfolio of 161 real estate projects, including office, office/flex,
industrial, multifamily, retail and hotel properties, located in 22 states.

Effective  April 1, 1998, the Company  contributed to the Operating  Partnership
the  majority  of its  assets,  including  100% of its shares of the  non-voting
preferred stock of Glenborough Corporation ("GC"), formerly known as Glenborough
Realty  Corporation,  as well as all of the Company's tangible personal property
including  furniture  and  fixtures,  all cash and  investments,  and a property
management contract.  As part of that transaction,  the Company also agreed to a
substantial  reduction  in the  asset  management  fees  paid  by the  Operating
Partnership  to the  Company.  In return,  the  Operating  Partnership  canceled
certain  obligations  of the Company to the  Operating  Partnership,  and issued
2,248,869 units of partnership interest to the Company.

Effective   February  15,  1999,  the  Company   contributed  to  the  Operating
Partnership 100% of its shares of the non-voting  preferred stock of Glenborough
Hotel Group ("GHG"). In return, the Operating Partnership issued 67,797 units of
partnership interest to the Company.

The contributions of 100% of the shares of non-voting  preferred stock in GC and
GHG  discussed  above have been  accounted for as a  reorganization  of entities
under common control,  similar to a pooling of interests.  All periods presented
have been restated to give effect to these  transactions  as if they occurred on
December 31, 1995. As a result of the above transactions, the only assets of the
Company that have not been contributed to the Operating  Partnership are (i) its
shares of common stock in twelve  qualified  REIT  subsidiaries,  which  produce
dividends that are not material to the Company,  and (ii) a less than 5% limited
partnership interest in Glenborough Partners.

Prior  to  September  30,  1999,  the  Operating  Partnership  held  100% of the
non-voting   preferred  stock  of  the  following   associated   companies  (the
"Associated Companies"):

     Glenborough  Corporation  ("GC") is the general  partner of several  real
     estate  limited  partnerships  and provides asset and property management
     services for these partnerships (the "Managed  Partnerships").  It also
     provides  partnership  administration,  asset management,  property
     management and development services to a group of unaffiliated


                                       41
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

     partnerships, which include three public partnerships sponsored by Rancon
     Financial Corporation, an unaffiliated corporation which has significant
     real estate assets in the Inland Empire region of Southern California (the
     "Rancon Partnerships").

     Glenborough  Hotel Group  ("GHG") owns an  approximate  36% limited
     partner  interest in a real estate joint venture.

Effective  September 30, 1999, GHG merged with GC. In the merger,  the Operating
Partnership  received  preferred stock of GC in exchange for its preferred stock
of GHG.  The merger was  accounted  for as a  reorganization  of entities  under
common control.

Following the merger,  the Operating  Partnership owns 100% of the 47,500 shares
(representing 95% of total outstanding shares) of non-voting  preferred stock of
GC. Six  individuals,  including  Sandra Boyle,  Frank Austin and Terri Garnick,
executive  officers of the  Company,  own the 2,500 shares  (representing  5% of
total  outstanding   shares)  of  voting  common  stock  of  GC.  The  Operating
Partnership  and GC  intend  that the  Operating  Partnership's  interest  in GC
complies with REIT qualification standards.

The Operating  Partnership,  through its ownership of preferred  stock of GC, is
entitled to receive cumulative,  preferred annual dividends of $1.896 per share,
which GC must pay before it pays any dividends  with respect to the common stock
of GC. Once GC pays the required cumulative preferred dividend,  it will pay any
additional  dividends in equal amounts per share on both the preferred stock and
the common stock at 95% and 5%,  respectively.  Through the preferred stock, the
Operating  Partnership is also entitled to receive a preferred liquidation value
of $169.49 per share plus all  cumulative  and unpaid  dividends.  The preferred
stock is subject to redemption at the option of GC after  December 31, 2005, for
a redemption price of $169.49 per share. As the holder of preferred stock of GC,
the  Operating  Partnership  has no voting power with respect to the election of
the directors of GC; all power to elect directors of GC is held by the owners of
the common stock of GC.

This  structure  is  intended  to  provide  the  Operating  Partnership  with  a
significant  portion  of the  economic  benefits  of the  operations  of GC. The
Operating  Partnership accounts for the financial results of GC using the equity
method.

Note 2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
The  accompanying   financial  statements  present  the  consolidated  financial
position of the Operating  Partnership as of December 31, 1999 and 1998, and the
consolidated  results of operations and cash flows of the Operating  Partnership
for the  years  ended  December  31,  1999,  1998  and  1997.  All  intercompany
transactions, receivables and payables have been eliminated in consolidation.

Reclassification
Certain prior year balances have been  reclassified  to conform with the current
year 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 results of operations  during the  reporting  period.  Actual  results could
differ from those estimates.

New Accounting Pronouncements
Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative Instruments and Hedging Activities" was issued in June 1998. SFAS No.
133 was  originally  effective for fiscal years  beginning  after June 15, 1999,
with early  adoption  permitted.  In June 1999,  SFAS No. 137,  "Accounting  for
Derivative  Instruments and Hedging  Activities - Deferral of the Effective Date
of FASB  Statement No. 133 - an amendment of FASB  Statement No. 133" was issued
which,  among other things,  deferred the final  implementation  to fiscal years


                                       42
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

beginning  after June 15, 2000. SFAS No. 133 provides  comprehensive  guidelines
for the recognition  and  measurement of derivatives and hedging  activities and
specifically  requires all  derivatives  to be recorded on the balance  sheet at
fair  value.   Management  is  evaluating   the  effects,   if  any,  that  this
pronouncement will have on the Operating  Partnership's  consolidated  financial
position, results of operations and financial statement position.

Rental Properties
Rental  properties  are stated at cost unless  circumstances  indicate that cost
cannot be  recovered,  in which  case,  the  carrying  value of the  property is
reduced to estimated  fair value.  Estimated  fair value:  (i) is based upon the
Operating  Partnership's plans for the continued operation of each property; and
(ii) is computed using estimated sales price, as determined by prevailing market
values  for  comparable  properties  and/or  the  use  of  capitalization  rates
multiplied by annualized rental income based upon the age,  construction and use
of the building. The fulfillment of the Operating Partnership's plans related to
each of its properties is dependent  upon,  among other things,  the presence of
economic  conditions which will enable the Operating  Partnership to continue to
hold  and  operate  the  properties   prior  to  their  eventual  sale.  Due  to
uncertainties  inherent  in the  valuation  process  and in the  economy,  it is
reasonably  possible  that the actual  results of operating and disposing of the
Operating  Partnership's  properties could be materially  different than current
expectations.

Depreciation is provided using the straight line method over the useful lives of
the respective assets.

The useful lives are as follow:

     Buildings and Improvements               10 to 40 years
     Tenant Improvements                      Term of the related lease
     Furniture and Equipment                  5 to 7 years

Real Estate Held for Sale
Real estate held for sale consists of rental  properties that are under contract
to be disposed  of. The  fulfillment  of the  Operating  Partnership's  plans to
dispose of property is  dependent  upon,  among other  things,  the  presence of
economic  conditions  which will enable the  Operating  Partnership  to hold the
property for eventual sale. The Operating Partnership discontinues  depreciation
of rental property once it is classified as held for sale.

Investments in Development
The Operating  Partnership,  through  mezzanine loans and equity  contributions,
invests  in  various   development   alliances  with  projects  currently  under
development. The interest on advances and other direct project costs incurred by
the Operating Partnership are capitalized to the investment during the period in
which the projects are under development. See Note 6 for further discussion.

Investments in Associated Companies
The  Operating  Partnership's   investments  in  the  Associated  Companies  are
accounted for using the equity method, as discussed further in Note 4.

Mortgage Loans Receivable
The Operating  Partnership  monitors the  recoverability  of its loans and notes
receivable  through  ongoing contact with the borrowers to ensure timely receipt
of interest and principal  payments,  and where  appropriate,  obtains financial
information  concerning  the operation of the  properties.  Interest on mortgage
loans is  recognized  as  revenue  as it  accrues  during the period the loan is
outstanding.  Mortgage loans  receivable  will be evaluated for impairment if it
becomes evident that the borrower is unable to meet its debt service obligations
in a timely manner and cannot  satisfy its payments using sources other than the
operations  of the  property  securing the loan.  If it is  concluded  that such
circumstances  exist,  then such loan will be  considered to be impaired and its
recorded amount will be reduced to the fair value of the collateral securing it.
Interest  income  will also  cease to accrue  under such  circumstances.  Due to
uncertainties  inherent in the valuation process, it is reasonably possible that
the amount ultimately  realized from the Operating  Partnership's  collection on
these receivables will be different than the recorded amounts.

                                       43
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

Cash Equivalents
The  Operating   Partnership   considers   short-term   investments   (including
certificates  of deposit) with a maturity of three months or less at the time of
investment to be cash equivalents.

Marketable Securities
The  Operating  Partnership  records its  marketable  securities  at fair value.
Unrealized  gains and losses on securities are reported as a separate  component
of partners' equity and realized gains and losses are included in net income. As
of December 31, 1999,  the  Operating  Partnership  did not hold any  marketable
securities.  As of December 31, 1998, marketable securities with a fair value of
approximately  $2,639,000  were  included  in other  assets on the  accompanying
consolidated balance sheet.

Fair Value of Financial Instruments
Statement of Financial  Accounting  Standards No. 107 requires  disclosure about
fair value for all financial instruments. Based on the borrowing rates currently
available to the Operating Partnership, the carrying amount of debt approximates
fair value.  Certain  assumed debt  instruments  have been recorded at a premium
based upon the stated rate on the instrument  and the then  available  borrowing
rates for the Operating Partnership. Cash and cash equivalents consist of demand
deposits and certificates of deposit with financial  institutions.  The carrying
amount of cash and cash  equivalents  as well as the mortgage  loans  receivable
described above, approximates fair value.

Derivative Financial Instruments
The Operating  Partnership may use derivative financial instruments in the event
that  it  believes  such   instruments   will  be  an  effective  hedge  against
fluctuations in interest rates on a specific anticipated  borrowing.  Derivative
financial instruments such as forward rate agreements or interest rate swaps may
be used in this  capacity.  To the extent  such  instruments  do not  qualify as
hedges,  they will be accounted  for on a  mark-to-market  basis and recorded in
earnings  each period as  appropriate.  The cost of terminated  instruments  not
qualifying  as hedges  will be  recorded  in  earnings  in the  period  they are
terminated.  Instruments which qualify as hedges upon obtaining the related debt
will be recorded as a premium or discount  on the  related  debt  principal  and
amortized  into  earnings  over the life of the debt  instrument.  If the hedged
instrument  is retired  early,  the  unamortized  discount  or  premium  will be
included as a component of the calculation of gain or loss on retirement.

At December 31, 1999 and 1998, the Operating  Partnership was not a party to any
open  interest  rate  protection  agreements  other than the  interest  rate cap
contract entered into in August 1999 as discussed in Note 7 below.

Deferred Financing and Other Fees
Fees  paid in  connection  with  the  financing  and  leasing  of the  Operating
Partnership's  properties  are  amortized  over  the term of the  related  notes
payable or leases and are included in other assets.

Revenues
All leases are classified as operating  leases.  Rental revenue is recognized as
earned over the terms of the related leases.

For the years ended December 31, 1999, 1998 and 1997, no tenants represented 10%
or more of rental revenue of the Operating Partnership.

Fees and reimbursements  revenue consists of property  management fees, overhead
administration  fees, and transaction  fees from the  acquisition,  disposition,
refinancing,   leasing  and   construction   supervision   of  real  estate  for
unconsolidated affiliates.

Revenues are recognized  only after the Operating  Partnership is  contractually
entitled to receive  payment,  after the  services for which the fee is received
have been provided,  and after the ability and timing of payments are reasonably
assured and predictable.

                                       44
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

Scheduled  rent  increases are based  primarily on the Consumer Price Index or a
similar factor.  Material incentives paid, if any, by the Operating  Partnership
to a tenant are  amortized as a reduction of rental  income over the life of the
related lease.

The Operating  Partnership's  portfolio of leases turns over continuously,  with
the number and value of expiring leases varying from year to year. The Operating
Partnership's  ability to release  the space to existing or new tenants at rates
equal to or greater than those realized historically is impacted by, among other
things,  the economic  conditions  of the market in which a property is located,
the availability of competing space, and the level of improvements  which may be
required at the  property.  No assurance can be given that the rental rates that
the Operating  Partnership will obtain in the future will be equal to or greater
than those obtained under existing contractual commitments.

Income Taxes
As a partnership,  the allocated share of income of the Operating Partnership is
included in the income tax returns of the partners.  Accordingly,  no accounting
for  income  taxes  is  required  in  the  accompanying  consolidated  financial
statements.  State  and  local  taxes are not  material.  Taxable  income of the
Operating  Partnership  for the  years  ended  December  31,  1998  and 1997 was
$58,266,000 and $23,795,000, respectively. Estimated taxable income for the year
ended December 31, 1999 is  $62,143,000.  Reconciling  differences  between book
income and tax income primarily  result from timing  differences in depreciation
expense.

