<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                                    FORM 10-Q


(Mark One)

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


         FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996

                                       OR

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


                         COMMISSION FILE NUMBER 1-12528


                            SPIEKER PROPERTIES, INC.

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                              <C>
                       MARYLAND                                                      94-3185802

            (State or other jurisdiction of                                         (IRS Employer
            incorporation or organization)                                       Identification No.)


           2180 SAND HILL ROAD, MENLO PARK, CA                                          94025

         (Address of principal executive offices)                                     (Zip code)
</TABLE>


                                 (415) 854-5600

              (Registrant's telephone number, including area code)

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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:

31,811,861 shares of Common Stock, $0.0001 par value as of November 1, 1996.
2,000,000 shares of Class B Common Stock, $0.0001 par value as of November 1,
1996. 1,176,470 shares of Class C Common Stock, $0.0001 par value as of November
1, 1996.



<PAGE>   2


                            SPIEKER PROPERTIES, INC.

            QUARTERLY REPORT FOR THE PERIOD ENDED SEPTEMBER 30, 1996

                                TABLE OF CONTENTS


<TABLE>

PART I.    FINANCIAL INFORMATION

<S>        <C>                                                                                                   <C>
Item 1.    Financial Statements ...............................................................................  

           Consolidated Balance Sheets as of September 30, 1996 and December 31, 1995..........................  
           Consolidated Statements of Operations for the Three Month and Nine Month Periods
              Ended September 30, 1996 and September 30, 1995..................................................  
           Consolidated Statement of Stockholders' Equity for the Nine Month Period
              Ended September 30, 1996.........................................................................  
           Consolidated Statements of Cash Flows for the Nine Month Periods Ended September 30, 1996
              and September 30, 1995...........................................................................  
           Notes to Consolidated Financial Statements..........................................................  

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations...............  

PART II.   OTHER INFORMATION

Item 2.    Changes in Securities...............................................................................  
Item 6.    Exhibits and Reports on Form 8-K....................................................................  
Signatures ....................................................................................................  
</TABLE>

<PAGE>   3



PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


Attached are the following financial statements of Spieker Properties, Inc.
("the Company"):

     (i)  Consolidated Balance Sheets as of September 30, 1996 and December 31,
          1995
  
     (ii) Consolidated Statements of Operations for the Three Month and Nine
          Month Periods Ended September 30, 1996 and September 30, 1995

     (iii) Consolidated Statement of Stockholders' Equity for the Nine Month
          Period Ended September 30, 1996

     (iv) Consolidated Statements of Cash Flows for the Nine Month Periods Ended
          September 30, 1996 and September 30, 1995

     (v)  Notes to Consolidated Financial Statements

The financial statements referred to above should be read in conjunction with
the Company's Annual Report on the Form 10-K/A for the year ended December 31,
1995.

<PAGE>   4





                            SPIEKER PROPERTIES, INC.

                           CONSOLIDATED BALANCE SHEETS
                 AS OF SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
                             (dollars in thousands)

                                     ASSETS

<TABLE>
<CAPTION>

                                                           September 30, 1996   December 31, 1995
                                                           ------------------   -----------------
                                                               (unaudited)
<S>                                                            <C>                <C>        
INVESTMENTS IN REAL ESTATE
  Properties:
  Land, land improvements and leasehold interests              $   357,280        $   303,157
  Buildings and improvements                                       947,005            756,734
  Construction in progress                                          31,901             38,980
                                                               -----------        -----------
                                                                 1,336,186          1,098,871
  Less - Accumulated depreciation                                 (135,592)          (124,612)
                                                               -----------        -----------
      Net investments in properties                              1,200,594            974,259
  Investments in mortgages                                          14,342               --
                                                               -----------        -----------
      Net investments in real estate                             1,214,936            974,259


CASH AND CASH EQUIVALENTS                                           24,541              7,573


ACCOUNTS RECEIVABLE                                                  3,353              3,351


DEFERRED RENT RECEIVABLE                                             4,391              4,698


RECEIVABLE FROM RELATED PARTY                                          109                386


DEFERRED FINANCING AND LEASING COSTS, net of accumulated
  amortization of $8,834 and $9,586 as of September 30,
  1996 and December 31, 1995, respectively                          16,686             13,485


FURNITURE, FIXTURES AND EQUIPMENT, net                               2,225              1,678


PREPAID EXPENSES AND OTHER ASSETS                                    3,649              6,067
                                                               -----------        -----------

                                                               $ 1,269,890        $ 1,011,497
                                                               ===========        ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

<PAGE>   5

                            SPIEKER PROPERTIES, INC.

