SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A

|X|   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934. For the quarterly period ended March 31, 2002.

|_|   Transition Report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934. For the transition period from ________________ to
      _______________.

Commission File Number 1-12222

                        BEDFORD PROPERTY INVESTORS, INC.
             (Exact name of Registrant as specified in its charter)

           MARYLAND                                                   68-0306514
           --------                                                   ----------
(state or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)

270 Lafayette Circle, Lafayette, CA                                        94549
-----------------------------------                                        -----
(Address of principal executive offices)                              (Zip Code)

                                 (925) 283-8910
                                 --------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether 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 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

            Class                                  Outstanding as of May 7, 2002
-----------------------------                      -----------------------------
Common Stock, $0.02 par value                                16,693,502
<PAGE>

                        BEDFORD PROPERTY INVESTORS, INC.

                                      INDEX

PART I. FINANCIAL INFORMATION                                               Page

ITEM 1. FINANCIAL STATEMENTS

Statement                                                                      1

Balance Sheets as of March 31, 2002 (Restated)
and December 31, 2001 (Unaudited)                                              2

Statements of Income for the three months ended
March 31, 2002 (Restated) and 2001 (Restated) (Unaudited)                      3

Statements of Stockholders' Equity and Comprehensive Income
for the three months ended March 31, 2002 (Restated) (Unaudited)               4

Statements of Cash Flows for the three months ended
March 31, 2002 (Restated) and 2001 (Restated) (Unaudited)                      5

Notes to Financial Statements                                               6-17

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                              18-23

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES
ABOUT MARKET RISK                                                          24-25

PART II. OTHER INFORMATION

ITEMS 1 - 6                                                                   25

SIGNATURES                                                                    26
<PAGE>

                        BEDFORD PROPERTY INVESTORS, INC.

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                    STATEMENT

We have prepared the following unaudited interim financial statements in
accordance with accounting principles generally accepted in the United States of
America and pursuant to the rules and regulations of the Securities and Exchange
Commission. In our opinion, the interim financial statements presented reflect
all adjustments, consisting only of normally recurring adjustments, which are
necessary for a fair presentation of our financial condition and results of
operations. These financial statements should be read in conjunction with the
notes to consolidated financial statements appearing in the annual report to
stockholders for the year ended December 31, 2001.

When used in the discussion in this Form 10-Q, the words "believes," "expects,"
"intends," "anticipates" and similar expressions are intended to identify
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements are subject to certain risks and
uncertainties and actual results could differ materially from those expressed,
expected or implied by the forward-looking statements. The risks and
uncertainties that could cause our actual results to differ from management's
estimates and expectations are contained in our filings with the Securities and
Exchange Commission, including our 2001 Annual Report on Form 10-K, and as set
forth in the section entitled "Potential Factors Affecting Future Operating
Results" below. Readers are cautioned not to place undue reliance on these
forward-looking statements since they only reflect information available as of
the date of this filing. We do not undertake to update forward-looking
information contained herein or elsewhere to reflect actual results, changes in
assumptions or changes in other factors affecting such forward-looking
information.

As more fully described in Note 2 to the financial statements, we have restated
our financial statements as of March 31, 2002 and December 31, 2001 and for the
periods then ended.


                                       1
<PAGE>

                        BEDFORD PROPERTY INVESTORS, INC.
                                 BALANCE SHEETS
                   AS OF MARCH 31, 2002 AND DECEMBER 31, 2001
                                   (Unaudited)
               (in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                           March 31, 2002
                                                                       (Restated, see Note 2)   December 31, 2001
-----------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                   <C>
Assets:

Real estate investments:
  Industrial buildings                                                         $297,946              $303,169
  Office buildings                                                              333,310               326,459
  Operating properties held for sale                                                 --                11,036
  Land held for development                                                      13,437                13,398
-----------------------------------------------------------------------------------------------------------------
                                                                                644,693               654,062
  Less accumulated depreciation                                                  52,056                48,984
-----------------------------------------------------------------------------------------------------------------
                                                                                592,637               605,078
  Net operating properties held for sale - discontinued operations               10,651                    --
-----------------------------------------------------------------------------------------------------------------

Total real estate investments                                                   603,288               605,078

Cash and cash equivalents                                                         5,074                 5,512
Other assets                                                                     20,319                20,215
-----------------------------------------------------------------------------------------------------------------

                                                                               $628,681              $630,805
=================================================================================================================

Liabilities and Stockholders' Equity:

Bank loan payable                                                               $84,725               $80,925
Mortgage loans payable                                                          240,750               242,066
Accounts payable and accrued expenses                                             6,952                11,653
Dividend and distributions payable                                                8,012                 7,962
Other liabilities                                                                 9,536                11,184
-----------------------------------------------------------------------------------------------------------------

     Total liabilities                                                          349,975               353,790
-----------------------------------------------------------------------------------------------------------------

Minority interest in consolidated partnership                                        --                 1,135
-----------------------------------------------------------------------------------------------------------------

Stockholders' equity:
  Common stock, par value $0.02 per share;
    authorized 50,000,000 shares; issued and
    outstanding 16,692,337 shares in 2002 and
    16,515,200 shares in 2001                                                       334                   330
  Additional paid-in capital                                                    295,022               292,731
  Accumulated dividends in
    excess of net income                                                        (16,509)              (16,871)
Accumulated other comprehensive loss                                               (141)                 (310)
-----------------------------------------------------------------------------------------------------------------

      Total stockholders' equity                                                278,706               275,880
-----------------------------------------------------------------------------------------------------------------

                                                                               $628,681              $630,805
=================================================================================================================
</TABLE>

See accompanying notes to financial statements.


                                       2
<PAGE>

                        BEDFORD PROPERTY INVESTORS, INC.
                              STATEMENTS OF INCOME
               FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (Unaudited)
               (in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                             2002                     2001
                                                    (Restated, see Note 2)   (Restated, see Note 2)
---------------------------------------------------------------------------------------------------
<S>                                                      <C>                      <C>
Property operations:
    Rental income                                           $24,494                  $24,040
    Rental expenses:
        Operating expenses                                    4,070                    3,752
        Real estate taxes                                     2,153                    2,264
        Depreciation and amortization                         4,101                    3,766
---------------------------------------------------------------------------------------------------

Income from property operations                              14,170                   14,258

General and administrative expenses                            (979)                    (938)
Interest income                                                  36                       56
Interest expense                                             (5,060)                  (5,776)
---------------------------------------------------------------------------------------------------

Income from continuing operations
    before minority interest                                  8,167                    7,600

Minority interest                                                --                      (35)
---------------------------------------------------------------------------------------------------

Income from continuing operations                             8,167                    7,565

Income from discontinued operations, net                        208                      142
---------------------------------------------------------------------------------------------------

Net income                                                   $8,375                   $7,707
===================================================================================================

Earnings per share - basic:
    Income from continuing operations                         $0.51                    $0.43
    Income from discontinued operations                        0.01                     0.01
---------------------------------------------------------------------------------------------------

Net income per share - basic                                  $0.52                    $0.44
===================================================================================================

Weighted average number of shares - basic                16,197,385               17,404,680
===================================================================================================

Earnings per share - diluted:
    Income from continuing operations                         $0.49                    $0.43
    Income from discontinued operations                        0.01                     0.01
---------------------------------------------------------------------------------------------------

Net income per share - diluted                                $0.50                    $0.44
===================================================================================================

Weighted average number of shares - diluted              16,589,831               17,731,411
===================================================================================================
</TABLE>

See accompanying notes to financial statements.