The Operating  Partnership  declared  distributions per unit of $1.68, $1.68 and
$1.38 for the years ended December 31, 1999,  1998 and 1997,  respectively.  The
following  is a summary of  distributions  per unit which  represent a return of
capital measured using generally accepted accounting principles:

   Distribution Per Unit                  1999           1998             1997
   -------------------------------     -----------    ------------     ---------

   From book net income                $    1.28      $    1.31        $    1.38
   Representing return of capital           0.40           0.37             0.00
   Total Distributions                 $    1.68      $    1.68        $    1.38

For the years ended December 31, 1999, 1998 and 1997, respectively, 24%, 22% and
0% of the distributions  paid represented a return of capital for federal income
tax purposes

Net Income Per Partnership Unit
Net income per partnership  unit is calculated using the weighted average number
of  partnership  units  outstanding  during  the  period.  No effect on per unit
amounts has been attributed to a potential  conversion of the Preferred  Partner
Interest  into limited  partner units as the impact is  anti-dilutive.  No other
potentially dilutive securities of the Operating Partnership exist.

Note 3.   RENTAL PROPERTY

The cost and accumulated depreciation of rental property as of December 31, 1999
and 1998 are as follows (in thousands):

                                       45
<PAGE>

<TABLE>
<CAPTION>
                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998


                                               Buildings
                                                  and                                                   Net Recorded
                                             Improve-ments                           Accumulated           Value
1999:                           Land                              Total Cost         Depreciation
                            -------------    ---------------    ---------------     ---------------    ---------------
<S>                         <C>              <C>                 <C>                 <C>                 <C>
Office properties           $   101,974      $     763,922       $   865,896         $   (54,886)        $   811,010
Office/Flex properties           48,205            222,838           271,043             (17,295)            253,748
Industrial properties            25,652             96,810           122,462             (10,625)            111,837
Retail properties                15,188             62,440            77,628              (7,130)             70,498
Multifamily properties           47,299            369,859           417,158             (22,420)            394,738
Hotel properties and other
                                    -                7,349             7,349              (1,814)              5,535
                            -------------    ---------------    ---------------     ---------------    ---------------
Total                       $   238,318      $   1,523,218       $ 1,761,536         $  (114,170)        $ 1,647,366
                            =============    ===============    ===============     ===============    ===============

                                               Buildings
                                                  and                                                   Net Recorded
                                             Improve-ments                           Accumulated           Value
1998:                           Land                              Total Cost         Depreciation
                            -------------    ---------------    ---------------     ---------------    ---------------
Office properties           $    92,166      $     773,018       $   865,184         $   (35,318)        $   829,866
Office/Flex properties           54,167            251,714           305,881             (11,443)            294,438
Industrial properties            21,329            115,451           136,780             (10,217)            126,563
Retail properties                20,524             72,654            93,178              (8,369)             84,809
Multifamily properties           46,590            350,011           396,601              (8,796)            387,805
Hotel properties                  2,756             24,928            27,684              (8,726)             18,958
                            =============    ===============    ===============     ===============    ===============
Total                       $   237,532      $   1,587,776       $ 1,825,308         $   (82,869)        $ 1,742,439
                            =============    ===============    ===============     ===============    ===============
</TABLE>

Acquisitions
In the fourth quarter of 1999,  through one of its  development  alliances,  the
Operating  Partnership acquired Chase Monroe Phase II, a 96-unit addition to the
Operating  Partnership's existing 120-unit multifamily complex in the Charlotte,
North  Carolina  area.  The  total  acquisition  cost,   including  third  party
expenditures incurred for the purpose of this transaction,  was approximately $5
million in cash, including a $4.4 million advance under the Credit Facility. The
development  pipeline also produced Bridgewater II, an 84,000 square foot office
building in Northern  New Jersey.  The  acquisition  was  structured  through an
exchange of interests in other  development  projects with the same  development
alliance and involved the  assumption of $10 million in debt.  There was no cash
involved in the transaction.

In the third quarter of 1999, the Operating Partnership acquired all of the real
estate assets of Prudential-Bache/Equitec  Real Estate Partnership, a California
limited  partnership  (the "Pru Bache  Portfolio") in which the managing general
partner  was  Prudential-Bache  Properties,  Inc.,  and in which  GC and  Robert
Batinovich, Chief Executive Officer of the Company served as co-general partners
since March 1994.  Neither GC nor Robert  Batinovich  held a material  equity or
economic  interest in the Pru-Bache  Portfolio.  The acquisition was unanimously
approved by the Company's  independent  directors,  with Robert  Batinovich  and
Andrew Batinovich abstaining.  The total acquisition cost, including third party
expenditures  incurred  for the purpose of the  transaction,  was  approximately
$49.1 million,  which  consisted of (i)  approximately  $15.2 million of assumed
debt and (ii) the  balance in cash,  including  approximately  $21.4  million of
proceeds from the sales of real estate assets and an $11.2 million advance under
the Credit Facility.  The Pru-Bache  Portfolio consists of four office buildings
and one office/flex property,  aggregating 550,592 total square feet and located
in Rockville, Maryland, Memphis, Tennessee, Sacramento,  California and Seattle,
Washington.

In the second quarter of 1999, the Operating  Partnership  expanded its existing
holdings  near Los Angeles  International  Airport by purchasing a 41,709 square
foot  industrial  building plus additional land which is the second phase of the
project  purchased in the first quarter (see below).  This second phase has been



                                       46
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

leased on a long term triple net basis to the tenant  currently  occupying phase
one  of  the  project.   The  total  acquisition  cost,  including  third  party
expenditures incurred for the purpose of the transaction, was approximately $5.6
million.

In the first  quarter of 1999,  the  Operating  Partnership  acquired a 285 unit
multifamily  property  ("Springs of Indian Creek") located in Carrolton,  Texas.
The property is the first phase of a two-phase project comprising a total of 519
units. The 234 unit second phase of the project is currently under  construction
through one of the Operating Partnership's development alliances and is expected
to be completed  in the first  quarter of the year 2000.  The total  acquisition
cost,  including  third  party  expenditures  incurred  for the  purpose  of the
transaction, was approximately $20.8 million comprising: (i) approximately $14.1
million in  assumption  of debt and (ii) the balance in cash.  In addition,  the
Operating  Partnership acquired a 1.45-acre parcel containing 34,500 square feet
of  industrial  buildings  in Los  Angeles,  California,  near  the Los  Angeles
International  Airport. This property is the first phase of a two-phase project.
The total acquisition cost, including third party expenditures  incurred for the
purpose of the  transaction,  was  approximately  $3.1  million,  which was paid
entirely  in cash.  The  property  has been  leased to a single  tenant  under a
15-year triple-net lease.

Dispositions
In the fourth quarter of 1999, the Operating  Partnership sold eight properties,
including one office, two office/flex,  five industrial and one building from an
office/flex  property.  The assets  were sold for an  aggregate  sales  price of
approximately  $28,697,000 and generated an aggregate net gain of  approximately
$2,291,000.

In the third quarter of 1999, the Operating  Partnership  sold five  properties,
including two office, two office/flex and one hotel. The assets were sold for an
aggregate  sales price of  approximately  $19,865,000 and generated an aggregate
net loss of approximately $371,000.

In  the  second  quarter  of  1999,  the  Operating  Partnership  sold  fourteen
properties, including five office, four office/flex, one retail, two industrial,
one multifamily and one hotel. The assets were sold for an aggregate sales price
of   approximately   $109,135,000   and  generated  an  aggregate  net  gain  of
approximately $5,742,000.

In the first quarter of 1999, the Operating  Partnership sold seven  properties,
including five office/flex  properties and two retail properties,  and a partial
interest  in a REIT.  These  assets  were sold for an  aggregate  sales price of
approximately $27.3 million and generated an aggregate net gain of approximately
$1,351,000.

These  transactions are reflected as the net gain on sales of real estate assets
on the accompanying consolidated statement of income for the year ended December
31, 1999.

The Operating  Partnership  leases its commercial and industrial  property under
non-cancelable  operating lease agreements.  Future minimum rents to be received
as of December 31, 1999 are as follows (in thousands):

          Year Ending
         December 31,
            2000                           $  173,142
            2001                              134,000
            2002                              110,945
            2003                               89,334
            2004                               66,933
            Thereafter                        211,580
                                           $  785,934

Note 4.   INVESTMENTS IN ASSOCIATED COMPANIES

The Operating  Partnership accounts for its investment in GC (as defined in Note
1) using the equity  method as a  substantial  portion of the economic  benefits
flow to the Operating  Partnership  by virtue of its 100%  non-voting  preferred
stock  interest in GC,  which  interest  constitutes  substantially  all of GC's


                                       47
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

capitalization.  Three  of the  holders  of the  voting  common  stock of GC are
officers of the Company; however, the Operating Partnership has no direct voting
or management control of GC. The Operating  Partnership  records earnings on its
investment in GC equal to its cash flow  preference,  to the extent of earnings,
plus its pro rata share of  remaining  earnings,  based on cash flow  allocation
percentages.  Distributions  received from GC are recorded as a reduction of the
Operating Partnership's investments.

As of December 31, 1999 and 1998,  the Operating  Partnership  had the following
investments in the Associated Companies (in thousands):
                                                              GC (1)
             Investment at December 31, 1997                $ 10,948
             Distributions                                    (3,455)
             Equity in earnings                                1,314
             Investment at December 31, 1998                   8,807
             Distributions                                      (625)
             Equity in earnings (loss)                         1,222
             Investment at December 31, 1999                $  9,404

Summary  condensed  balance sheet  information as of December 31, 1999 and 1998,
and the  condensed  statements of income for the years then ended are as follows
(in thousands):
<TABLE>
<CAPTION>

                                                          Balance Sheets
                                                              GC (1)
                                                        As of December 31,
                                                     1999                1998
                                                  ------------        ------------
<S>                                               <C>                 <C>
      Investments in management contracts, net    $   3,468           $   6,332
      Investment in real estate joint venture           4,512             4,050
      Other assets                                      8,011             2,647
                                                  ============        ============
      Total assets                                $  15,991           $  13,029
                                                  ============        ============

      Notes payable                               $    6,025          $   3,525
      Other liabilities                                  287                453
                                                  ------------        ------------
      Total liabilities                                 6,312             3,978

      Common stockholders                                 275               244

      Preferred stockholder                             9,404             8,807
                                                  ------------        ------------
      Stockholders' equity                              9,679             9,051
                                                  ============        ============
      Total liabilities and stockholders' equity  $  15,991           $  13,029
                                                  ============        ============


                                                        Statements of Income
                                                               GC (1)
                                                         For the year ended
                                                            December 31,
                                                      1999                1998
                                                   ------------        ------------
<S>                                                <C>                 <C>
       Revenue                                     $   8,528           $  19,942
       Expenses                                        7,247              18,550
                                                   ============        ============
       Net income (loss)                           $   1,281           $   1,392
                                                   ============        ============
                                                   ============        ============
       Net  income  allocable  to  the  Operating
         Partnership                               $   1,222           $   1,314
                                                   ============        ============

(1) All amounts  presented for GC represent  combined amounts for GC and GHG due
to the September 30, 1999 merger, as previously discussed in Note 1.
</TABLE>

                                       48
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

Note 5.   MORTGAGE LOANS RECEIVABLE

The Operating  Partnership's  mortgage loans receivable consist of the following
as of December 31, 1999 and 1998 (dollars in thousands):
<TABLE>
<CAPTION>
                                                                                     1999                   1998
                                                                                ---------------        ---------------
<S>                                                                                <C>                    <C>
Note secured by an office property in Phoenix,  AZ, with a fixed interest rate
of 7% (until May 31,  2000,  at which  time the rate  shall  change to a fixed
rate of 9%) and a maturity  date of May 2001.  This note was sold in  November
1999 (see below for further discussion).                                           $         -            $     3,484

Note secured by a hotel property in Dallas,  TX, with a fixed interest rate of
9%,  monthly  interest-only  payments and a maturity  date of March 2000.  The
principal  amount of this loan was reduced in  September  1999 and it was paid
off in December 1999 (see below for further discussion).                                     -                  3,600

Note secured by a hotel property in Arlington,  TX, with a fixed interest rate
of 9%,  monthly  interest-only  payments  and a maturity  date of March  2000.
(see below for further discussion).                                                      1,141                      -

Note secured by Gateway  Park land located in Aurora,  CO, with a stated fixed
interest rate of 13%, quarterly  interest-only payments and a maturity date of
July 2005 (see below for further discussion).                                           36,441                 35,336
                                                                                ---------------        ---------------

Total                                                                              $    37,582            $    42,420
                                                                                ===============        ===============
</TABLE>

In November 1999, a note secured by an office  property in Phoenix,  Arizona was
sold to a third party at a discount of  $1,229,000  and the proceeds of the sale
were invested in the repurchase of preferred stock. This discount is recorded as
a loss on sale of mortgage  loan  receivable  on the  accompanying  consolidated
statement of income for the year ended December 31, 1999.

In September 1999, the Operating Partnership sold a hotel property in Arlington,
Texas, to a third party for a sale price of $2.1 million, of which $1.14 million
was  represented by a note receivable  secured by the hotel property.  This note
was paid off in January 2000.

In 1998, the Operating  Partnership sold a hotel property in Dallas, Texas, to a
third  party  for a sale  price of $4.2  million,  of  which  $3.6  million  was
represented by a note  receivable  secured by the hotel  property.  In September
1999,  the loan  agreement was modified to reduce the sale price of the hotel by
$1.6 million and,  thus,  the principal  amount of the note  receivable was also
reduced by $1.6 million. In addition, the maturity date of the note was extended
to March 2000. This note was paid off in December 1999.