                                       3
<PAGE>

                        BEDFORD PROPERTY INVESTORS, INC.
           STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                    FOR THE THREE MONTHS ENDED MARCH 31, 2002
                                   (Unaudited)
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                  Accumulated    Accumulated       Total
                                                                 Additional        dividends        other          stock-
                                                     Common       paid-in        in excess of   comprehensive     holders'
                                                     stock        capital         net income         loss          equity
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>         <C>              <C>              <C>           <C>
Balance, December 31, 2001                            $330        $292,731         $(16,871)        $(310)        $275,880

Issuance of common stock                                 4           2,313               --            --            2,317

Repurchase and retirement of common stock               --            (538)              --            --             (538)

Amortization of deferred compensation                   --             516               --            --              516

Dividends to common stockholders
 ($0.48 per share)                                      --              --           (8,013)           --           (8,013)
-----------------------------------------------------------------------------------------------------------------------------

Subtotal                                               334         295,022          (24,884)         (310)         270,162
-----------------------------------------------------------------------------------------------------------------------------

Net income (restated, see Note 2)                       --              --            8,375            --            8,375

Other comprehensive income                              --              --               --           169              169
-----------------------------------------------------------------------------------------------------------------------------

Comprehensive income                                    --              --            8,375           169            8,544
-----------------------------------------------------------------------------------------------------------------------------

Balance, March 31, 2002 (restated, see Note 2)        $334        $295,022         $(16,509)        $(141)        $278,706
=============================================================================================================================
</TABLE>

See accompanying notes to financial statements.


                                       4
<PAGE>

                        BEDFORD PROPERTY INVESTORS, INC.
                            STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                              2002            2001
                                                                           (Restated,      (Restated,
                                                                           see Note 2)     see Note 2)
--------------------------------------------------------------------------------------------------------
<S>                                                                          <C>             <C>
Operating Activities:
  Net income                                                                 $ 8,375         $ 7,707
  Adjustments to reconcile net income to net cash
     provided by operating activities:
        Minority interest                                                         --              35
        Depreciation and amortization                                          4,453           4,400
        Stock compensation amortization                                          516             416
        Uncollectible accounts expense                                           204              32
        Change in other assets                                                  (774)         (1,501)
        Change in accounts payable and accrued expenses                       (3,829)         (6,709)
        Change in other liabilities                                           (1,479)           (349)
--------------------------------------------------------------------------------------------------------

Net cash provided by operating activities                                      7,466           4,031
--------------------------------------------------------------------------------------------------------

Investing Activities:
  Investments in real estate                                                  (2,480)         (4,465)
--------------------------------------------------------------------------------------------------------

Net cash (used) by investing activities                                       (2,480)         (4,465)
--------------------------------------------------------------------------------------------------------

Financing Activities:
  Proceeds from bank loan payable, net of loan costs                           8,384           7,749
  Repayments of bank loan payable                                             (4,626)           (973)
  Refund of loan costs                                                             2              52
  Repayments of mortgage loans payable                                        (1,316)           (931)
  Issuance of common stock                                                       834             276
  Payment of dividends and distributions                                      (7,962)         (8,005)
  Repurchase and retirement of common stock                                     (538)           (543)
  Redemption of Operating Partnership Units                                     (202)             --
--------------------------------------------------------------------------------------------------------

Net cash (used) by financing activities                                       (5,424)         (2,375)
--------------------------------------------------------------------------------------------------------

Net (decrease) in cash and cash equivalents                                     (438)         (2,809)
Cash and cash equivalents at beginning of period                               5,512           3,160
--------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                                   $ 5,074         $   351
========================================================================================================

Supplemental disclosure of cash flow information:

Cash paid during the year for interest, net of amounts capitalized of
   $273 in 2002 and $304 in 2001                                             $ 4,869         $ 5,437
========================================================================================================

Non-cash investing and financing transactions:

Redemption of Operating Partnership Units paid in common stock               $(1,483)        $    --
Investment in real estate assets                                             $   550         $    --
Minority interest in consolidated partnership                                $   933         $    --
========================================================================================================
</TABLE>


                                       5
<PAGE>

                        BEDFORD PROPERTY INVESTORS, INC.
                    NOTES TO FINANCIAL STATEMENTS (Unaudited)
                                 MARCH 31, 2002

Note 1 - Organization and Summary of Significant Accounting Policies and
Practices

The Company

Bedford Property Investors, Inc. (the "Company") is a Maryland real estate
investment trust with investments primarily in industrial and suburban office
properties concentrated in the western United States. Our common stock trades
under the symbol "BED" on both the New York Stock Exchange and the Pacific
Exchange.

Basis of Presentation

We have prepared the accompanying unaudited financial statements in accordance
with the requirements of Form 10-Q as set forth by the Securities and Exchange
Commission. Therefore, they do not include all information and footnotes
necessary for a presentation of financial condition, results of operations and
cash flows in conformity with accounting principles generally accepted in the
United States of America. The unaudited interim financial statements reflect all
adjustments which are, in our opinion, necessary for a fair presentation of
results for the interim periods presented in compliance with the instructions to
Form 10-Q. All such adjustments are of a normal, recurring nature.

Real Estate Investments Held for Sale

Real estate investments that are considered held for sale are recorded at the
lower of carrying amount or fair value less costs to sell and such properties
are no longer depreciated. We adopted Financial Accounting Standards Board's
Statement of Financial Accounting Standard ("FAS") 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," on January 1, 2002. FAS 144
supersedes FAS 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." The primary objectives of FAS 144 are to
develop one accounting model based on the framework established in FAS 121 for
long-lived assets to be disposed of by sale, and to address significant
implementation issues regarding impairment of long-lived assets held for use. In
accordance with FAS 144, real estate assets are classified as held for sale in
the period in which all of the following criteria are met: (a) management,
having the authority to approve the action, commits to a plan to sell the asset;
(b) the asset is available for immediate sale in its present condition subject
only to terms that are usual and customary for sales of such assets; (c) an
active program to locate a buyer and other actions required to complete the plan
to sell the asset have been initiated; (d) the sale of the asset is probable and
the transfer of the asset is expected to qualify for recognition as a completed
sale within one year; (e) the asset is being actively marketed for sale at a
price that is reasonable in relation to its current fair value; and (f) actions
required to complete the plan indicate that it is unlikely that significant
changes to the plan will be made or that the plan will be withdrawn. Our
adoption of FAS 144 resulted in: (i) the presentation of the operating
properties held for sale, net of accumulated depreciation, as discontinued
operations on the balance sheet and (ii) the presentation of the net operating
results of properties considered held for sale during the three months ended
March 31, 2002, less allocated interest expense, as income from discontinued
operations for all periods presented. We allocated interest expense based on the
percentage of the cost basis of properties held for sale to the total cost basis
of real estate assets as of March 31, 2002 and pro-rated the allocated interest
for the number of days prior to sale. Implementation of FAS 144 only impacted
the balance sheet and income statement classification but had no effect on
results of operations.

Per Share Data

Per share data are based on the weighted average number of common shares
outstanding during the year. Stock options issued under our stock option plans,
non-vested restricted stock, and the Operating Partnership ("OP") Units of
Bedford Realty Partners, L.P. (prior to their redemption on January 15, 2002)
are included in the calculation of diluted per share data if, upon exercise or
vestiture, they would have a dilutive effect.


                                       6
<PAGE>

Cash and Cash Equivalents

We consider all demand deposits, money market accounts and temporary cash
investments to be cash equivalents. We maintain our cash and cash equivalents at
financial institutions. The combined account balances at each institution
periodically exceed the Federal Depository Insurance Corporation ("FDIC")
insurance coverage, and, as a result, there is a concentration of credit risk
related to amounts on deposit in excess of FDIC insurance coverage. However, we
believe that the risk is not significant, as we do not anticipate their
non-performance.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued FAS 143,
Accounting for Asset Retirement Obligations. Under FAS 143, the fair value of a
liability for an asset retirement obligation must be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset. FAS 143 is effective for fiscal years beginning after
June 15, 2002. We do not believe that FAS 143 will have a material impact on our
financial position or results of operations.

Reclassifications

Certain prior year accounts have been reclassified to conform to the current
year presentation.


                                       7
<PAGE>

Note 2 - Restatement

Effective July 1, 2002, we corrected our accounting treatment for fees incurred
under our contractual relationship with Bedford Acquisitions, Inc. ("BAI") (see
Note 8), commencing in the fourth quarter of 1997 and continuing through the
quarter ended June 30, 2002. This new treatment was based on our independent
auditors' advice that they would no longer support the prior method of
accounting for BAI. We have been advised by our independent auditors that the
correction of the accounting treatment for fees paid to BAI did not arise from
any change in the operations of BAI or our operations or the discovery of any
new facts relating to these operations. The Company's transactions with BAI and
the effects of those transactions have been disclosed in detail in each Form
10-K, Form 10-Q, and Proxy Statement the Company filed with the SEC for all
periods affected. The Company has evaluated its independent auditors'
recommendation and agrees that, according to generally accepted accounting
principles, a change in accounting for transactions between the Company and BAI
is appropriate. Effective October 1, 1997, fees charged by BAI should have been
deemed internal costs and expensed to the extent that such fees did not
represent payment to BAI for direct and incremental development costs or for
independent third party costs incurred by BAI on our behalf. We have restated
our financial statements for all quarters commencing with the fourth quarter of
1997 through the first quarter of 2002 to correct the accounting for these
services. The previously reported amounts and the restated amounts for the
periods (excluding periods already restated in previous filings) included in
this quarterly report are as follows:

                 (Dollars in thousand, except per share amounts)

                                         March 31, 2002
-------------------------------------------------------
Real estate investments (net of
   accumulated depreciation)
           As Reported                         $605,773
           Restated                             603,288
Other Assets:
           As Reported                           22,599
           Restated                              20,319
Total Assets:
           As Reported                          633,446
           Restated                             628,681
Stockholders' equity:
           As Reported                          283,471
           Restated                             278,706

                                     Three months ended       Three months ended
                                         March 31, 2002           March 31, 2001
                                         --------------           --------------

Depreciation and amortization
   expenses:
           As Reported                            4,112                    3,779
           Restated                               4,101                    3,766
General and administrative
   expenses:
           As Reported                            1,059                    1,018
           Restated                                 979                      938
Interest expense:
           As Reported                            5,293                    5,791
           Restated                               5,060                    5,776
Net income:
           As Reported                            8,051                    7,599
           Restated                               8,375                    7,707
Net income per share:
           As Reported:
                        Basic                     $0.50                    $0.44
                        Diluted                   $0.48                    $0.43
           Restated
                        Basic                     $0.52                    $0.44
                        Diluted                   $0.50                    $0.44

The 2002 and 2001 financial statements included herein and the accompanying
footnotes reflect these restated amounts.


                                       8
<PAGE>

Note 3 - Real Estate Investments

As of March 31, 2002, our real estate investments were diversified by property
type as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                 Number of                                    Percent
                                                 Properties            Cost                  of Total
--------------------------------------------------------------------------------------------------------------
<S>                                                 <C>              <C>                         <C>
Industrial buildings                                 56              $297,946                     45%
Office buildings                                     30               333,310                     51%
Operating properties held for sale-
    discontinued operations                           4                11,525                      2%
Land held for development                            11                13,437                      2%
--------------------------------------------------------------------------------------------------------------

Total                                               101              $656,218                    100%
==============================================================================================================
</TABLE>


                                       9
<PAGE>

The following table sets forth our real estate investments as of March 31, 2002
and December 31, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                                                        Less
                                                                   Development       Accumulated
                                           Land      Building      In-Progress       Depreciation        Total
                                      ----------------------------------------------------------------------------
<S>                                     <C>          <C>              <C>               <C>             <C>
Industrial buildings
Northern California                     $ 44,660     $112,750         $   --            $16,009         $141,401
Northwest                                  3,409       10,789             --              1,569           12,629
Southern California                       16,345       37,139             --              4,837           48,647
Arizona                                   18,751       54,103             --              6,368           66,486
                                      ----------------------------------------------------------------------------

Total industrial buildings                83,165      214,781             --             28,783          269,163
                                      ----------------------------------------------------------------------------

Office buildings
Northern California                        6,221       26,107             --              2,608           29,720
Northwest                                 16,669       99,947             --              8,995          107,621
Southern California                        9,340       22,024             --              2,505           28,859
Arizona                                   10,588       25,503             --              2,317           33,774
Colorado                                  13,706       90,241             --              5,574           98,373
Nevada                                     2,102       10,862             --              1,274           11,690
                                      ----------------------------------------------------------------------------

Total office buildings                    58,626      274,684             --             23,273          310,037
                                      ----------------------------------------------------------------------------

Operating properties held for sale-
  discontinued operations
Southern California                        2,747        8,778             --                874           10,651
                                      ----------------------------------------------------------------------------

Land held for development
Northern California                        5,674           --             --                 --            5,674
Northwest                                      7           --             --                 --                7
Southern California                        3,178           --             --                 --            3,178
Arizona                                      637           --             --                 --              637
Colorado                                   3,941           --             --                 --            3,941
                                      ----------------------------------------------------------------------------

Total land held for development           13,437           --             --                 --           13,437
                                      ----------------------------------------------------------------------------

Total as of March 31, 2002              $157,975     $498,243         $   --            $52,930         $603,288
                                      ============================================================================

Total as of December 31, 2001           $157,861     $496,201         $   --            $48,984         $605,078
                                      ============================================================================
</TABLE>

Our Company personnel directly manage all but one of our properties from
regional offices in Lafayette, California; Tustin, California; Phoenix, Arizona;
Denver, Colorado; and Seattle, Washington. We have retained an outside manager
to assist in some of the management functions for U.S. Bank Centre in Reno,
Nevada. All financial record-keeping is centralized at our corporate office in
Lafayette, California.

Income from property operations for operating properties held for sale at March
31, 2002 was $208,000 and $142,000 for the three months ended March 31, 2002 and
2001, respectively. Income from discontinued operations includes allocated
interest expense of $99,000 and $111,000 for the three months ended March 31,
2002 and 2001, respectively.


                                       10
<PAGE>

Note 4.  Debt

Bank Loan Payable

In May 2001, we renewed our revolving credit facility with a bank group led by
Bank of America. The facility, which matures on June 1, 2004, consists of a $150
million secured line with an accordion feature that gives us the option to
expand the facility to $175 million, if needed. Interest on the facility is at a
floating rate equal to the lender's prime rate or LIBOR plus a margin ranging
from 1.30% to 1.55% depending on our leverage level. As of March 31, 2002, the
facility had an outstanding balance of $84,725,000 and was secured by our
interest in 31 properties which collectively accounted for approximately 34% of
our annualized base rent and approximately 34% of our total real estate assets.

The credit facility contains various restrictive covenants including, among
other things, a covenant limiting quarterly dividends to 95% of average Funds
From Operations. We were in compliance with the covenants and requirements of
our revolving credit facility during the quarter ended March 31, 2002.