In 1998, the Operating  Partnership entered into a development alliance with The
Pauls  Corporation (see Note 6). In addition to this development  alliance,  the
Operating Partnership loaned approximately $34 million ($36.4 million, including
accrued  interest,  at  December  31,  1999),  secured by a First  Mortgage,  to
continue the  build-out of Gateway  Park.  In this  arrangement,  the  Operating
Partnership  has  rights  under  certain   conditions  and  subject  to  certain
contingencies  to purchase the properties  upon  completion of development  and,
thus,  through this arrangement,  the Operating  Partnership could acquire up to
2.2 million square feet of office,  office/flex  and industrial  space and 1,600
multifamily units over the next ten years.

Contractually  due principal  payments of the mortgage  loans  receivable are as
follows (in thousands):

                                       49
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

                 Year Ending
                December 31,
                   2000                      $    1,141
                   2001                               -
                   2002                               -
                   2003                               -
                   2004                               -
                   Thereafter                    36,441
                   Total                     $   37,582

Note 6.   INVESTMENTS IN DEVELOPMENT AND OTHER ASSETS

The  Operating  Partnership  currently has 3 alliances  for the  development  of
approximately  885,000  square  feet of  office,  office/flex  and  distribution
properties and 1,614  multifamily units in Colorado,  Texas, New Jersey,  Kansas
and  Michigan.  As of  December  31,  1999,  the  Operating  Partnership  has an
investment of approximately $33 million. Under these development alliances,  the
Operating  Partnership  has  certain  rights to  purchase  the  properties  upon
completion of development over the next five years.

In June 1999, the Operating Partnership entered into a joint venture in which it
sold a 90%  interest  in Rockwall I & II, a 340,252  square foot office  complex
located in  Rockville,  Maryland.  The  Operating  Partnership  maintains  a 10%
interest in the asset along with a contract  for property  management  and asset
management services under which the Operating Partnership is entitled to receive
property  management fees of 3% of cash receipts and an annual asset  management
fee of  $350,000.  The  proceeds  from the sale were used to paydown  the Credit
Facility  (discussed  below), to reduce other secured debt and to repurchase the
Company's stock.  The value of this 10% interest is  approximately  $1.4 million
and is included in Other Assets on the accompanying  consolidated  balance sheet
as of December  31, 1999.  This  investment  is  accounted  for using the equity
method.

In April 1999,  the  Operating  Partnership  also  purchased a 10% interest in a
joint  venture  holding the fee simple title to the land under Rincon Center I &
II in San Francisco,  California.  The land was purchased from the United States
Post  Office for a purchase  price of $80.5  million.  The land has a triple net
ground lease with a remaining term of 51 years with minimum 30% rental increases
every six years.  In October  1999,  the joint  venture  purchased the leasehold
improvements  comprising  Rincon Center I & II. Occupying a full city block near
the  waterfront  in  the  Financial  District,  Rincon  Center  I & II  contains
approximately  700,000 square feet which includes  commercial  office and retail
space, 320 multifamily units and 381 subterranean  parking spaces. The Operating
Partnership  took over management and leasing of the project on November 1, 1999
and is now  entitled  to  receive  property  management  fees of  1.75%  of cash
receipts.  The book value of this 10% interest is approximately $4.2 million and
is included in Other Assets on the accompanying consolidated balance sheet as of
December 31, 1999. This investment is accounted for using the equity method.

As of  December  31, 1999 and 1998,  other  assets on the  consolidated  balance
sheets consists of the following (in thousands):
                                                   1999              1998
                                                ------------      ------------
       Accounts receivable                      $   3,863         $   1,968
       Prepaid expenses                             8,164             8,157
       Impound accounts                            12,970            12,280
       Lease commissions and loan fees             20,867            13,120
       Investment in joint ventures                 5,679                 -
       Corporate office fixed assets                4,726             4,259
       Marketable securities                            -             2,639
       Related party receivable (Note 9)            1,847                 -
       Other                                        3,118             3,014
                                                ------------      ------------

       Total other assets                       $  61,234         $  45,437
                                                ============      ============

                                       50
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

Note 7.   SECURED AND UNSECURED LIABILITIES

The Operating  Partnership  had the following  mortgage loans,  bank lines,  and
notes payable outstanding as of December 31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
                                                                                            1999          1998
<S>                                                                                      <C>           <C>
Secured loans with various  lenders,  net of  unamortized  discount of
$5,515 and $6,140 at December  31, 1999 and 1998,  respectively,  with
a fixed  interest  rate of  6.125%,  monthly  principal  and  interest
payments  ranging  between  $296  and  $458,  and a  maturity  date of
November 10, 2008.  These loans are secured by 35  properties  with an
aggregate  net  carrying  value of $400,980  and  $408,439 at December
31, 1999 and  1998, respectively.                                                        $232,735      $234,871

Secured loan with an  investment  bank with a fixed  interest  rate of
7.57% and a  maturity  date of  January  1,  2006.  This loan was paid
off  in  March  1999  with  the  proceeds  from  a  $26  million  loan
discussed below.                                                                                -        13,220

Secured loans with various  lenders,  bearing  interest at fixed rates
between  6.95%  and  9.25%  (approximately   $52,602  of  these  loans
include an  unamortized  premium of  approximately  $285 which reduces
the  effective  interest  rate on those  instruments  to 6.75%),  with
monthly  principal and interest  payments  ranging between $8 and $371
and maturing at various  dates through  December 1, 2030.  These loans
are secured by  properties  with an aggregate  net  carrying  value of
$547,264 and $576,633 at December 31, 1999 and 1998, respectively.                        322,878       335,257

Secured loans with various banks  bearing  interest at variable  rates
ranging  between  6.53% and 8.52% at  December  31, 1999 and 7.25% and
8.18% at December 31, 1998,  monthly  principal and interest  payments
ranging  between $4 and $790 and  maturing  at various  dates  through
August  30,  2004.  These  loans are  secured  by  properties  with an
aggregate  net  carrying  value of $224,526  and  $179,438 at December
31, 1999 and 1998, respectively.                                                          146,102       125,230

Unsecured  $142,500  line of credit  with a bank  ("Credit  Facility")
with a  variable  interest  rate of  LIBOR  plus  1.625%  (7.753%  and
7.401%  at  December  31,  1999  and  1998,   respectively),   monthly
interest  only  payments  and a maturity  date of December  22,  2000,
with one option to extend for 10 years.                                                    70,628        63,519

Unsecured  $125,000  term loan with a bank  with a  variable  interest
rate of LIBOR  plus  1.75%  (8.25%  at  December  31,  1999),  monthly
interest  only  payments  and a maturity  date of June 10,  2002.  See
below for further discussion.                                                              33,865             -

Unsecured   Senior  Notes  with  a  fixed  interest  rate  of  7.625%,
interest  payable  semiannually  on March 15 and  September  15, and a
maturity  date of March 15, 2005.  Approximately  $58,850 of the notes
were retired in 1999 as discussed below.                                                   91,150       150,000

Total                                                                                    $897,358      $922,097
</TABLE>

                                       51
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

In March 1999,  the  Operating  Partnership  obtained a $26 million  loan from a
commercial  bank. The loan was  non-recourse and was secured by seven properties
and had a maturity  date of December 22, 1999,  with an option to extend for six
months. The proceeds were used to pay off a loan which was previously secured by
these same  properties and to reduce other debt.  This loan was paid off in June
1999 with proceeds generated from the sales of four properties.

In June  1999,  in order  to  increase  the  Operating  Partnership's  financial
flexibility,  the Credit  Facility was modified to increase the commitment  from
$100 million to $142.5 million. The interest rate, monthly payments and maturity
date remained unchanged.  Subsequent to December 31, 1999, the maturity date was
extended to June 2002.

In  August  1999,  the  Operating  Partnership  closed a $97.6  million  secured
financing with a commercial bank ("Secured  Financing").  The proceeds from this
financing, combined with proceeds from a new $7.2 million mortgage and a draw on
the Credit  Facility,  were used to retire a $113.2 million mortgage which would
have  matured in  December of 1999.  The new  financing  is a revolving  line of
credit  maturing  in five years with a  five-year  extension  option,  and bears
interest  at a floating  rate equal to 75 basis  points over the rate for 90-day
mortgage  backed  securities  credit-enhanced  by FNMA.  The  December  31, 1999
interest rate on this loan was 6.53%.

In connection with the Secured Financing, the Operating Partnership entered into
an interest  rate cap  agreement to hedge  increases  in interest  rates above a
specified  level of 11.21%.  The  agreement  is for a term  concurrent  with the
Secured  Financing  instrument,  is indexed to a 90-day LIBOR rate, and is for a
notional amount equal to the maximum amount  available on the Secured  Financing
loan. As of December 31, 1999, the 90-day LIBOR rate was 6.00125%. The Operating
Partnership  paid a premium fee at the inception of the cap agreement,  which is
being amortized as additional interest expense over the life of the agreement.

In November  1999,  through  the  acquisition  of a property  through one of the
Operating   Partnership's   development  alliances  (as  discussed  above),  the
Operating  Partnership  assumed a $10 million loan from a commercial  bank. This
loan is secured by one office property, has a maturity date of June 30, 2000 and
bears  interest at a floating  rate of LIBOR plus 2.50%.  The  December 31, 1999
interest rate on this loan was 8.32%.

In December 1999, the Operating Partnership obtained an unsecured term loan from
a commercial bank whereby, until December 9, 2000, the Operating Partnership can
borrow the lesser of $125 million or the then Loan  Availability  (as  defined).
Any unborrowed  amounts from the loan at December 9, 2000 will be cancelled.  At
December 31, 1999,  $33,865,000  was  outstanding  on the loan.  This loan has a
maturity  date of June 10, 2002 and bears  interest at a floating  rate of LIBOR
plus 1.75%. The December 31, 1999 interest rate on this loan was 8.25%.

In the second,  third and fourth  quarters of 1999,  the  Operating  Partnership
retired  approximately $58.9 million of unsecured Senior Notes at a discount. As
a result of these  transactions,  a net gain on early  extinguishment of debt of
approximately  $3.1  million was  recorded  which is included in the net gain on
early  extinguishment  of debt on the  accompanying  consolidated  statement  of
income for the year ended December 31, 1999, as discussed in Note 8 below.

Some of the Operating Partnership's  properties are held in limited partnerships
and limited liability companies in order to facilitate  financing.  Such limited
partnerships  and limited  liability  companies are included in the consolidated
financial  statements of the Operating  Partnership in accordance with Generally
Accepted Accounting Principles ("GAAP").

The required principal payments on the Operating Partnership's debt for the next
five  years  and  thereafter,  as of  December  31,  1999,  are as  follows  (in
thousands):

                                       52
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998


                Year Ending
               December 31,
                 2000                  $  102,843 (1)
                 2001                      22,535
                 2002                     118,794 (1)
                 2003                      37,849
                 2004                     125,391
                 Thereafter               489,946
                 Total                 $  897,358

(1)  Subsequent to December 31, 1999,  the maturity date on the Credit  Facility
     was extended  from  December  2000 to June 2002.  The payment  schedule
     has been updated for this subsequent event and reflects a June 2002 payoff.

Note 8.  NET GAIN (LOSS) ON EARLY EXTINGUISHMENT OF DEBT

In  connection  with the loan  payoffs  discussed  above and the payoff of other
mortgage  debt,  the  Operating   Partnership  recorded  a  net  gain  on  early
extinguishment  of debt of $984,000 for the year ended  December 31, 1999.  This
gain consists of $3,115,000 of gains on retirement of Senior Notes (as discussed
above) offset by  $2,026,000 of losses due to prepayment  penalties and $105,000
of losses due to the writeoff of unamortized  loan fees upon the early payoff of
four  loans.  These loans were  paid-off  early when more  favorable  terms were
obtained  through  new  financing  (discussed  above)  and  upon the sale of the
properties  securing  the  loans.  Net loss on early  extinguishment  of debt of
$1,400,000  during the year ended  December  31, 1998,  consisted of  prepayment
penalties  and the write-off of  unamortized  loan fees upon the early payoff of
debt.  Various loans were paid-off early when more favorable terms were obtained
through new financing and upon the sale of one of the hotels.  Net loss on early
extinguishment  of debt of $843,000  during the year ended  December  31,  1997,
resulted  from the write-off of  unamortized  loan fees related to a $50 million
secured line of credit which was replaced with a $250 million  unsecured line of
credit (the "Credit Facility") from a commercial bank.

Note 9.   RELATED PARTY TRANSACTIONS

Fee and  reimbursement  income earned by the Operating  Partnership from related
entities  totaled  $3,312,000,  $2,802,000  and  $719,000  for the  years  ended
December  31,  1999,  1998 and 1997,  respectively,  and  consisted  of property
management fees, asset  management fees and other fee income.  In addition,  the
Operating Partnership paid GC property management fees and salary reimbursements
totaling  $1,572,000  and  $1,273,000  for the years ended December 31, 1999 and
1998,  respectively,  for  management of a portfolio of  residential  properties
owned by the  Company,  which is  included in property  operating  expenses  and
general and administrative expenses on the accompanying  consolidated statements
of income.