The daily weighted average amount we owed to the bank was $84,173,000 and
$83,153,000 for the three months ended March 31, 2002 and 2001, respectively.
The weighted average annual interest rates under our bank line of credit in each
of these periods was 4.98% and 7.59%, respectively. The effective interest rate
at March 31, 2002 was 5.07%.

Mortgage Loans Payable

Mortgage loans payable at March 31, 2002 consist of the following (in
thousands):

                                  Interest Rate as of
      Maturity Date                 March 31, 2002                     Balance
      -------------               --------------------                 -------

      March 15, 2003              7.02%                                $18,454
      November 19, 2004           4.02%(1)                              21,640
      January 1, 2005             6.00%(2)                               4,458
      June 1, 2005                7.17%                                 26,155
      August 1, 2005              5.55%(3)                               3,522
      August 1, 2005              5.55%(3)                              22,719
      July 31, 2006               8.90%                                  8,093
      July 31, 2006               6.91%                                 19,423
      December 1, 2006            7.95%                                 21,458
      June 1, 2007                7.17%                                 35,575
      June 1, 2009                7.17%                                 41,552
      August 1, 2011              6.918%(4)                             17,701
                                                                      --------
      Total                                                           $240,750
                                                                      ========

(1)   Floating rate based on LIBOR plus 1.60%. The LIBOR rate was locked for one
      year at 2.42% and will expire on December 20, 2002.
(2)   Floating rate based on 3 month LIBOR plus 2.50% (adjusted quarterly).
(3)   Floating rate based on fixed rate on interest swap agreements. See Note 4.
(4)   Floating rate based on a 12-month average of U.S. Treasury Security Yields
      plus 2.60% (adjusted semi-annually).


                                       11
<PAGE>

The mortgage loans are collaterized by our interests in 49 properties which
collectively accounted for approximately 62% of our annualized base rents and
approximately 56% of our total real estate assets as of March 31, 2002. We were
in compliance with the covenants and requirements of our various mortgages
during the quarter ended March 31, 2002.

The following table presents scheduled principal payments on mortgage loans as
of March 31, 2002 (in thousands):

       Twelve month period ending March 31, 2003              $ 24,188
       Twelve month period ending March 31, 2004                 6,109
       Twelve month period ending March 31, 2005                30,613
       Twelve month period ending March 31, 2006                53,202
       Twelve month period ending March 31, 2007                48,263
       Total thereafter                                         78,375
                                                              --------
                                                              $240,750
                                                              ========

Note 5.  Derivative Instruments and Hedging Activities

In the normal course of business, we are exposed to the effects of interest rate
changes. We limit these risks by following established risk management policies
and procedures, including the use of derivatives. For interest rate exposures,
interest rate swaps are used primarily to hedge the cash flow risk of variable
rate borrowing obligations.

We do not use derivatives for trading or speculative purposes. Further, we have
a policy of only entering into contracts with major financial institutions. When
viewed in conjunction with the underlying and offsetting exposure that the
derivatives are designed to hedge, we have not sustained a material loss from
those instruments, and we do not anticipate any material adverse effect on our
net income or financial position in the future from the use of derivatives.

Interest rate swaps that convert variable payments to fixed payments are cash
flow hedges. Hedging relationships that are fully effective have no effect on
net income or FFO. The unrealized gains and losses in the fair value of these
interest rate swaps are reported on the balance sheet, as a component of other
assets or other liabilities as appropriate, with a corresponding adjustment to
accumulated other comprehensive income (loss).

On June 18, 2001, we entered into interest swap agreements with United
California Bank. The swap agreements allow us to hedge our exposure to variable
interest rates on two mortgages with remaining principal balances totaling
$26,241,000 as of March 31, 2002, by effectively paying a fixed rate of interest
over the term of the swap agreement. Interest rate pay differentials that arise
under these swap agreements are recognized in interest expense over the term of
the contracts. These interest rate swap agreements were considered to be fully
effective in hedging the variable rate risk associated with the two mortgages.

The following summarizes the principal value and fair value of our interest swap
contracts. The principal value below provides an indication of the amount that
has been hedged in these contracts but does not represent an obligation or
exposure to credit risk at March 31, 2002 (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                   Approximate
Principal        Fixed             Contract              Cumulative               Liability at
Amount            Rate             Maturity            Cash Paid, Net          March 31, 2002 (1)
------           ------            --------            --------------          ------------------
<S>              <C>             <C>                         <C>                      <C>
$22,719          5.55%           July 1, 2002                $258                     $122
  3,522          5.55%           July 1, 2002                  49                       19
-------------------------------------------------------------------------------------------------
$26,241                                                      $307                     $141
=================================================================================================
</TABLE>

(1)   Represents the approximate amount which we would have paid as of March 31,
      2002 if the swap contracts were terminated.

To determine the fair values of derivative instruments in accordance with SFAS
133, we use the discounted cash flow method, which requires the use of
assumptions about market conditions and risks existing at the balance sheet
date. Considerable judgment is required in interpreting market data to develop
estimates of market value. Accordingly, estimated fair value is a general
approximation of value, and such value may or may not actually be realized.

At March 31, 2002, $141,000 is included in other liabilities and accumulated
other comprehensive loss, a stockholders' equity account, reflecting the
estimated market value of the swap contract obligations at that date.


                                       12
<PAGE>

Note 6.  Segment Disclosure

We have five reportable segments organized by the region in which they operate:
Northern California (Northern California and Nevada), Arizona, Southern
California, Northwest (greater Seattle, Washington) and Colorado.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. We evaluate performance based upon
income from real estate from the combined properties in each segment.

<TABLE>
<CAPTION>
                                           For the three months ended March 31, 2002 (Restated, see Note 2)
                                                           (in thousands, except percentages)
                            -------------------------------------------------------------------------------------------
                               Northern                 Southern                             Corporate
                              California    Arizona    California    Northwest    Colorado     & Other     Consolidated
                            -------------------------------------------------------------------------------------------
<S>                           <C>          <C>          <C>          <C>           <C>         <C>           <C>
Rental income                   $9,077       $3,987       $3,077       $4,794       $3,559     $    --        $24,494
Operating expenses and
  real estate taxes              1,897        1,106          630        1,329        1,261          --          6,223
Depreciation and
  amortization                   1,427          717          454          935          568          --          4,101
                            -------------------------------------------------------------------------------------------

Income from property
  operations                     5,753        2,164        1,993        2,530        1,730          --         14,170

Percent of income from
  property operations               41%          15%          14%          18%          12%          0%           100%

General and administrative
  expenses                          --           --           --           --           --        (979)          (979)
Interest income(1)                   7           --           --            4           --          25             36
Interest expense                    --           --           --           --           --      (5,060)        (5,060)
                            -------------------------------------------------------------------------------------------

Income (loss) from
  continuing operations          5,760        2,164        1,993        2,534        1,730      (6,014)         8,167

Income from discontinued
  operations, net                   --           --          208           --           --          --            208
                            -------------------------------------------------------------------------------------------

Net income (loss)               $5,760       $2,164       $2,201       $2,534       $1,730     $(6,014)        $8,375
                            ===========================================================================================

Real estate investments       $208,375     $109,583      $99,551     $130,820     $107,889     $    --       $656,218
                            ===========================================================================================

Additions of real
  estate investments              $424         $693         $523          $54         $462     $    --         $2,156
                            ===========================================================================================

Total assets                  $219,112     $105,892     $109,821     $115,520      $77,473        $863       $628,681
                            ===========================================================================================
</TABLE>

(1)   The interest income in the Northern California and Northwest segments
      represents interest earned from tenant notes receivable.


                                       13
<PAGE>

<TABLE>
<CAPTION>
                                           For the three months ended March 31, 2001 (Restated, see Note 2)
                                                          (in thousands, except percentages)
                            -----------------------------------------------------------------------------------------------
                              Northern                  Southern                               Corporate
                             California     Arizona    California     Northwest      Colorado    & Other      Consolidated
                            -----------------------------------------------------------------------------------------------
<S>                           <C>          <C>          <C>           <C>           <C>          <C>           <C>
Rental income                   $8,550       $4,146       $3,126        $4,694        $3,524     $    --        $24,040
Operating expenses and
  real estate taxes              1,772        1,109          598         1,317         1,220          --          6,016
Depreciation and
  amortization                   1,220          738          424           896           488          --          3,766
                            -----------------------------------------------------------------------------------------------

Income from property
  operations                     5,558        2,299        2,104         2,481         1,816          --         14,258

Percent of income from
  property operations               39%          16%          15%           17%           13%          0%           100%

General and administrative
  expenses                          --           --           --            --            --        (938)          (938)
Interest income (1)                  6           --           --             2            --          48             56
Interest expense                    --           --           --            --            --      (5,776)        (5,776)
                            -----------------------------------------------------------------------------------------------

Income (loss) before
  minority interest              5,564        2,299        2,104         2,483         1,816      (6,666)         7,600

Minority interest                   --           --           --            --            --         (35)           (35)
                            -----------------------------------------------------------------------------------------------

Income (loss) from
  continuing operations          5,564        2,299        2,104         2,483         1,816      (6,701)         7,565

Income from discontinued
  operations, net                   --           --          142            --            --          --            142
                            -----------------------------------------------------------------------------------------------

Net income (loss)               $5,564       $2,299       $2,246        $2,483        $1,816     $(6,701)        $7,707
                            ===============================================================================================

Real estate investments       $201,822     $116,962      $96,205      $129,725      $103,930     $    --       $648,644
                            ===============================================================================================

Additions of real estate
  investments                   $1,444         $319         $297           $(8)       $2,260     $    --         $4,312
                            ===============================================================================================

Total assets                  $213,771     $110,517     $107,013      $116,763       $81,237        $292       $629,593
                            ===============================================================================================
</TABLE>

(1)   The interest income in the Northern California and Northwest segments
      represents interest earned from tenant notes receivable.


                                       14
<PAGE>

Note 7.  Earnings per Share

Following is a reconciliation of earnings per share (in thousands, except share
and per share amounts):

<TABLE>
<CAPTION>
                                                        Three Months Ended      Three Months Ended
                                                          March 31, 2002          March 31, 2001
                                                      (Restated, see Note 2)  (Restated, see Note 2)
                                                    --------------------------------------------------
<S>                                                         <C>                    <C>
Basic:

Income from continuing operations                               $8,167                 $7,565
Income from discontinued operations, net                           208                    142
                                                    --------------------------------------------------

Net income                                                      $8,375                 $7,707
                                                    ==================================================

Weighted average number of shares - basic                   16,197,385             17,404,680
                                                    ==================================================

Earnings per share:
    Income from continuing operations                            $0.51                  $0.43
    Income from discontinued operations                           0.01                   0.01
                                                    --------------------------------------------------

    Earnings per share - basic                                   $0.52                  $0.44
                                                    ==================================================

Diluted:

Income from continuing operations                               $8,167                 $7,565
Income from discontinued operations, net                           208                    142
Add: minority interest                                              --                     35
                                                    --------------------------------------------------

Net income for diluted earnings per share                       $8,375                 $7,742
                                                    ==================================================

Weighted average number of shares - basic                   16,197,385             17,404,680
Weighted average shares of dilutive stock
    options using average period stock price
    under the treasury stock method                            189,318                 47,886
Weighted average shares issuable upon the
    conversion of Operating Partnership Units                   11,210                 77,992
Weighted average shares of non-vested
    restricted stock using average period
    stock price under the treasury stock method                191,918                200,853
                                                    --------------------------------------------------

Weighted average number of shares - diluted                 16,589,831             17,731,411
                                                    ==================================================

Earnings per share:
    Income from continuing operations                            $0.49                  $0.43
    Income from discontinued operations                           0.01                   0.01
                                                    --------------------------------------------------

    Earnings per share - diluted                                 $0.50                  $0.44
                                                    ==================================================
</TABLE>


                                       15
<PAGE>

Note 8.  Related Party Transactions

Prior to July 1, 2002 our activities relating to the acquisition of new
properties, sales of real estate, development of real property, and financing
arrangements were performed by Bedford Acquisitions, Inc. ("BAI"), a corporation
wholly-owned by Peter Bedford, our Chairman of the Board and Chief Executive
Officer. We used the services of BAI for our acquisition, disposition, financing
and development activities because we incurred expenses related only to those
transactions that were successfully completed. These services were provided
pursuant to written agreements (renewable annually since January 1, 1995), which
provide that BAI was obligated to provide services to us with respect to our
acquisition, disposition, financing and development activities, and that BAI was
responsible for the payment of expenses incurred for these activities.

This arrangement provided that BAI earned a success fee in an amount equal to 1
1/2% of the purchase price of property acquisitions, 1 1/2% of the sale price of
dispositions, up to 1 1/2% of the amount of any loans secured (less third-party
commissions), and up to 7% of the development costs incurred. The total amount
of such fees payable to BAI by us was limited to the lesser of: (i) the
aggregate amount of such fees earned, or (ii) the aggregate amount of approved
expenses incurred by BAI through the time of such acquisition, disposition,
financing or development activity.

As discussed in Note 2, BAI fees incurred and reported as capitalized costs
during the period from October 1, 1997 through March 31, 2002 have been restated
in the prior periods and in the accompanying financial statements as expenses.

For the quarters ended March 31, 2002 and 2001, we paid BAI an aggregate amount
of approximately $1,345,000 and $1,308,000, respectively, for acquisition,
disposition, financing, and development activities performed pursuant to this
arrangement. As of March 31, 2002 and December 31, 2001, we had an accrued
liability of $680,000 and $1,945,000, respectively, for fees earned by BAI in
excess of the amounts we paid to BAI under the agreement.

At March 31, 2002 and 2001, we did not have any other relationships with
unconsolidated entities or financial partnerships, including entities often
referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes. Therefore, we are not
materially exposed to any financing, liquidity, market or credit risk that could
arise if we had engaged in such relationships.

Note 9.  Commitments and Contingencies

As of March 31, 2002, we had contractual construction commitments generally
relating to tenant improvements on its developed properties of approximately
$700,000. We had outstanding undrawn letters of credit against its credit
facility of approximately $2,100,000 million as of March 31, 2002.

From time to time, we are subject to legal claims in the ordinary course of
business. As of March 31, 2002, we have recorded on our balance sheet an accrued
liability for potential uninsured loss. We are not aware of any legal
proceedings or claims that we believe will have, individually or in the
aggregate, a material adverse effect on our business, prospects, financial
condition, operating results or cash flows.

Note 10.  Subsequent Events

In the second quarter of 2002, we sold four industrial properties in Vista,
California and one industrial property in Scottsdale, Arizona for a total sale
price of approximately $19,081,000, resulting in a gain of approximately
$1,798,000.

In July 2002, we purchased a 214,000 square foot research and development
property in Phoenix, Arizona for a purchase price of approximately $24,300,000.
This acquisition was funded with proceeds from the sale of the five operating
properties in the second quarter of 2002 and additional borrowings from our line
of credit.

On August 2, 2002, we obtained from our bank group a $40,000,000 commitment for
an unsecured bridge facility that is to be funded upon the acquisition of
additional real estate.