In 1998, the Operating Partnership acquired from a Managed Partnership an option
to purchase all of its rights  under a Lease with Option to Purchase  Agreement,
for certain undeveloped land located in Burlingame,  California. Upon expiration
of the  option  period,  the  independent  members  of the  Company's  Board  of
Directors  concluded that  proceeding with the development of the property would
have  required  that  the  Operating   Partnership   incur   substantial   debt.
Accordingly,  on  February 1, 1999,  the  Operating  Partnership  elected not to
proceed  with the  development  and not to exercise the option in return for the
Managed  Partnership's  agreement to reimburse  the  Operating  Partnership  for
$2,309,000 of predevelopment costs, $462,000 to be paid in cash with the balance
of  $1,847,000  in a  promissory  note  bearing  interest  at 10% and due on the
earlier  of sale,  refinance  or  March  31,  2002.  The note  also  contains  a
participation  in  profits   realized  by  the  Managed   Partnership  from  the
development  and sale of the  property.  The  principal  balance  of the note is
included in Other Assets on the  accompanying  consolidated  balance sheet as of
December 31, 1999.

The Operating Partnership has no employees and reimburses,  at cost, the Company
for  all  employee-related  costs  included  in  the  accompanying  consolidated
financial statements.

                                       53
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

Note 10.  COMMITMENTS AND CONTINGENCIES

Environmental  Matters. The Operating Partnership follows a 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  could have an adverse
effect on the Operating Partnership's results of operations and cash flow.

General  Uninsured  Losses.  The  Operating  Partnership  carries  comprehensive
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.  Further,  certain of the
properties are located in areas that are subject to earthquake activity.  Should
a  property  sustain  damage  as  a  result  of  an  earthquake,  the  Operating
Partnership  may incur  losses  due to  insurance  deductibles,  co-payments  on
insured  losses  or  uninsured  losses.  Should an  uninsured  loss  occur,  the
Operating  Partnership could lose its investment in, and anticipated profits and
cash flows from, a property.

Litigation.  Prior to the  completion  of the  Consolidation,  two lawsuits were
filed in 1995  contesting the fairness of the  Consolidation,  one in California
State court and one in federal court.  The  complaints in both actions  alleged,
among  other  things,  breaches  by  the  defendants  of  fiduciary  duties  and
inadequate disclosures. The State court action was settled over the objection of
certain  parties,  and the  settlement  was approved  (or review  denied) by the
Superior  Court of the  State of  California  in and for San Mateo  County,  the
California state court of appeals,  the California Supreme Court and the Supreme
Court of the United States. In the federal action, the court in December of 1995
deferred  all further  proceedings  pending a ruling in the State court  action.
Following  the final  resolution of the State court  action,  the  defendants in
January 2000 filed a motion to dismiss the federal court action.  As of the date
of this report, the plaintiffs had failed to file a timely responsive  pleading,
so the defendants intend to move for final dismissal.  The Operating Partnership
and the Company  believe that it is very  unlikely  that this  litigation  would
result in a  liability  that would  exceed the accrued  liability  by a material
amount. However, given the inherent uncertainties of litigation, there can be no
assurance  that the ultimate  outcomes of these actions will be favorable to the
Operating Partnership and the Company.

Certain other claims and lawsuits have arisen against the Operating  Partnership
and the Company in their normal course of business.  The  Operating  Partnership
and the Company  believe  that such other  claims and  lawsuits  will not have a
material  adverse effect on their  financial  position,  cash flow or results of
operations.

Note 11.  SEGMENT INFORMATION

The Operating  Partnership owns a diverse portfolio of properties comprising six
product types: office, office/flex,  industrial, retail, multifamily and hotels.
Each of these product types  represents a reportable  segment with distinct uses
and tenant types which require the  Operating  Partnership  to employ  different
management  strategies.  Each  segment  contains  properties  located in various
regions and markets  within the United  States.  The office  portfolio  consists
primarily of suburban office buildings.  The office/flex  portfolio  consists of
properties  designed  for a  combination  of  office  and  warehouse  uses.  The
industrial portfolio consists of properties designed for warehouse, distribution
and light  manufacturing  for  single-tenant  or  multi-tenant  use.  The retail
portfolio  consists  primarily  of  community  shopping  centers  anchored  with
national  or  regional  supermarkets  or  drug  stores.  The  properties  in the
multifamily  portfolio are apartment  buildings with units rented to residential
tenants on either a  month-by-month  basis or for terms of one year or less. The
Operating   Partnership's  hotel  operations  are  from  three  limited  service
"all-suite"  properties leased to and operated by third parties.  As of December
31, 1999, two of these hotel  properties  have been sold with only one remaining
in the Operating Partnership's portfolio.

The accounting  policies of the segments are the same as those  described in the
summary of significant  accounting policies. The Operating Partnership evaluates
performance  of its  property  types based on net  operating  income  derived by
subtracting  rental  expenses and real estate taxes  (operating  expenses)  from

                                       54
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

rental revenues.  Significant  information used by the Operating Partnership for
its reportable segments as of and for the years ended December 31, 1999 and 1998
is as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                     Multi-family  Hotel and
1999                             Office     Office/Flex    Industrial     Retail                     Other         Total
                               -----------  -------------  -----------  -----------  ------------ ------------  -------------
<S>                            <C>           <C>            <C>          <C>          <C>           <C>          <C>
Rental revenue                 $  120,135    $   35,772     $  18,694    $  11,182    $  68,144     $   1,412    $   255,339
Property operating expenses        46,840        10,184         4,445        3,640       30,570           420         96,099
                               ===========  =============  ===========  ===========  ============ ============  =============
Net operating income (NOI)     $   73,295    $   25,588     $  14,249    $   7,542    $  37,574     $     992    $   159,240
                               ===========  =============  ===========  ===========  ============ ============  =============

Real estate assets, net        $  811,010    $  253,748     $ 111,837    $  70,498    $ 394,738     $   5,535    $1,647,366
                               ===========  =============  ===========  ===========  ============ ============  =============

1998
Rental revenue                 $  117,746    $   36,987     $  16,104    $  12,072    $  40,865     $   4,182    $   227,956
Property operating expenses        44,775        10,898         3,609        3,840       17,235           967         81,324
                               ===========  =============  ===========  ===========  ============ ============  =============
Net operating income (NOI)     $   72,971    $   26,089     $  12,495    $   8,232    $  23,630     $   3,215    $   146,632
                               ===========  =============  ===========  ===========  ============ ============  =============

Real estate assets, net        $  829,866    $  294,438     $ 126,563    $  84,809    $ 387,805     $  18,958    $1,742,439
                               ===========  =============  ===========  ===========  ============ ============  =============

</TABLE>

The  following is a  reconciliation  of segment  revenues,  income and assets to
consolidated  revenues,  income and assets for the periods  presented  above (in
thousands):
<TABLE>
<CAPTION>

                                                           1999                 1998
                                                      ----------------     ----------------
Revenues
<S>                                                       <C>                  <C>
Total revenue for reportable segments                     $  255,339           $  227,956
Other revenue (1)                                             19,641               13,469
                                                      ================     ================
Total consolidated revenues                               $  274,980           $  241,425
                                                      ================     ================

Net Income
NOI for reportable segments                               $  159,240           $  146,632
Elimination of internal property management fees               8,062                5,898
Unallocated amounts:
   Other revenue (1)                                          19,641               13,469
   General and administrative expenses                        (9,672)             (10,682)
   Depreciation and amortization                             (58,295)             (50,169)
   Interest expense                                          (64,782)             (53,289)
   Loss on sale of mortgage loan receivable                   (1,229)                   -
   Loss on interest rate protection agreement                      -               (4,323)
                                                      ================     ================
Income from operations before extraordinary item        $     52,965         $     47,536
                                                      ================     ================
Assets
Total assets for reportable segments                    $  1,647,366         $  1,742,439
Investments in Development                                    33,298               35,131
Investments in Associated Companies                            9,404                8,807
Mortgage loans receivable                                     37,582               42,420
Cash and cash equivalents                                      6,363                4,019
Other assets                                                  61,234               45,437
                                                      ================     ================
Total consolidated assets                               $  1,795,247         $  1,878,253
                                                      ================     ================

(1)  Other revenue includes fee income,  interest and other income,  equity in
     earnings of Associated Companies,  equity in earnings of joint ventures
     and net gains on sales of real estate assets.
</TABLE>

                                       55
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

Note 12.  SUBSEQUENT EVENTS

On February 18,  2000,  the  Operating  Partnership  formed a limited  liability
company (the "LLC") with an independent third party and contributed its interest
in the  office  property  known as 2000  Corporate  Ridge,  located  in  McLean,
Virginia.  The  Operating  Partnership  retains  a  10%  interest  in  the  LLC.
Consideration  received for this  contribution  included  $20.6  million in debt
assumption by the LLC and $14.7 million in cash, which approximates the carrying
value of the portion of the property now held by a third party. Cash proceeds to
the Operating  Partnership were funded by the capital contributions of the third
party to the LLC. The LLC  agreement  provides  for,  among other  things,  a 3%
annual  management  fee to the  Operating  Partnership  for property  management
services,  certain asset management fees and certain additional distributions in
excess of its 10% interest, if available, upon the ultimate sale of the property
by the LLC. The Operating  Partnership  will account for its interest in the LLC
under the equity method.

In February 2000, the Operating  Partnership  entered into sale negotiations and
on February 24, 2000,  sold its interest in the  office/flex  property  known as
Columbia Warehouse, located in Columbia, Maryland, to an independent third party
for all cash consideration of $1,640,000. This resulted in a loss on sale, to be
recognized in the first quarter of 2000, of approximately $430,000.

Note 13.  UNAUDITED QUARTERLY RESULTS OF OPERATIONS

The following represents an unaudited summary of quarterly results of operations
for the  years  ended  December  31,  1999 and 1998 (in  thousands,  except  for
weighted average units and per unit amounts):

                                       56
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

<TABLE>
<CAPTION>

                                                                                    Quarter Ended
                                                         --------------------------------------------------------------------
                                                           March 31,       June 30, 1999       Sept 30,          Dec 31,
                                                              1999                               1999              1999
                                                         ---------------   ---------------  ---------------   ---------------
  REVENUE
<S>                                                      <C>               <C>              <C>               <C>
       Rental revenue                                    $      64,641     $      64,552    $     62,934      $     63,212
       Fees and reimbursements from affiliates                   1,131               743             618               820
       Interest and other income                                 1,659             1,721           1,677             1,347
       Equity in earnings (loss) of Associated
          Companies                                                309              (874)          1,777                10
       Equity in earnings (loss) of joint ventures                   -                57             102              (469)
       Net gain (loss) on sales of real estate assets            1,351             5,742            (371)            2,291
                                                         ---------------   ---------------  ---------------   ---------------
         Total revenue                                          69,091            71,941          66,737            67,211
                                                         ---------------   ---------------  ---------------   ---------------

  EXPENSES
       Property operating expenses                              22,001            21,860          22,145            22,031
       General and administrative                                2,215             2,545           2,280             2,632
       Depreciation and amortization                            15,092            14,220          14,266            14,717
       Interest expense                                         16,540            16,418          15,720            16,104
       Loss on sale of mortgage loan receivable                      -                 -               -             1,229
                                                         ---------------   ---------------  ---------------   ---------------
         Total expenses                                         55,848            55,043          54,411            56,713
                                                         ---------------   ---------------  ---------------   ---------------

  Income from operations before extraordinary item              13,243            16,898          12,326            10,498
  Extraordinary item:
  Gain (loss) on early extinguishment of debt                   (1,991)            1,688             740               547
                                                         ---------------   ---------------  ---------------   ---------------
  Net income                                                    11,252            18,586          13,066            11,045
  Preferred partner interest distributions                      (5,570)           (5,570)         (5,570)           (5,570)
                                                         ===============   ===============  ===============   ===============
  Net income available to general and limited partners   $       5,682     $      13,016    $      7,496      $      5,475
                                                         ===============   ===============  ===============   ===============

  Per Partnership Unit Data:
  Net income after preferred partner interest
       distributions and before extraordinary item       $        0.21     $        0.31    $       0.19      $       0.14
  Extraordinary item                                             (0.05)             0.05            0.02              0.02
                                                         ---------------   ---------------  ---------------   ---------------
  Net income available to general and limited partners   $        0.16     $        0.36    $       0.21      $       0.16
                                                         ===============   ===============  ===============   ===============
  Weighted average number of partnership units
    outstanding                                             35,949,321        35,875,015      35,188,560        34,680,551
                                                         ===============   ===============  ===============   ===============


Per unit amounts do not  necessarily  sum to per unit amounts for the year as weighted  average  units  outstanding
are measured for each period presented, rather than solely for the entire year.
</TABLE>

                                       57
<PAGE>

                      GLENBOROUGH PROPERTIES, L.P.