On August 14, 2002 we announced that effective July 1, 2002, we were terminating
our agreement with BAI and had hired its former employees.


                                       16
<PAGE>

On August 16, 2002, we purchased a 112,000 square foot service flex complex in
South San Francisco, California for $22,000,000. The acquisition was funded from
borrowings on our credit facility.


                                       17
<PAGE>

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

Restatement

The financial statements for 2002 and 2001 have been restated as explained in
Note 2 to Financial Statements. Management's discussion and analysis below
compares the restated 2002 results to the restated 2001 results.

Results of Operations

Our operations consist of developing, owning and operating industrial and
suburban office properties located primarily in the western United States.

Variances in revenues, expenses, net income and cash flows for the three months
ended March 31, 2002 when compared with the same period in 2001 were due
primarily to the development and sale of operating properties during the
following periods:

<TABLE>
<CAPTION>
                        Activities from January 1, 2001             Activities from April 1, 2001
                               to March 31, 2001                          to March 31, 2002
                     -------------------------------------------------------------------------------
                          Number of             Square                Number of            Square
                         Properties              Feet                Properties             Feet
                     -------------------------------------------------------------------------------
<S>                          <C>                <C>                       <C>             <C>
Development
    Industrial               --                     --                    1                36,885
    Office                    1                 29,400                    3               155,289
                     -------------------------------------------------------------------------------
                              1                 29,400                    4               192,174
                     ===============================================================================

Sales
    Industrial               --                     --                    3               289,867
    Office                   --                     --                    1                52,000
                     -------------------------------------------------------------------------------
                             --                     --                    4               341,867
                     ===============================================================================
</TABLE>

Three Months Ended March 31, 2002 Compared with Three Months Ended March 31,
2001

Income from Property Operations

Income from property operations (defined as rental income less rental expenses)
decreased $88,000 or less than 1% in 2002 compared with 2001. This decrease is
attributable to an increase in rental income of $454,000, offset by an increase
in rental expenses (which include operating expenses, real estate taxes, and
depreciation and amortization) of $542,000.

The increases in rental income and rental expenses are primarily attributable to
the development activities and sales of properties during the year 2001.
Development activities increased rental income and rental expenses in 2002 by
$382,000 and $340,000, respectively, as compared to 2001. These increases were
offset by the sale of three industrial properties and one office property in
2001 which resulted in a reduction in rental income and rental expenses in 2002
of $615,000 and $179,000, respectively, as compared to 2001. The remaining
increase in rental income of $687,000 is due to an increase in rental rates and
expense recovery income, as well as early termination fees earned in 2002. The
remaining increase in rental expenses of $381,000 is primarily due to an
increase in gas and electricity costs.

Expenses

General and administrative expense increased $41,000 or 4% in 2002 compared with
2001, primarily as a result of increased compensation costs. Interest expense,
which includes amortization of loan fees, decreased $716,000 or 12% in 2002
compared with 2001. The decrease is attributable to lower interest rates on our
variable rate debt and lower amortization of loan fees. The amortization of loan
fees was $284,000 and $500,000 in 2002 and 2001, respectively. This decrease is
primarily due to a decrease in deferred loan fees for debt renewed during 2001.


                                       18
<PAGE>

Dividends

Common stock dividends to stockholders declared for the first quarter of 2002
were $0.48 per share. Common stock dividends to stockholders and distributions
to Operating Partnership ("OP") Unitholders declared for the first quarter of
2001 were $0.45 per share or OP Unit. The outstanding OP Units were redeemed by
us on January 15, 2002. Consistent with our policy, dividends and distributions
were paid in the quarter following the quarter in which they were declared.

Liquidity and Capital Resources

We expect to fund the cost of acquisitions, capital expenditures, costs
associated with lease renewals and reletting of space, repayment of
indebtedness, share repurchases, and development of properties from (i) cash
flow from operations, (ii) borrowings under the credit facility and, if
available, other indebtedness (which may include indebtedness assumed in
acquisitions), and (iii) the sale of certain real estate investments.

Our cash and cash equivalents decreased to $5,074,000 at March 31, 2002, from
$5,512,000 at December 31, 2001. This decrease is due to $7,466,000 of cash
provided from operations, partially offset by $2,480,000 and $5,424,000 used by
investing activities and financing activities, respectively.

Net cash of $7,466,000 provided by operating activities consisted primarily of
$13,548,000 of net income adjusted for non-cash items, offset by $6,082,000 used
in working capital and other activities. Net cash used in working capital and
other activities resulted from expenditures incurred in acquiring other assets
and payments for accounts payable, accrued expenses, and other liabilities.

Net cash of $2,480,000 used for investing activities consisted of cash used for
investments in real estate, resulting from $1,355,000 of cash used for
investments in developed properties, and approximately $1,125,000 of cash used
for investments in existing operating properties. Investments in real estate
include the cost of land, buildings, building improvements, and tenant
improvements. We expect to spend additional capital expenditures of
approximately $8,800,000 for the remainder of 2002.

Net cash used by financing activities of $5,424,000 consisted of repayments of
bank borrowings and mortgage loans of $5,942,000, payment of dividends and
distributions of $7,962,000, the repurchase of 22,589 shares of stock for
$538,000, and the redemption of 8,623 shares of OP Units for $202,000 in cash
offset by net proceeds from bank borrowings of $8,384,000, refund of loan costs
of $2,000, and net proceeds from stock options exercised by employees and
directors of $834,000.

Our ability to continue to finance our operations is subject to several
uncertainties. For example, our ability to obtain mortgage loans on income
producing property is dependent upon the ability to attract and retain tenants
and the economics of the various markets in which the properties are located, as
well as the willingness of mortgage-lending institutions to make loans secured
by real property. Approximately 90% of our real estate investments serve as
collateral for our existing indebtedness as of March 31, 2002. Our ability to
sell real estate investments is partially dependent upon the ability of
purchasers to obtain financing at reasonable commercial rates.

In May 2001, we renewed our revolving credit facility with a bank group led by
Bank of America. The facility, which matures on June 1, 2004, consists of a $150
million secured line with an accordion feature which allows us at our option to
expand the facility to $175 million, if needed. Interest on the facility is at a
floating rate equal to either the lender's prime rate or LIBOR plus a margin
ranging from 1.30% to 1.55% depending on our leverage level. As of March 31,
2002, the facility had an outstanding balance of $84,725,000 and an effective
interest rate of 5.07%.

On August 2, 2002, we obtained from our bank group a $40,000,000 commitment for
an unsecured bridge facility that is to be funded upon the acquisition of
additional real estate.


                                       19
<PAGE>

Mortgage loans payable at March 31, 2002 consist of the following (in
thousands):

                                 Interest Rate as of
     Maturity Date                  March 31, 2002                    Balance
     -------------                  --------------                    -------

     March 15, 2003                     7.02%                         $18,454
     November 19, 2004                  4.02%(1)                       21,640
     January 1, 2005                    6.00%(2)                        4,458
     June 1, 2005                       7.17%                          26,155
     August 1, 2005                     5.55%(3)                        3,522
     August 1, 2005                     5.55%(3)                       22,719
     July 31, 2006                      8.90%                           8,093
     July 31, 2006                      6.91%                          19,423
     December 1, 2006                   7.95%                          21,458
     June 1, 2007                       7.17%                          35,575
     June 1, 2009                       7.17%                          41,552
     August 1, 2011                     6.918%(4)                      17,701
                                                                     --------
     Total                                                           $240,750
                                                                     ========

(1)   Floating rate based on LIBOR plus 1.60%. The LIBOR rate was locked for one
      year at 2.42% and will expire on December 20, 2002.
(2)   Floating rate based on 3 month LIBOR plus 2.50% (adjusted quarterly).
(3)   Floating rate based on fixed rate on interest swap agreements. See Note 4
      of our notes to financial statements.
(4)   Floating rate based on a 12-month average of U.S. Treasury Security Yields
      plus 2.60% (adjusted semi-annually).