                Notes to Consolidated Financial Statements
                        December 31, 1999 and 1998

<TABLE>
<CAPTION>

                                                                                    Quarter Ended
                                                         --------------------------------------------------------------------
                                                           March 31,       June 30, 1998       Sept 30,          Dec 31,
                                                              1998                               1998              1998
                                                         ---------------   ---------------  ---------------   ---------------
  REVENUE
<S>                                                      <C>               <C>              <C>               <C>
       Rental revenue                                    $      45,963     $      51,619    $     65,321      $     65,053
       Fees and reimbursements from affiliates                     473               759           1,220               350
       Interest and other income                                   307               246           1,416             2,588
       Equity in earnings (loss) of Associated
          Companies                                                352               709             629              (376)
       Net gain (reduction in prior quarter gain) on
          sales of real estate assets                            1,446               693            (250)            2,907
                                                         ---------------   ---------------  ---------------   ---------------
         Total revenue                                          48,541            54,026          68,336            70,522
                                                         ---------------   ---------------  ---------------   ---------------

  EXPENSES
       Property operating expenses                              15,671            16,265          22,446            21,044
       General and administrative                                1,866             2,603           3,372             2,841
       Depreciation and amortization                             9,984            10,934          14,309            14,942
       Interest expense                                          9,145             9,707          17,064            17,373
       Loss on interest rate protection agreement                    -                 -               -             4,323
                                                         ---------------   ---------------  ---------------   ---------------
         Total expenses                                         36,666            39,509          57,191            60,523
                                                         ---------------   ---------------  ---------------   ---------------

  Income from operations before extraordinary item              11,875            14,517          11,145             9,999
  Extraordinary item:
  Loss on early extinguishment of debt                               -                 -               -            (1,400)
                                                         ---------------   ---------------  ---------------   ---------------
  Net income                                                    11,875            14,517          11,145             8,599
  Preferred partner interest distributions                      (3,910)           (5,570)         (5,570)           (5,570)
                                                         ===============   ===============  ===============   ===============
  Net income available to general and limited partners   $       7,965     $       8,947    $      5,575      $      3,029
                                                         ===============   ===============  ===============   ===============

  Per Partnership Unit Data:
  Net income after preferred partner interest
       distributions and before extraordinary item       $        0.24     $        0.26    $       0.16      $       0.12
  Extraordinary item                                                 -                 -               -             (0.04)
                                                         ---------------   ---------------  ---------------   ---------------
  Net income available to general and limited partners   $        0.24     $        0.26    $       0.16      $       0.08
                                                         ===============   ===============  ===============   ===============
  Weighted average number of partnership units
    outstanding                                             33,771,067        34,432,922      35,932,666        35,974,851
                                                         ===============   ===============  ===============   ===============


Per unit amounts do not  necessarily  sum to per unit amounts for the year as weighted  average  units  outstanding
are measured for each period presented, rather than solely for the entire year.
</TABLE>

                                       58
<PAGE>

<TABLE>
<CAPTION>

                                   GLENBOROUGH PROPERTIES, L.P.
                      SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                         December 31, 1999
                                          (in thousands)


           COLUMN A                COLUMN B               COLUMN C               COLUMN D

                                                                        Costs Capitalized (Reduced)
                                                     Initial Cost to           Subsequent to
                                                       Company (1)             Acquisition (4)
                                                               Buildings
                                                                  and
     Description                 Encumbrances      Land      Improvements     Improvements
----------------------------------------------------------------------------------------------------

Office Properties:
<S>                                 <C>          <C>           <C>              <C>
    Tradewinds Financial, AZ        $    -       $   304       $  1,214         $     47
    Vintage Pointe, AZ               2,044           738          2,950              248
    400 South El Camino Real, CA        (8)        4,000         30,549            3,996
    Centerstone Plaza, CA               (6)        6,077         24,265              315
    Gateway Professional Center, CA      -           459          4,339               26
    Park Plaza, CA                       -           971          6,226              149
    University Tech Center, CA (2)       -         2,086          8,046              539
    Warner Village Medical, CA           -           558          2,232              338
    One Gateway Center, CO              (9)          470          9,498              (25)
    Buschwood III, FL                   (8)        1,479          5,890              470
    Park Place, FL                      (8)        1,895         12,982              585
    Temple Terrace Bus. Center, FL       -         1,788          6,949               27
    Ashford Perimeter, GA           20,923         1,174         42,227              398
    Powers Ferry Landing East, GA   18,548         2,744         40,600            1,532
    Capitol Center, IA                  (8)            -         11,981              650
    Columbia Center II, IL               -           208         20,329              345
    Embassy Plaza, IL                    -           436         15,680            1,343
    Oak Brook International, IL         (8)          757         11,126              560
    Oakbrook Terrace, IL            19,095           552         37,635              275
    Crosspoint Four, IN                  -           394          2,847               58
    Meridian Park, IN                    -         1,296          5,906              860
    The Osram Building, IN               -           264          4,515               20
    Leawood Office Building, KS      4,222         1,124         10,300              138
    Blue Ridge Office Building, MA   2,862           734          5,877              296
    Bronx Park I, MA                     -           916          9,104              370
    Marlborough Corporate Place, MA      -         5,655         55,908            1,064
    The Hartwood Building, MA        2,518           527          5,426              121
    Westford Corporate Center, MA       (6)        2,091          8,310              305
                                                   (continued)
</TABLE>

<TABLE>
<CAPTION>


                                   GLENBOROUGH PROPERTIES, L.P.
                      SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                         December 31, 1999
                                          (in thousands)


           COLUMN A                               COLUMN E                COLUMN F        COLUMN G          COLUMN H


                                            Gross Amount Carried
                                            at December 31, 1999
                                                  Buildings                                   (1)             Life
                                                     and         (3)      Accumulated       Date           Depreciated
     Description                       Land     Improvements    Total    Depreciation     Acquired            Over
----------------------------------------------------------------------------------------------------------------------

Office Properties:
<S>                                 <C>         <C>          <C>         <C>                <C>            <C>
    Tradewinds Financial, AZ        $   304     $  1,261     $   1,565   $    158           11/96          1-30 yrs.
    Vintage Pointe, AZ                  738        3,198         3,936        456           11/96          1-30 yrs.
    400 South El Camino Real, CA      4,000       34,545        38,545      3,182            3/98          1-30 yrs.
    Centerstone Plaza, CA             6,077       24,580        30,657      2,094            7/97          1-30 yrs.
    Gateway Professional Center, CA     459        4,365         4,824         61            7/99          1-30 yrs.
    Park Plaza, CA                      971        6,375         7,346         94            7/99          1-30 yrs.
    University Tech Center, CA (2)    2,086        8,585        10,671        778            6/97          1-30 yrs.
    Warner Village Medical, CA          558        2,570         3,128        341           10/96          1-30 yrs.
    One Gateway Center, CO              470        9,473         9,943        500            7/98          1-30 yrs.
    Buschwood III, FL                 1,479        6,360         7,839        541            9/97          1-30 yrs.
    Park Place, FL                    1,895       13,567        15,462        985            1/98          1-30 yrs.
    Temple Terrace Bus. Center, FL    1,788        6,976         8,764        523           12/97          1-30 yrs.
    Ashford Perimeter, GA             1,174       42,625        43,799      2,871            1/98          1-30 yrs.
    Powers Ferry Landing East, GA     2,744       42,132        44,876      2,852            1/98          1-30 yrs.
    Capitol Center, IA                  500       12,131        12,631        810            2/98          1-30 yrs.
    Columbia Center II, IL              208       20,674        20,882      1,458            1/98          1-30 yrs.
    Embassy Plaza, IL                   436       17,023        17,459      1,141            1/98          1-30 yrs.
    Oak Brook International, IL         757       11,686        12,443        830            1/98          1-30 yrs.
    Oakbrook Terrace, IL                552       37,910        38,462      2,529            1/98          1-30 yrs.
    Crosspoint Four, IN                 394        2,905         3,299        169            4/98          1-30 yrs.
    Meridian Park, IN                 1,296        6,766         8,062        428            4/98          1-30 yrs.
    The Osram Building, IN              264        4,535         4,799        264            4/98          1-30 yrs.
    Leawood Office Building, KS       1,124       10,438        11,562        674            3/98          1-30 yrs.
    Blue Ridge Office Building, MA      734        6,173         6,907        279            3/98          1-30 yrs.
    Bronx Park I, MA                    916        9,474        10,390        688            3/98          1-30 yrs.
    Marlborough Corporate Place, MA   5,655       56,972        62,627      3,834            1/98          1-30 yrs.
    The Hartwood Building, MA           527        5,547         6,074        369            3/98          1-30 yrs.
    Westford Corporate Center, MA     2,091        8,615        10,706        786            4/97          1-30 yrs.
                                                                                       (continued)

</TABLE>

                                       59
<PAGE>

<TABLE>
<CAPTION>

                                               GLENBOROUGH PROPERTIES, L.P.
                                   SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                                      December 31, 1999
                                                       (in thousands)


           COLUMN A                COLUMN B               COLUMN C               COLUMN D

                                                                        Cost Capitalized (Reduced)
                                                     Initial Cost to           Subsequent to
                                                        Company (1 )          Acquisition (4)
                                                               Buildings
                                                                  and
     Description                 Encumbrances      Land      Improvements     Improvements
-----------------------------------------------------------------------------------------------------
Office Properties continued:
<S>                                 <C>           <C>         <C>                 <C>
   Montgomery Exec. Center, MD      $       (8)   $1,928      $   7,676           $   524
   Montrose Office Park, MD         15,175         3,871         20,360               72
   Riverview Office Tower, MN           (6)        4,095         16,333            1,467
   University Club Tower, MO             -         4,087         14,519            2,735
   Woodlands Plaza, MO                  (6)        1,114          4,426              527
   Edinburgh Center, NC                 (8)          984         14,232              520
   One & Three Pacific Place, NE        (8)        1,985         18,014              640
   25 Independence Blvd., NJ            (8)        4,547         18,141              313
   Bridgewater II, NJ               10,000         7,309         12,570                -
   Bridgewater Exec. Quarters, NJ    4,370         2,075          7,337               21
   Executive Place, NJ                   -           944         11,347               39
   Frontier Exec. Quarters I, NJ        (8)        4,200         33,892              257
   Frontier Exec. Quarters II, NJ       (8)          631          5,091               92
   Gatehall, NJ                          -         1,865          7,427              682
   Morristown Medical Offices, NJ        -           518          1,832                6
   Vreeland Business Ctr., NJ            -         1,863          8,714               49
   Citibank Park, NV                    (8)        4,628         18,442            1,121
   Poplar Towers, TN                     -         1,688          3,787              181
   Thousand Oaks, TN                     -         9,741         40,355            1,789
   2000 Corporate Ridge, VA         20,605           909         41,096              362
   700 South Washington, VA             (6)        1,981          7,894              581
   Cameron Run, VA                  10,034           414         18,964              279
   Globe Building, WA                    -           375          1,501              279
-----------------------------------------------------------------------------------------------------
         Office Total                            101,449        736,861           27,586
-----------------------------------------------------------------------------------------------------

                                                    (continued)
</TABLE>

<TABLE>
<CAPTION>

                                               GLENBOROUGH PROPERTIES, L.P.
                                   SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                                      December 31, 1999
                                                       (in thousands)


           COLUMN A                                COLUMN E              COLUMN F        COLUMN G          COLUMN H


                                            Gross Amount Carried
                                            at December 31, 1999
                                                  Buildings                                  (1)              Life
                                                     and         (3)      Accumulated       Date           Depreciated
     Description                       Land     Improvements    Total    Depreciation     Acquired            Over
----------------------------------------------------------------------------------------------------------------------
Office Properties continued:
<S>                                <C>          <C>          <C>           <C>               <C>           <C>
   Montgomery Exec. Center, MD     $  1,928     $  8,200     $  10,128     $  760            9/97          1-30 yrs.
   Montrose Office Park, MD           3,871       20,432        24,303        340            7/99          1-30 yrs.
   Riverview Office Tower, MN         4,095       17,800        21,895      1,726            4/97          1-30 yrs.
   University Club Tower, MO          4,087       17,254        21,341      2,324            7/96          1-40 yrs.
   Woodlands Plaza, MO                1,114        4,953         6,067        548            4/97          1-30 yrs.
   Edinburgh Center, NC                 984       14,752        15,736      1,077            1/98          1-30 yrs.
   One & Three Pacific Place, NE      1,985       18,654        20,639      1,106            5/98          1-30 yrs.
   25 Independence Blvd., NJ          4,547       18,454        23,001      1,528            9/97          1-30 yrs.
   Bridgewater II, NJ                 7,309       12,570        19,879        131           12/99          1-30 yrs.
   Bridgewater Exec. Quarters, NJ     2,075        7,358         9,433        614            9/97          1-30 yrs.
   Executive Place, NJ                  944       11,386        12,330        569            8/98          1-30 yrs.
   Frontier Exec. Quarters I, NJ      4,200       34,149        38,349      2,861            9/97          1-30 yrs.
   Frontier Exec. Quarters II, NJ       631        5,183         5,814        435            9/97          1-30 yrs.
   Gatehall, NJ                       1,865        8,109         9,974        697            9/97          1-30 yrs.
   Morristown Medical Offices, NJ       518        1,838         2,356        154            9/97          1-30 yrs.
   Vreeland Business Ctr., NJ         1,863        8,763        10,626        511            6/98          1-30 yrs.
   Citibank Park, NV                  4,628       19,563        24,191      1,549            9/97          1-30 yrs.
   Poplar Towers, TN                  1,688        3,968         5,656         61            7/99          1-30 yrs.
   Thousand Oaks, TN                  9,741       42,144        51,885      3,103           12/97          1-30 yrs.
   2000 Corporate Ridge, VA             909       41,458        42,367      2,783            1/98          1-30 yrs.
   700 South Washington, VA           1,981        8,475        10,456        754            4/97          1-30 yrs.
   Cameron Run, VA                      439       19,218        19,657      1,311            1/98          1-30 yrs.
   Globe Building, WA                   375        1,780         2,155        249           10/96          1-30 yrs.
----------------------------------------------------------------------------------------------------------------------
         Office Total               101,974      763,922       865,896     54,886
----------------------------------------------------------------------------------------------------------------------

                                                      (continued)
</TABLE>

                                       60
<PAGE>

<TABLE>
<CAPTION>

                                               GLENBOROUGH PROPERTIES, L.P.
                                   SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                                      December 31, 1999
                                                       (in thousands)