We were in compliance with the covenants and requirements of our various debt
financings during the quarter ended March 31, 2002. We anticipate that the cash
flow generated by our real estate investments and funds available under the
credit facility will be sufficient to meet our short-term liquidity
requirements.

Contractual Obligations and Commercial Commitments

The following summarizes our contractual obligations and other commitments at
March 31, 2002, and the effect such obligations could have on our liquidity and
cash flow in future periods (in thousands):

<TABLE>
<CAPTION>
                                             Amount of Commitment Expiring by Period
                                   ----------------------------------------------------------
                                       Less
                                       than       1-3          4-5      Over 5
                                      1 year     Years        Years      Years       Total
                                   ----------------------------------------------------------
<S>                                  <C>        <C>         <C>         <C>        <C>
Bank Loan Payable                    $    --    $ 84,725    $     --    $    --    $ 84,725
Mortgage Loans Payable                24,188      36,722     101,465     78,375     240,750
Construction Contract Commitments        700          --          --         --         700
Standby Letters of Credit              2,096          --          --         --       2,096
                                   ----------------------------------------------------------

Total                                $26,984    $121,447    $101,465    $78,375    $328,271
                                   ==========================================================
</TABLE>

Related Party Transactions

Prior to July 1, 2002 our activities relating to the acquisition of new
properties, sales of real estate, development of real property, and financing
arrangements were performed by BAI, a corporation wholly-owned by Peter Bedford,
our Chairman of the Board and Chief Executive Officer. We used the services of
BAI for our acquisition, disposition, financing and development activities
because we incurred expenses related only to those transactions that were


                                       20
<PAGE>

successfully completed. These services were provided pursuant to written
agreements (renewable annually since January 1, 1995), which provide that BAI
was obligated to provide services to us with respect to our acquisition,
disposition, financing and development activities, and that BAI was responsible
for the payment of expenses incurred for these activities. BAI was required to
submit to us a cost estimate for our approval relating to each activity, setting
forth the estimated timing and amount of all projected BAI costs relating to
such activities. Pursuant to the agreement, Mr. Bedford was obligated to pay
BAI's expenses described above if BAI failed to make any such payments in a
timely fashion, provided that Mr. Bedford was not obligated to pay any such
amounts exceeding $1 million or following a termination of BAI's obligations
based on the expiration or termination of the term of the agreement.

This arrangement provided that BAI earned a success fee in an amount equal to 1
1/2% of the purchase price of property acquisitions, 1 1/2% of the sale price of
dispositions, up to 1 1/2% of the amount of any loans secured (less third-party
commissions), and up to 7% of the development costs incurred. The total amount
of such fees payable to BAI by us was limited to the lesser of: (i) the
aggregate amount of such fees earned, or (ii) the aggregate amount of approved
expenses incurred by BAI through the time of such acquisition, disposition,
financing or development activity.

On August 14, 2002, we announced that effective July 1, 2002, we were
terminating the agreement with BAI and had hired its former employees.

For the quarters ended March 31, 2002 and 2001, we paid BAI an aggregate amount
of approximately $1,345,000 and $1,308,000, respectively, for acquisition,
disposition, financing, and development activities performed pursuant to this
arrangement. As of March 31, 2002 and December 31, 2001, we had an accrued
liability of $680,000 and $1,945,000, respectively, for fees earned by BAI in
excess of the amounts paid to BAI by us under the agreement.

At March 31, 2002 and 2001, we did not have any other relationships with
unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes. Therefore, we are not
materially exposed to any financing, liquidity, market or credit risk that could
arise if we had engaged in such relationships.

Potential Factors Affecting Future Operating Results

Many factors affect our actual financial performance and may cause our future
results to be different from past performance or trends. These factors include
the following:

Change in Accounting for Costs Associated with Acquisitions, Financings and
Development costs

We are currently evaluating the impact of the accounting treatment for certain
costs related to development, acquisitions and financings on future operating
results. Based on the first quarter 2002 net income, we anticipate that the
effect for the remainder of 2002 will not be material.

Economic Environment

Both the national economy and the economies of the western states in which we
own, manage and develop properties have been and continue to be in a recession.
The early indicators of how this affects the real estate industry in general,
and us in particular, are slightly reduced occupancy rates, flattening of growth
in market rental rates, and reduced activity levels in the flow of prospective
tenants for space currently available for lease.

Our property types and locations provide some degree of risk diversification but
are not immune to a prolonged down cycle in the real estate markets in which we
operate. Although we believe we are well positioned to meet the challenges
ahead, it is possible that further reductions in occupancy rates and the absence
of rental rate growth, or even reductions in market rental rates, will result in
reduction of rental revenues, operating income, cash flows, and the market value
of our shares. A prolonged recession could also affect our ability to obtain
financing at acceptable rates of interest and to access funds from the
disposition of properties at acceptable disposition prices.

These conditions, the risks that follow, and many other factors affect our
actual financial performance and may cause our future results to be markedly
outside of our current expectations.


                                       21
<PAGE>

Interest Rate Fluctuations

At the present time, borrowings under our credit facility, the $4.6 million and
$21.8 million mortgage loans from Union Bank, the $30.9 million mortgage loans
from Security Life of Denver Insurance Company, and the $18.0 million mortgage
loan from Washington Mutual bear interest at floating rates. The floating
interest rate on the $30.9 million mortgage loans has been fixed for a period of
one year with interest swap agreements which expire on July 1, 2002. The LIBOR
rate on the $21.8 million mortgage loan has been fixed for a period of one year.
Its effective interest rate of 4.02% expires on December 20, 2002. We recognize
that our results from operations may be negatively impacted by future increases
in interest rates and substantial additional borrowings to finance property
acquisitions, development projects and share repurchases.

Lease Renewals

While we historically have been successful in renewing and reletting space, we
are subject to the risk that certain leases expiring in 2002 and beyond may not
be renewed, or the terms of renewal may be less favorable than current lease
terms. We expect to incur costs in making improvements or repairs to our
portfolio of properties required by new or renewing tenants and expect to incur
expenses associated with brokerage commissions payable in connection with the
reletting of space.

Inflation

Most of the leases require the tenants to pay their share of operating expenses,
including common area maintenance, real estate taxes and insurance, thereby
reducing our exposure to increases in costs and operating expenses resulting
from inflation. Inflation, including escalations in electricity costs in
California and neighboring states, however, could result in an increase in our
borrowing and other operating expenses.

Government Regulations

Our properties are subject to various federal, state and local regulatory
requirements such as local building codes and other similar regulations. We
believe our properties are currently in substantial compliance with all
applicable regulatory requirements, although expenditures at our properties may
be required to comply with changes in these laws. No material expenditures are
contemplated at this time in order to comply with any such laws or regulations.

Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real estate is liable for the costs of removal or
remediation of hazardous or toxic substances released on, above, under, or in
the property. These laws often impose liability without regard to whether the
owner knew of, or was responsible for, the presence of such hazardous or toxic
substances. The costs of removal or remediation could be substantial.
Additionally, the presence of such substances or the failure to properly
remediate them may adversely affect the owner's ability to borrow using such
real estate as collateral.