           COLUMN A                COLUMN B               COLUMN C               COLUMN D

                                                                        Cost Capitalized (Reduced)
                                                     Initial Cost to           Subsequent to
                                                       Company (1)             Acquisition (4)
                                                               Buildings
                                                                  and
     Description                 Encumbrances      Land      Improvements     Improvements
--------------------------------------------------------------------------------------------------------
Office/Flex Properties:
<S>                                <C>           <C>           <C>                <C>
   Baseline Business Park, AZ      $     -       $   886       $  3,527           $  388
   Hoover Industrial, AZ                 -           322          1,290              170
   Magnolia Industrial, AZ               -           322          1,241              229
   Scripps Terrace, CA                   -           678          2,685              104
   Tierrasanta Research Park, CA        (8)        1,303          5,189              773
   Gateway Eight, CO                    (9)          442          3,870               30
   Gateway Four, CO                    (10)          523          3,517             (106)
   Gateway One, CO                   2,376           402          3,608               32
   Gateway Six, CO                     (10)          568          5,040              310
   Northglenn Bus. Center, CO            -         1,335          3,354              156
   Fingerhut Business Center, FL         -         1,188          3,282               10
   Grand Regency Business Ctr., FL       -         1,120          4,302            1,082
   Lake Point Business Park, FL         (6)        1,344          5,343              340
   Primeco Business Center, FL           -           950          3,418               12
   Oakbrook Corners, GA                 (8)        1,057          4,209              176
   The Business Park, GA                (8)        1,485          5,912              599
   Covance Business Center, IN           -         1,405         15,109                -
   Park 100 - Building 42, IN (5)        -           712          3,286             (488)
   Canton Business Center, MA        3,291           796          6,758               73
   Fisher-Pierce, MA                    (6)          718          2,860              123
   Columbia Warehouse, MD                -           393          1,565               22
   Germantown Business Center, MD       (8)        1,442          5,753               23
   Bryant Lake Business Center, MN      (8)        1,907          7,531              878
   Winnetka Industrial Center, MN        -         1,189          4,737              188
   Woodlands Tech Center, MO            (6)          949          3,773              364
   Fairfield Business Quarters, NJ   2,675           817          3,479               67
   Fox Hollow Bus. Quarters, NJ          -         1,576          2,358              126
                                                        (continued)
</TABLE>

<TABLE>
<CAPTION>

                                               GLENBOROUGH PROPERTIES, L.P.
                                   SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                                      December 31, 1999
                                                       (in thousands)


           COLUMN A                              COLUMN E              COLUMN F        COLUMN G          COLUMN H


                                          Gross Amount Carried
                                          at December 31, 1999
                                                Buildings                                  (1)              Life
                                                   and         (3)      Accumulated       Date           Depreciated
     Description                     Land     Improvements    Total    Depreciation     Acquired            Over
--------------------------------------------------------------------------------------------------------------------
Office/Flex Properties:
<S>                                <C>         <C>          <C>          <C>               <C>           <C>
   Baseline Business Park, AZ      $  886      $ 3,915      $  4,801     $  358            9/97          1-30 yrs.
   Hoover Industrial, AZ              322        1,460         1,782        175           10/96          1-30 yrs.
   Magnolia Industrial, AZ            322        1,470         1,792        162            6/97          1-30 yrs.
   Scripps Terrace, CA                678        2,789         3,467        242            9/97          1-30 yrs.
   Tierrasanta Research Park, CA    1,303        5,962         7,265        625            9/97          1-30 yrs.
   Gateway Eight, CO                  442        3,900         4,342        195            7/98          1-30 yrs.
   Gateway Four, CO                   523        3,411         3,934        174            7/98          1-30 yrs.
   Gateway One, CO                    402        3,640         4,042        182            7/98          1-30 yrs.
   Gateway Six, CO                    568        5,350         5,918        329            7/98          1-30 yrs.
   Northglenn Bus. Center, CO       1,335        3,510         4,845        256           12/97          1-30 yrs.
   Fingerhut Business Center, FL    1,188        3,292         4,480        247           12/97          1-30 yrs.
   Grand Regency Business Ctr., FL  1,120        5,384         6,504        537           12/97          1-30 yrs.
   Lake Point Business Park, FL     1,344        5,683         7,027        577            4/97          1-30 yrs.
   Primeco Business Center, FL        950        3,430         4,380        257           12/97          1-30 yrs.
   Oakbrook Corners, GA             1,057        4,385         5,442        384            9/97          1-30 yrs.
   The Business Park, GA            1,485        6,511         7,996        596            9/97          1-30 yrs.
   Covance Business Center, IN      1,405       15,109        16,514        797            7/98          1-30 yrs.
   Park 100 - Building 42, IN (5)     712        2,798         3,510        901           10/86          5-25 yrs.
   Canton Business Center, MA         796        6,831         7,627        460            3/98          1-30 yrs.
   Fisher-Pierce, MA                  718        2,983         3,701        269            4/97          1-30 yrs.
   Columbia Warehouse, MD             393        1,587         1,980        119           10/97          1-30 yrs.
   Germantown Business Center, MD   1,442        5,776         7,218        481            9/97          1-30 yrs.
   Bryant Lake Business Center, MN  1,907        8,409        10,316        664           11/97          1-30 yrs.
   Winnetka Industrial Center, MN   1,189        4,925         6,114        411            9/97          1-30 yrs.
   Woodlands Tech Center, MO          949        4,137         5,086        481            4/97          1-30 yrs.
   Fairfield Business Quarters, NJ    817        3,546         4,363        295            9/97          1-30 yrs.
   Fox Hollow Bus. Quarters, NJ     1,576        2,484         4,060        228            9/97          1-30 yrs.
                                                                    (continued)
</TABLE>

                                       61
<PAGE>

<TABLE>
<CAPTION>

                 GLENBOROUGH PROPERTIES, L.P.
     SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                        December 31, 1999
                         (in thousands)

           COLUMN A                COLUMN B               COLUMN C               COLUMN D

                                                                        Cost Capitalized (Reduced)
                                                     Initial Cost to           Subsequent to
                                                       Company (1)             Acquisition (4)
                                                               Buildings
                                                                  and
     Description                 Encumbrances      Land      Improvements     Improvements
------------------------------------------------------------------------------------------------------
Office/Flex Properties continued:
<S>                                  <C>        <C>           <C>                <C>
   Palms Business Center III, NV     $   (8)    $  3,984      $  10,207          $   109
   Palms Business Center IV, NV         (8)          627          3,272               20
   Palms Business Center North, NV      (8)        2,492          7,067              192
   Palms Business Center South, NV      (8)        4,134          9,610              368
   Post Palms Business Center, NV        -         2,522          9,453              136
   Clark Avenue, PA                      -           649          2,584               59
   Lehigh Valley Exec. Campus, PA        -         1,748         12,826              415
   Valley Forge Corporate Center, PA     -         2,614         34,805           (1,376)
   Kent Business Park, WA               (8)        1,211          4,822               89
   Totem Valley Business Center, WA      -         2,504          5,262              132
------------------------------------------------------------------------------------------------------
         Office/Flex Total                        48,314        216,904            5,825
------------------------------------------------------------------------------------------------------
Industrial Properties:
   Fairmont Commerce Center, AZ          -           735          2,928              177
   Fifth Street Industrial, AZ           -           654          2,522              183
   Bellanca Airport Park I, CA           -         8,687              -                -
   Coronado Industrial, CA              (8)          711          2,831               46
   East Anaheim Industrial, CA          (8)        1,480          3,282               36
   Springdale Commerce Center, CA       (8)        1,030          4,101               89
   Gateway Nine, CO                  4,694           612          4,941               11
   Gateway Seven, CO                   (10)          638          5,143              213
   Gateway Ten, CO                      (9)          524          4,762               36
   Gateway Three, CO                   (10)          508          4,704               39
   Gateway Two, CO                   3,831           561          4,425             (202)
   Atlantic Industrial, GA               -           634          3,866           (1,091)
   Navistar International, IL (5)        -           793         10,941           (4,122)

                                                     (continued)
</TABLE>

<TABLE>
<CAPTION>

                      GLENBOROUGH PROPERTIES, L.P.
          SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             December 31, 1999
                              (in thousands)

           COLUMN A                                  COLUMN E              COLUMN F        COLUMN G          COLUMN H


                                              Gross Amount Carried
                                              at December 31, 1999
                                                    Buildings                                  (1)              Life
                                                       and         (3)      Accumulated       Date           Depreciated
     Description                         Land     Improvements    Total    Depreciation     Acquired            Over
------------------------------------------------------------------------------------------------------------------------
Office/Flex Properties continued:
<S>                                  <C>         <C>           <C>           <C>              <C>            <C>
   Palms Business Center III, NV     $  3,984    $  10,316     $  14,300     $  780           10/97          1-30 yrs.
   Palms Business Center IV, NV           627        3,292         3,919        247           10/97          1-30 yrs.
   Palms Business Center North, NV      2,492        7,259         9,751        553           10/97          1-30 yrs.
   Palms Business Center South, NV      4,134        9,978        14,112        764           10/97          1-30 yrs.
   Post Palms Business Center, NV       2,522        9,589        12,111        731           10/97          1-30 yrs.
   Clark Avenue, PA                       649        2,643         3,292        223            9/97          1-30 yrs.
   Lehigh Valley Exec. Campus, PA       1,748       13,241        14,989        906            1/98          1-30 yrs.
   Valley Forge Corporate Center, PA    2,505       33,538        36,043      2,180            1/98          1-30 yrs.
   Kent Business Park, WA               1,211        4,911         6,122        417            9/97          1-30 yrs.
   Totem Valley Business Center, WA     2,504        5,394         7,898         92            7/99          1-30 yrs.
------------------------------------------------------------------------------------------------------------------------
         Office/Flex Total             48,205      222,838       271,043     17,295
------------------------------------------------------------------------------------------------------------------------
Industrial Properties:
   Fairmont Commerce Center, AZ           735        3,105         3,840        244           10/97          1-30 yrs.
   Fifth Street Industrial, AZ            654        2,705         3,359        248            6/97          1-30 yrs.
   Bellanca Airport Park I, CA          8,687            -         8,687          -            2/99                n/a
   Coronado Industrial, CA                711        2,877         3,588        244            9/97          1-30 yrs.
   East Anaheim Industrial, CA          1,480        3,318         4,798        251           10/97          1-30 yrs.
   Springdale Commerce Center, CA       1,030        4,190         5,220        360            9/97          1-30 yrs.
   Gateway Nine, CO                       612        4,952         5,564        323            7/98          1-30 yrs.
   Gateway Seven, CO                      638        5,356         5,994        290            7/98          1-30 yrs.
   Gateway Ten, CO                        524        4,798         5,322        240            7/98          1-30 yrs.
   Gateway Three, CO                      508        4,743         5,251        237            7/98          1-30 yrs.
   Gateway Two, CO                        561        4,223         4,784        217            7/98          1-30 yrs.
   Atlantic Industrial, GA                634        2,775         3,409        276            9/97          1-30 yrs.
   Navistar International, IL (5)         793        6,819         7,612      2,188            3/84            40 yrs.

                                                                    (continued)
</TABLE>

                                       62
<PAGE>

<TABLE>
<CAPTION>


                      GLENBOROUGH PROPERTIES, L.P.
          SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             December 31, 1999
                              (in thousands)

           COLUMN A                COLUMN B               COLUMN C               COLUMN D

                                                                        Cost Capitalized (Reduced)
                                                     Initial Cost to           Subsequent to
                                                       Company (1)             Acquisition (4)
                                                               Buildings
                                                                  and
     Description                 Encumbrances      Land      Improvements     Improvements
-------------------------------------------------------------------------------------------------------
Industrial Properties continued:
<S>                                    <C>         <C>         <C>              <C>
   Park 100 - Building 46, IN (5)      $  -        $    -      $       -        $     212
   J.I. Case Equip. Corp., KS (5)         -           236          3,264           (1,241)
   Flanders Industrial Park, MA           -           738          5,634              209
   Forest Street Business Center, MA      -           227          1,801               39
   Southworth-Milton, MA                 (6)        1,922          7,652               80
   Navistar International, MD (5)         -           356          4,911           (1,879)
   Cottontail Distribution Center, NJ 8,407         1,616         16,278               74
   Eatontown Industrial, NJ               -           765          1,963               30
   One Taft Industrial, NJ               (8)        1,326          4,975               56
   J.I. Case Equip. Corp., TN (5)         -           187          2,583             (988)
   Sea Tac II, WA (5)                     -           712          1,474             (178)
-------------------------------------------------------------------------------------------------------
         Industrial Total                          25,652        104,981           (8,171)
-------------------------------------------------------------------------------------------------------
Retail Properties:
   Sonora Plaza, CA                   4,811         1,948          7,781              176
   Piedmont Plaza, FL                     -         1,317          5,233               85
   River Run Shopping Ctr., FL            -         1,428          5,687              203
   Westwood Plaza, FL (5)                 -         2,599          5,110            2,755
   Westbrook Commons, IL                 (8)        3,067         12,213              718
   Broad Ripple Retail Center, IN         -           542          3,876              128
   Cross Creek Retail Center, IN      4,973         1,516          4,351              201
   Geist Retail Centre, IN            4,316         1,012          4,828              194
   Woodfield Centre, IN                   -           765          4,685              232
   Goshen Plaza, MD                       -           994          3,958               26
-------------------------------------------------------------------------------------------------------
        Retail Total                               15,188         57,722            4,718
-------------------------------------------------------------------------------------------------------

                                                        (continued)
</TABLE>

<TABLE>
<CAPTION>


                      GLENBOROUGH PROPERTIES, L.P.
          SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             December 31, 1999
                              (in thousands)

           COLUMN A                                COLUMN E              COLUMN F        COLUMN G          COLUMN H


                                              Gross Amount Carried
                                              at December 31, 1999
                                                    Buildings                                  (1)              Life
                                                       and         (3)      Accumulated       Date           Depreciated
     Description                         Land     Improvements    Total    Depreciation     Acquired            Over
------------------------------------------------------------------------------------------------------------------------
Industrial Properties continued:
<S>                                   <C>         <C>         <C>          <C>                <C>            <C>
   Park 100 - Building 46, IN (5)     $     -     $    212    $      212   $    174           10/86          5-25 yrs.
   J.I. Case Equip. Corp., KS (5)         236        2,023         2,259        639            3/84            40 yrs.
   Flanders Industrial Park, MA           738        5,843         6,581        399            3/98          1-30 yrs.
   Forest Street Business Center, MA      227        1,840         2,067        117            3/98          1-30 yrs.
   Southworth-Milton, MA                1,922        7,732         9,654        708            4/97          1-30 yrs.
   Navistar International, MD (5)         356        3,032         3,388        960            3/84            40 yrs.
   Cottontail Distribution Center, NJ   1,616       16,352        17,968        954            6/98          1-30 yrs.
   Eatontown Industrial, NJ               765        1,993         2,758        167            9/97          1-30 yrs.
   One Taft Industrial, NJ              1,326        5,031         6,357        419            9/97          1-30 yrs.
   J.I. Case Equip. Corp., TN (5)         187        1,595         1,782        506            3/84            40 yrs.
   Sea Tac II, WA (5)                     712        1,296         2,008        464            2/86          5-25 yrs.
------------------------------------------------------------------------------------------------------------------------
         Industrial Total              25,652       96,810       122,462     10,625
------------------------------------------------------------------------------------------------------------------------
Retail Properties:
   Sonora Plaza, CA                     1,948        7,957         9,905        927           11/96          1-30 yrs.
   Piedmont Plaza, FL                   1,317        5,318         6,635        356            4/97          1-30 yrs.
   River Run Shopping Ctr., FL          1,428        5,890         7,318        338            9/97          1-30 yrs.
   Westwood Plaza, FL (5)               2,599        7,865        10,464      3,032            1/88          1-30 yrs.
   Westbrook Commons, IL                3,067       12,931        15,998      1,070            9/97          1-30 yrs.
   Broad Ripple Retail Center, IN         542        4,004         4,546        231            4/98          1-30 yrs.
   Cross Creek Retail Center, IN        1,516        4,552         6,068        266            4/98          1-30 yrs.
   Geist Retail Centre, IN              1,012        5,022         6,034        291            4/98          1-30 yrs.
   Woodfield Centre, IN                   765        4,917         5,682        286            4/98          1-30 yrs.
   Goshen Plaza, MD                       994        3,984         4,978        333            9/97          1-30 yrs.
------------------------------------------------------------------------------------------------------------------------
        Retail Total                   15,188       62,440        77,628      7,130
------------------------------------------------------------------------------------------------------------------------

                                                            (continued)
</TABLE>

                                       63
<PAGE>

<TABLE>
<CAPTION>


                      GLENBOROUGH PROPERTIES, L.P.
          SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             December 31, 1999
                              (in thousands)


           COLUMN A                COLUMN B               COLUMN C               COLUMN D

                                                                        Cost Capitalized (Reduced)
                                                     Initial Cost to           Subsequent to
                                                        Company (1)            Acquisition (4)
                                                               Buildings
                                                                  and
     Description                 Encumbrances      Land      Improvements     Improvements
------------------------------------------------------------------------------------------------------
Multifamily Properties:
<S>                                <C>          <C>            <C>               <C>
   Overlook Apartments, AZ         $    (6)     $  2,274       $  9,036          $   295
   Stone Ridge at Vinings, GA          (11)        1,881         16,942              855
   Woodmere Trace, GA                7,183         1,002          9,029               73
   Crosscreek Apartments, IN         6,215           701          9,042               99
   Harcourt Club Apartments, IN      3,756           437          5,389              191
   Island Club Apartments, IN       11,958           713         15,596              219
   Arrowood Crossing I & II, NC         (8)        1,837          7,222              413
   The Chase (Commonwealth), NC      3,143           784          3,083              43
   The Chase (Monroe), NC               (8)        1,033          4,062              264
   The Chase Monroe II, NC                           380          4,689               22
   Sabal Point I, II & III, NC          (8)        3,714         14,602              757
   Sharonridge I & II, NC            1,731           527          2,071              (22)
   The Courtyard, NC                 1,572           438          1,723               35
   The Landing on Farmhurst, NC      3,085           841          3,306               30
   The Oaks, NC                      2,272           644          2,649              (51)
   Wendover Glen, NC                 2,461           597          2,346               35
   Willow Glen, NC                      (8)          823          3,236              160
   Sahara Gardens, NV                   (8)        1,872          7,500              766
   Villas De Mission, NV                (8)        1,924          7,695              375
   Player's Club of Brentwood, TN       (8)          800          7,205              285
   Bandera Crossing, TX                (11)          675          6,077              207
   Bear Creek Crossing, TX             (11)          627          5,650               80
   Cypress Creek Apartments, TX        (11)          732          6,591              361
   The Hollows, TX                     (11)        1,390         12,518              187
   Hunterwood, TX                      (11)          563          5,067               73
   Hunter's Chase, TX                  (11)        2,094         18,857              287
   Jefferson Creek, TX                  (7)        1,889         17,017              171
   Jefferson Place, TX                  (7)        2,620         23,598              226
   La Costa, TX                         (7)        2,826         25,453              201
                                                          (continued)
</TABLE>

<TABLE>
<CAPTION>


                      GLENBOROUGH PROPERTIES, L.P.
          SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             December 31, 1999
                              (in thousands)


           COLUMN A                                COLUMN E              COLUMN F        COLUMN G          COLUMN H


                                            Gross Amount Carried
                                            at December 31, 1999
                                                  Buildings                                  (1)              Life
                                                     and         (3)      Accumulated       Date           Depreciated
     Description                       Land     Improvements    Total    Depreciation     Acquired            Over
----------------------------------------------------------------------------------------------------------------------
Multifamily Properties:
<S>                                <C>         <C>           <C>            <C>              <C>           <C>
   Overlook Apartments, AZ         $  2,274    $   9,331     $  11,605      $   875          4/97          1-30 yrs.
   Stone Ridge at Vinings, GA         1,881       17,797        19,678          954          6/98          1-30 yrs.
   Woodmere Trace, GA                 1,002        9,102        10,104          499          6/98          1-30 yrs.
   Crosscreek Apartments, IN            701        9,141         9,842          567          4/98          1-30 yrs.
   Harcourt Club Apartments, IN         437        5,580         6,017          349          4/98          1-30 yrs.
   Island Club Apartments, IN           713       15,815        16,528          981          4/98          1-30 yrs.
   Arrowood Crossing I & II, NC       1,837        7,635         9,472          621         12/97          1-30 yrs.
   The Chase (Commonwealth), NC         753        3,157         3,910          271         12/97          1-30 yrs.
   The Chase (Monroe), NC             1,033        4,326         5,359          354         12/97          1-30 yrs.
   The Chase Monroe II, NC              380        4,711         5,091           39         10/99          1-30 yrs.
   Sabal Point I, II & III, NC        3,714       15,359        19,073        1,225         12/97          1-30 yrs.
   Sharonridge I & II, NC               494        2,082         2,576          176         12/97          1-30 yrs.
   The Courtyard, NC                    422        1,774         2,196          148         12/97          1-30 yrs.
   The Landing on Farmhurst, NC         819        3,358         4,177          263         12/97          1-30 yrs.
   The Oaks, NC                         600        2,642         3,242          221         12/97          1-30 yrs.
   Wendover Glen, NC                    561        2,417         2,978          210         12/97          1-30 yrs.
   Willow Glen, NC                      823        3,396         4,219          282         12/97          1-30 yrs.
   Sahara Gardens, NV                 1,872        8,266        10,138          933         10/96          1-30 yrs.
   Villas De Mission, NV              1,924        8,070         9,994          976         10/96          1-30 yrs.
   Player's Club of Brentwood, TN       800        7,490         8,290          419          6/98          1-30 yrs.
   Bandera Crossing, TX                 675        6,284         6,959          338          6/98          1-30 yrs.
   Bear Creek Crossing, TX              627        5,730         6,357          331          6/98          1-30 yrs.
   Cypress Creek Apartments, TX         732        6,952         7,684          401          6/98          1-30 yrs.
   The Hollows, TX                    1,390       12,705        14,095          715          6/98          1-30 yrs.
   Hunterwood, TX                       563        5,140         5,703          280          6/98          1-30 yrs.
   Hunter's Chase, TX                 2,094       19,144        21,238        1,042          6/98          1-30 yrs.
   Jefferson Creek, TX                1,889       17,188        19,077          912          6/98          1-30 yrs.
   Jefferson Place, TX                2,620       23,824        26,444        1,280          6/98          1-30 yrs.
   La Costa, TX                       2,826       25,654        28,480        1,383          6/98          1-30 yrs.
                                                                 (continued)
</TABLE>

                                       64
<PAGE>

<TABLE>
<CAPTION>


                      GLENBOROUGH PROPERTIES, L.P.
          SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             December 31, 1999
                              (in thousands)


           COLUMN A                COLUMN B               COLUMN C               COLUMN D

                                                                        Cost Capitalized (Reduced)
                                                     Initial Cost to           Subsequent to
                                                       Company (1)             Acquisition (4)
                                                               Buildings
                                                                  and
     Description                 Encumbrances      Land      Improvements     Improvements
---------------------------------------------------------------------------------------------------
Multifamily Properties continued:
<S>                            <C>            <C>          <C>                <C>
   Longspur, TX                $       (11)   $    1,240   $     11,165       $      157
   North Park Crossing, TX             (11)        1,147         10,332              286
   Silver Vale Crossing, TX            (11)        1,111         10,006              349
   Springs of Indian Creek, TX      14,100         1,493         19,359               11
   The Park at Woodlake, TX             (8)        1,676         15,100              636
   Vista Crossing, TX                  (11)          737          6,643              115
   Walnut Creek Crossing, TX           (11)        1,286         11,586              140
   Willow Brook Crossing, TX           (11)          716          6,448              200
   Wind River Crossing, TX             (11)        1,437         12,939              317
---------------------------------------------------------------------------------------------------
        Multifamily Total                         47,481        360,829            8,848
---------------------------------------------------------------------------------------------------
Hotel Properties and Other:
   Country Inn & Suites by Carlson:
     Scottsdale, AZ                  4,035             -         12,117              185
Miscellaneous Investments                -             -              -           (4,953)
---------------------------------------------------------------------------------------------------
        Hotel and Other Total                          -         12,117           (4,768)
---------------------------------------------------------------------------------------------------
        Combined Total         $   231,281     $ 238,084   $  1,489,414         $ 34,038
===================================================================================================

(1)  Initial cost and date acquired by GRT Predecessor Entities, where applicable.
(2)  The Operating Partnership holds a participating first mortgage interest in the property.
     In accordance with GAAP, the Operating Partnership is accounting for the property as though it holds fee title.
(3)  The aggregate cost for Federal income tax purposes is  $1,634,765.
(4)  Bracketed amounts represent reductions to carrying value.
(5)  Initial Cost represents original book value carried forward from the financial statements of the GRT Predecessor Entities.
(6)  Cross collateralized loan secured by ten properties - $58,059.
(7)  Cross collateralized loan secured by three properties - $52,602.
(8)  Cross collateralized loans secured by 35 properties - $232,735.
(9)  Cross collateralized loan secured by three properties - $15,361.
(10) Cross collateralized loan secured by four properties - $14,077.
(11) Cross collateralized loan secured by 14 properties - $97,600.
</TABLE>

<TABLE>
<CAPTION>

                      GLENBOROUGH PROPERTIES, L.P.
          SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             December 31, 1999
                              (in thousands)


           COLUMN A                                   COLUMN E              COLUMN F        COLUMN G          COLUMN H


                                               Gross Amount Carried
                                               at December 31, 1999
                                                     Buildings                                  (1)              Life
                                                        and         (3)      Accumulated       Date           Depreciated
     Description                          Land     Improvements    Total    Depreciation     Acquired            Over
-------------------------------------------------------------------------------------------------------------------------
Multifamily Properties continued:
<S>                                <C>           <C>          <C>            <C>                <C>           <C>
   Longspur, TX                    $     1,240   $   11,322   $     12,562   $     625          6/98          1-30 yrs.
   North Park Crossing, TX               1,147       10,618        11,765          592          6/98          1-30 yrs.
   Silver Vale Crossing, TX              1,111       10,355        11,466          564          6/98          1-30 yrs.
   Springs of Indian Creek, TX           1,493       19,370        20,863          592          2/99          1-30 yrs.
   The Park at Woodlake, TX              1,676       15,736        17,412          876          6/98          1-30 yrs.
   Vista Crossing, TX                      737        6,758         7,495          377          6/98          1-30 yrs.
   Walnut Creek Crossing, TX             1,286       11,726        13,012          646          6/98          1-30 yrs.
   Willow Brook Crossing, TX               716        6,648         7,364          373          6/98          1-30 yrs.
   Wind River Crossing, TX               1,437       13,256        14,693          730          6/98          1-30 yrs.
-------------------------------------------------------------------------------------------------------------------------
        Multifamily Total               47,299      369,859       417,158       22,420
-------------------------------------------------------------------------------------------------------------------------
Hotel Properties and Other:
   Country Inn & Suites by Carlson:
     Scottsdale, AZ                          -       12,302        12,302        1,814          2/97          3-30 yrs.
Miscellaneous Investments                    -      (4,953)       (4,953)            -
-------------------------------------------------------------------------------------------------------------------------
        Hotel and Other Total                -        7,349         7,349        1,814
-------------------------------------------------------------------------------------------------------------------------
        Combined Total              $  238,318  $ 1,523,218   $ 1,761,536    $ 114,170
=========================================================================================================================