We believe that we are in compliance in all material respects with all federal,
state and local laws regarding hazardous or toxic substances. Further, we have
not been notified by any governmental authority of any non-compliance or other
claim in connection with any of our present or former properties. Accordingly,
we do not currently anticipate that compliance with federal, state and local
environmental protection regulations will have any material adverse impact on
our financial position, results of operations or liquidity. There can be no
assurance, however, that future discoveries or events at our properties, or
changes to current environmental regulations, will not result in such a material
adverse impact.


                                       22
<PAGE>

Financial Performance

We consider Funds From Operations ("FFO") to be one measure of the performance
of an equity REIT. FFO during the three months ended March 31, 2002 was
$12,476,000. During the same period in 2001, FFO was $11,561,000. FFO is used by
financial analysts in evaluating REITs and can be one measure of a REIT's
ability to make cash distributions. Presentation of this information provides
the reader with an additional measure to compare the performance of REITs. FFO
is generally defined by the National Association of Real Estate Investment
Trusts as net income (loss) (computed in accordance with accounting principles
generally accepted in the United States of America), excluding extraordinary
items and gains (losses) from sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. FFO was computed by us in accordance with this definition. FFO does
not represent cash generated by operating activities in accordance with
accounting principles generally accepted in the United States of America; it is
not necessarily indicative of cash available to fund cash needs and should not
be considered as an alternative to net income (loss) as an indicator of our
operating performance or as an alternative to cash flow as a measure of
liquidity. Further, FFO as disclosed by other REITs may not be comparable to our
presentation.

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                         March 31
                                                               2002                   2001
                                                         ---------------------------------------
<S>                                                         <C>                    <C>
Funds From Operations
    (in thousands, except share amounts):
             Net income                                         $8,375                 $7,707
             Add:
                 Depreciation and amortization:
                    Continuing operations                        4,101                  3,766
                    Discontinued operations                         --                     53
                 Minority interest                                  --                     35
                                                         ---------------------------------------

             Funds From Operations                             $12,476                $11,561
                                                         =======================================

             Weighted average number of
                 shares - diluted                           16,589,831             17,731,411
                                                         =======================================
</TABLE>


                                       23
<PAGE>

ITEM 3.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to interest rate changes primarily as a result of our line of
credit and long-term debt used to maintain liquidity and fund capital
expenditures and expansion of our real estate investment portfolio and
operations. Our interest rate risk management objective is to limit the impact
of interest rate changes on earnings and cash flows and to lower our overall
borrowing costs. To achieve our objectives, we balance our borrowings between
fixed and variable rate debt. While we have entered into interest swap
agreements to minimize our exposure to interest rate fluctuations, we do not
enter into derivative or interest rate transactions for speculative purposes.

Our interest rate risk is monitored using a variety of techniques. The table
below presents the principal amounts, weighted average annual interest rates,
fair values and other terms required by year of expected maturity to evaluate
the expected cash flows and sensitivity to interest rate changes (dollars in
thousands):

<TABLE>
<CAPTION>
                                                        Three Month Period Ending March 31,
                                                                                                                  Fair
                              2003        2004       2005         2006        2007    Thereafter     Total       Value
                          -----------------------------------------------------------------------------------------------
<S>                         <C>          <C>       <C>          <C>         <C>         <C>        <C>         <C>
Variable rate LIBOR debt     $2,530      $2,931    $111,918     $25,583      $1,821      $9,731    $154,514    $154,514
Weighted average
  interest rate               5.15%       5.06%       4.94%       5.29%       6.92%       6.92%       5.10%       5.10%

Fixed rate debt             $21,659      $3,178      $3,420     $27,619     $46,441     $68,644    $170,961    $176,724
Weighted average
  interest rate               7.24%       7.34%       7.34%       7.36%       7.32%       7.17%       7.28%       6.50%
</TABLE>

As the table incorporates only those exposures that existed as of March 31,
2002, it does not consider those exposures or positions which could arise after
that date. As a result, our ultimate realized gain or loss with respect to
interest rate fluctuations will depend on the exposures that arise during the
period, our hedging strategies at that time, and interest rates.

On June 18, 2001, we entered into interest swap agreements with United
California Bank. The swap agreements allow us to hedge our exposure to variable
interest rates on two mortgages with remaining principal balances totaling
$26,241,000 as of March 31, 2002, by effectively paying a fixed rate of interest
over the term of the swap agreement. Interest rate pay differentials that arise
under these swap agreements are recognized in interest expense over the term of
the contracts. These interest rate swap agreements were considered to be fully
effective in hedging the variable rate risk associated with the two mortgages.

The following summarizes the principal value and fair value of our interest swap
contracts. The principal value below provides an indication of the amount that
has been hedged in these contracts but does not represent an obligation or
exposure to credit risk at March 31, 2002 (dollars in thousands):

<TABLE>
<CAPTION>
Principal        Fixed              Contract               Cumulative                Approximate Liability
Amount (1)        Rate              Maturity             Cash Paid, Net              at March 31, 2002 (2)
----------        ----              --------             --------------              ---------------------
<S>               <C>             <C>                         <C>                             <C>
 $22,719          5.55%           July 1, 2002                $258                            $122
   3,522          5.55%           July 1, 2002                  49                              19
----------------------------------------------------------------------------------------------------------
 $26,241                                                      $307                            $141
==========================================================================================================
</TABLE>

(1)   The principal amount is included in the table of qualitative and
      quantitative disclosure about market risk as variable rate LIBOR debt and
      fixed rate debt, as applicable.

(2)   Represents the approximate amount which we would have paid as of March 31,
      2002 if the swap contracts were terminated.


                                       24
<PAGE>

To determine the fair values of derivative instruments in accordance with SFAS
133, we use the discounted cash flow method, which requires the use of
assumptions about market conditions and risks existing at the balance sheet
date. Considerable judgment is required in interpreting market data to develop
estimates of market value. Accordingly, estimated fair value is a general
approximation of value, and such value may or may not actually be realized.

PART II.  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

       None

Item 2.  CHANGES IN SECURITIES

       None

Item 3.  DEFAULTS UPON SENIOR SECURITIES

       None

Item 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

       None

Item 5.  OTHER INFORMATION

       None

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

A.     Exhibits

         Exhibit No.    Exhibit

            3.1(a)      Articles of Incorporation of Bedford Property Investors,
                        Inc. is incorporated herein by reference to Exhibit 4.2
                        of our Registration Statement on Form S-2 (File No.
                        333-00921) filed on February 14, 1996.

            3.1(b)      Charter of the Company, as amended, is incorporated
                        herein by reference to Exhibit 4.2 of our Amendment No.
                        1 to our Registration Statement on Form S-2 (File No.
                        333-00921) filed on March 29, 1996.

            3.1(c)      Articles of Amendment of Charter of Bedford Property
                        Investors, Inc. is incorporated herein by reference to
                        Exhibit 3.1 to our Form 10-Q for the quarter ended June
                        30, 1997.

            3.2         Amended and Restated Bylaws are incorporated herein by
                        reference to Exhibit 3.2 to our Form 10-K for the year
                        ended December 31, 2000.

B.     Reports on Form 8-K

       None


                                       25
<PAGE>

SIGNATURES

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

Dated:  August 23, 2002

               BEDFORD PROPERTY INVESTORS, INC.
                                (Registrant)


         By:      /s/ HANH KIHARA
                  ---------------
                  Hanh Kihara
                  Senior Vice President and
                  Chief Financial Officer


         By:      /s/ KRISTA K. ROWLAND
                  ---------------------
                  Krista K. Rowland
                  Vice President and Controller


                                       26