(1)  Initial cost and date acquired by GRT Predecessor Entities, where applicable.
(2)  The Operating Partnership holds a participating first mortgage interest in the property.
     In accordance with GAAP, the Operating Partnership is accounting for the property as though it holds fee title.
(3)  The aggregate cost for Federal income tax purposes is  $1,634,765.
(4)  Bracketed amounts represent reductions to carrying value.
(5)  Initial Cost represents original book value carried forward from the financial statements of the GRT Predecessor Entities.
(6)  Cross collateralized loan secured by ten properties - $58,059.
(7)  Cross collateralized loan secured by three properties - $52,602.
(8)  Cross collateralized loans secured by 35 properties - $232,735.
(9)  Cross collateralized loan secured by three properties - $15,361.
(10) Cross collateralized loan secured by four properties - $14,077.
(11) Cross collateralized loan secured by 14 properties - $97,600.
</TABLE>

                                       65
<PAGE>

<TABLE>
<CAPTION>



                         GLENBOROUGH PROPERTIES, L.P.
           SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                              December 31, 1999
                                (in thousands)


Reconciliation of gross amount at which real estate was carried for the years ended December 31:

                                          1999                      1998                       1997
                                    -----------------          ----------------          -----------------

Rental Property:

<S>                                   <C>                        <C>                        <C>
Balance at beginning of year          $ 1,825,308                $   866,431                $  190,729

Additions during year:
Property acquisitions and
    additions                             124,726                  1,013,170                   690,214

Retirements/sales                        (183,545)                   (54,293)                  (14,512)

Miscellaneous                              (4,953)                         -                         -
                                    -----------------          ----------------          -----------------

Balance at end of year                $ 1,761,536                $ 1,825,308                $  866,431
                                    =================          ================          =================

Accumulated Depreciation:

Balance at beginning of year          $    82,869                $    41,213                $   28,784

Additions during year:
Depreciation                               56,004                     49,450                    14,496
Acquisitions                                    -                          -                       443

Retirements/sales                         (24,703)                    (7,794)                   (2,510)
                                    -----------------          ----------------          -----------------

Balance at end of year                $   114,170                $    82,869                $   41,213
                                    =================          ================          =================

</TABLE>

                                       66
<PAGE>

<TABLE>
<CAPTION>



                                   GLENBOROUGH PROPERTIES, L.P.
                 SCHEDULE IV - MORTGAGE LOANS RECEIVABLE, SECURED BY REAL ESTATE

                                        December 31, 1999
                                          (in thousands)

         COLUMN A              COLUMN B          COLUMN C          COLUMN D


 Description of Loan and
    Securing Property           Current                            Periodic
                             Interest Rate    Maturity Date     Payment Terms

<S>                               <C>            <C>            <C>
First Mortgage Loan                                               Quarterly
Secured by land located                                         interest-only
in Aurora, Colorado               13%             7/1/05           payments

First Mortgage Loan                                                Monthly
secured by land located                                         interest-only
in Arlington, Texas               9%             3/31/00           payments





</TABLE>

<TABLE>
<CAPTION>

                                   GLENBOROUGH PROPERTIES, L.P.
                 SCHEDULE IV - MORTGAGE LOANS RECEIVABLE, SECURED BY REAL ESTATE

                                        December 31, 1999
                                          (in thousands)

         COLUMN A             COLUMN E         COLUMN F            COLUMN G                COLUMN H
                                                                   Carrying
                                                                   Amount,            Principal Amount of
 Description of Loan and                                          including            Loans Subject to
    Securing Property                        Face Amount           accrued                Delinquent
                            Prior Liens                            interest          Principal or Interest

<S>                            <C>             <C>                 <C>                       <C>
First Mortgage Loan
Secured by land located
in Aurora, Colorado             None           $ 34,349            $  36,441                 None

First Mortgage Loan
secured by land located
in Arlington, Texas             None           $  1,141            $   1,141                 None
                                            ---------------     ---------------

                               Total           $ 35,490            $  37,582
                                            ===============     ===============


</TABLE>

                                       67
<PAGE>

<TABLE>
<CAPTION>


                                         GLENBOROUGH PROPERTIES, L.P.
                          SCHEDULE IV - MORTGAGE LOANS RECEIVABLE, SECURED BY REAL ESTATE

                                            December 31, 1999
                                             (in thousands)


The following is a summary of changes in the carrying amount of mortgage loans for the years ended December 31, 1999, 1998 and 1997:

                                           1999                        1998                        1997
                                    -------------------          ------------------          ------------------
<S>                                     <C>                          <C>                         <C>
Balance at beginning of year            $  42,420                    $   3,692                   $  9,905

Additions during year:
   New mortgage loans                       1,141                       39,613                      1,855
    Interest accruals                       1,296

Deductions during year:
   Collections of principal                (4,396)                        (885)                    (8,068)
   Reduction in principal                  (1,600)                           -                          -
   Loss on sale                            (1,229)                           -                          -
                                    -------------------          ------------------          ------------------


Balance at end of year                  $  37,582                    $  42,420                   $  3,692
                                    ===================          ==================          ==================


</TABLE>

                                       68
<PAGE>

                                      SIGNATURES


Pursuant to the  requirements of Section l3 or l5(d) of the Securities  Exchange
Act of l934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                              GLENBOROUGH PROPERTIES, L.P.,
                              a California Limited Partnership




                                      By: Glenborough Realty Trust Incorporated,
                                          its General Partner



      Date:  March 14, 2000                    /s/ Andrew Batinovich
                                               Andrew Batinovich
                                               Director, President and
                                               Chief Operating Officer





      Date:  March 14, 2000                    /s/ Stephen Saul
                                               Stephen Saul
                                               Chief Financial Officer
                                               (Principal Financial Officer)





      Date:  March 14, 2000                    /s/ Terri Garnick
                                               Terri Garnick
                                               Senior Vice President,
                                               Chief Accounting Officer,
                                               Treasurer
                                               (Principal Accounting Officer)



                                       69
<PAGE>

                                  EXHIBIT INDEX


Exhibit
Number                                 Exhibit Title

3.01 Articles of Amendment and Restatement of Articles of  Incorporation  of the
     Company  are  incorporated  herein  by  reference  to  Exhibit  3.1  to the
     Company's  Quarterly  Report on Form 10-Q for the  quarter  ended March 31,
     1998.

3.02 Amended  Bylaws of the  Company are  incorporated  herein by  reference  to
     Exhibit 3.1 to the Company's  Quarterly Report on Form 10-Q for the quarter
     ended June 30, 1998.

3.03 The Company's Form of Articles  Supplementary relating to the 7-3/4% Series
     A  Convertible  Preferred  Stock is  incorporated  herein by  reference  to
     Exhibit 3.03 to the Company's Annual Report on Form 10-K for the year ended
     December 31, 1997.

3.04 Articles  Supplementary  of the Series B Preferred  Stock  (relating to the
     Rights  Plan) are  incorporated  herein by  reference to Exhibit 3.2 to the
     Company's  Quarterly  Report on Form 10-Q for the  quarter  ended  June 30,
     1998.

4.01 Form of Common Stock  Certificate of the Company is incorporated  herein by
     reference to Exhibit 4.02 to the Company's  Registration  Statement on Form
     S-4 (Registration No. 33-83506), which became effective October 26, 1995.

4.02 Form of 7-3/4%  Series A Convertible  Preferred  Stock  Certificate  of the
     Company is incorporated herein by reference to Exhibit 4.1 to the Company's
     Registration Statement on Form 8-A which was filed on January 22, 1998.

10.01  Form of  Indemnification  Agreement for existing  Officers and Directors
     of the Company is  incorporated  herein by reference  to Exhibit  10.02 to
     the Company's  Registration  Statement on Form S-4 (Registration No.
     33-83506), which became effective October 26, 1995.

10.02* Stock Incentive Plan of the Company (amended and restated as of March 20,
     1997) is  incorporated  herein by reference to Exhibit 4.0 to the Company's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.

10.03*  Employment  Agreement  between  the  Company  and Robert  Batinovich  is
     incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly
     Report on Form 10-Q for the quarter ended March 31, 1998.

10.04*  Employment  Agreement  between  the  Company  and Andrew  Batinovich  is
     incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly
     Report on Form 10-Q for the quarter ended March 31, 1998.

10.05  Rights  Agreement,  dated as of July 20, 1998,  between the Company and
     the Registrar  and  Transfer  Company,  together  with Exhibit A Form of
     Rights Certificate;  Exhibit B Summary of Rights to Purchase  Preferred
     Stock; and Exhibit C Form of Articles  Supplementary  of the Series B
     Preferred  Stock are  incorporated  herein by reference to Exhibit 1 to
     the  Company's  Form 8-A, filed on July 16, 1998.

10.06  Registration Agreement between the Company and GPA, Ltd. is incorporated
     herein by reference to Exhibit 10.27 to the Company's Annual Report on Form
     10-K for the year ended December 31, 1995.

10.07  Indemnification  Agreement for Glenborough  Realty  Corporation  and  the
     Company,  with Robert  Batinovich as indemnitor is  incorporated  herein by
     reference to Exhibit 10.31 to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1995.

                                       70
<PAGE>

                            EXHIBIT INDEX - continued


Exhibit
Number                           Exhibit Title

12.01  Computation  of Ratio of Earnings to Fixed Charges and Ratio of Earnings
     to Fixed Charges and Preferred Partner Interest Distributions

23.01 Consent of Arthur Andersen LLP, independent public accountants

27.01 Financial Data Schedule
*    Indicates management contract or compensatory plan or arrangement.


                                       71
<PAGE>

Exhibit 12.01

GLENBOROUGH PROPERTIES, L.P.
Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed
Charges and Preferred  Partner Interest  Distributions
For the five years ended December 31, 1999 (dollars in thousands)
<TABLE>
<CAPTION>

                                                       GRT
                                                   Predecessor
                                                    Entities,
                                                    Combined                     The Operating Partnership
                                                  --------------  --------------------------------------------------------

                                                                     Twelve Months Ended December 31,
                                                  ------------------------------------------------------------------------
                                                      1995           1996            1997          1998           1999
                                                  --------------  -----------     -----------   ------------   -----------
EARNINGS, AS DEFINED

Net Income (Loss) before Preferred Partner
<S>                                                <C>             <C>             <C>          <C>            <C>
   Interest Distributions(2)                       $      524      $ (1,901)       $ 17,727     $  46,136      $  53,949
Extraordinary items                                         -           186             843         1,400           (984)
Federal & State income taxes                              357             -               -             -              -
Fixed Charges                                           2,129         3,913           9,668        53,289         64,782
                                                  --------------  -----------     -----------   ------------   -----------

                                                   $    3,010      $  2,198        $ 28,238     $100,825       $117,747
                                                  --------------  -----------     -----------   ------------   -----------

FIXED CHARGES AND PREFERRED PARTNER INTEREST
   DISTRIBUTIONS, AS DEFINED

Interest Expense                                   $    2,129      $  3,913        $  9,668     $  53,289      $  64,782
Capitalized Interest                                        -             -               -         1,108          2,675
Preferred Partner Interest Distributions                    -             -               -        20,620         22,280
                                                  --------------  -----------     -----------   ------------   -----------
                                                   $    2,129      $  3,913        $  9,668     $  75,017      $  89,737

RATIO OF EARNINGS TO FIXED   CHARGES (3)
                                                         1.41          0.56  (1)       2.92          1.85           1.75
                                                  --------------  -----------     -----------   ------------   -----------

RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED
   PARTNER INTEREST DISTRIBUTIONS (3)
                                                         1.41          0.56  (1)       2.92          1.34           1.31
                                                  --------------  -----------     -----------   ------------   -----------

(1)  For the twelve months ended December 31, 1996, earnings were insufficient to cover fixed charges by $1,715.
(2)  Net Income (Loss) before Preferred Partner Interest  Distributions  includes
     depreciation and amortization expense as a deduction.
(3)  Ratio of  Earnings to Fixed  Charges and Ratio of Earnings to Fixed  Charges
     and  Preferred  Partner  Interest   Distributions   includes   depreciation  and
     amortization expense as a deduction from earnings.
</TABLE>

                                       72
<PAGE>

Exhibit 23.01

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
report  dated  March  1,  2000  on  the  financial   statements  of  Glenborough
Properties,  L.P.  included in this Form 10-K, into the Operating  Partnership's
previously filed Registration  Statement File Nos.  333-70463 and 333-08806.  It
should  be noted  that we have  not  audited  any  financial  statements  of the
Operating  Partnership  subsequent  to December 31, 1999 or performed  any audit
procedures subsequent to the date of our report.


                                            /s/ ARTHUR ANDERSEN LLP
                                            ARTHUR ANDERSEN LLP

San Francisco, California
March 14, 2000


                                       73
<PAGE>