                           CONSOLIDATED BALANCE SHEETS
                 AS OF SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
                             (dollars in thousands)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                              September 30, 1996    December 31, 1995
                                                                              ------------------    -----------------
                                                                                  (unaudited)
<S>                                                                               <C>                <C>        
DEBT
  Unsecured notes                                                                 $   510,000        $   260,000
  Unsecured line of credit                                                             39,000            117,700
  Mortgage loans                                                                       47,301            112,702
                                                                                  -----------        -----------
      Total debt                                                                      596,301            490,402
                                                                                  -----------        -----------
ASSESSMENT BONDS PAYABLE                                                               12,176             12,140
ACCOUNTS PAYABLE                                                                        3,619              3,804
ACCRUED REAL ESTATE TAXES                                                               5,018                506
ACCRUED INTEREST                                                                        9,658              2,510
UNEARNED RENTAL INCOME                                                                  6,410              6,972
DIVIDENDS AND DISTRIBUTIONS PAYABLE                                                    18,655             15,588
OTHER ACCRUED EXPENSES AND LIABILITIES                                                 14,918             12,202
                                                                                  -----------        -----------
  Total liabilities                                                                   666,755            544,124
                                                                                  -----------        -----------

MINORITY INTERESTS                                                                     44,768             47,526
                                                                                  -----------        -----------

COMMITMENTS AND CONTINGENCIES                                                            --                 --

STOCKHOLDERS' EQUITY
  Series A Preferred Stock: cumulative, convertible, $.0001 par value,
    1,000,000 shares authorized, issued and outstanding, $25,000
    liquidation preference                                                             23,949             23,949
  Series B Preferred Stock: cumulative, redeemable, $.0001 par value,
    5,000,000 shares authorized, 4,250,000 issued and outstanding, $106,250
    liquidation preference                                                            102,064            102,064
  Common Stock: $.0001 par value, 660,500,000 shares authorized, 31,811,861
    and 26,724,074 shares issued and outstanding as of September 30, 1996,
    and December 31, 1995, respectively                                                     3                  3
  Class B Common Stock: $.0001 par value, 2,000,000 shares authorized,
    issued and outstanding                                                               --                 --
  Class C Common Stock: $.0001 par value, 1,500,000 shares authorized,
    1,176,470 issued and outstanding as of September 30, 1996                            --                 --
  Excess Stock: $.0001 par value per share, 330,000,000 shares authorized,
    no shares issued or outstanding                                                      --                 --
  Additional paid-in capital                                                          432,912            303,320
  Deferred compensation                                                                  (561)              (652)
  Retained earnings (deficit)                                                            --               (8,837)
                                                                                  -----------        -----------
      Total stockholders' equity                                                      558,367            419,847
                                                                                  -----------        -----------

                                                                                  $ 1,269,890        $ 1,011,497
                                                                                  ===========        ===========
</TABLE>

        The accompanying notes are an integral part of these statements.



<PAGE>   6

                            SPIEKER PROPERTIES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
     FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
                (dollars in thousands, except per share amounts)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                     Three Months Ended                  Nine Months Ended
                                                                     ------------------                  -----------------
                                                                        September 30                        September 30
                                                                        ------------                        ------------
                                                                   1996              1995              1996             1995
                                                                   ----              ----              ----             ----
<S>                                                               <C>              <C>              <C>              <C>      
REVENUE
  Rental income                                                   $  51,079        $  38,627        $ 142,131        $ 110,529
  Interest and other income                                           1,064              397            3,026            1,521
                                                                  ---------        ---------        ---------        ---------
                                                                     52,143           39,024          145,157          112,050
                                                                  ---------        ---------        ---------        ---------
OPERATING EXPENSES
  Rental expenses                                                     9,578            6,177           24,351           17,556
  Real estate taxes                                                   3,989            3,132           11,292            8,822
  Interest expense, including amortization of finance costs           9,761           10,690           26,443           35,711
  Depreciation and amortization                                      10,033            8,100           27,373           23,384
  General and administrative and other expenses                       2,686            2,114            7,491            6,335
                                                                  ---------        ---------        ---------        ---------
                                                                     36,047           30,213           96,950           91,808
                                                                  ---------        ---------        ---------        ---------
  Income from operations before disposal of real estate
    properties and minority interests                                16,096            8,811           48,207           20,242
                                                                  ---------        ---------        ---------        ---------

DISPOSAL OF REAL ESTATE PROPERTIES
  Loss on sale                                                       (1,483)            --             (1,483)            --
                                                                  ---------        ---------        ---------        ---------

  Income from operations before minority interests                   14,613            8,811           46,724           20,242
                                                                  ---------        ---------        ---------        ---------

MINORITY INTERESTS' SHARE IN NET INCOME                              (1,826)          (1,556)          (6,121)          (3,885)
                                                                  ---------        ---------        ---------        ---------
  Net income                                                         12,787            7,255           40,603           16,357
                                                                  ---------        ---------        ---------        ---------

PREFERRED DIVIDENDS
  Series A Preferred Stock                                             (524)            (512)          (1,573)          (1,536)
  Series B Preferred Stock                                           (2,510)            --             (7,530)            --
                                                                  ---------        ---------        ---------        ---------
  Net income available to Common Stockholders                     $   9,753        $   6,743        $  31,500        $  14,821
                                                                  =========        =========        =========        =========

INCOME PER SHARE OF COMMON STOCK
      Net income                                                  $     .27        $     .23        $     .92        $     .59
                                                                  =========        =========        =========        =========

DIVIDENDS AND DISTRIBUTIONS PER SHARE
  Series A Preferred Stock                                        $     .52        $     .51        $    1.57        $    1.53
                                                                  =========        =========        =========        =========
  Series B Preferred Stock                                        $     .59        $    --          $    1.77        $    --
                                                                  =========        =========        =========        =========
  Common Stock, including Class B and Class C                     $     .43        $     .42        $    1.34        $    1.26
                                                                  =========        =========        =========        =========
</TABLE>



        The accompanying notes are an integral part of these statements.

<PAGE>   7

                            SPIEKER PROPERTIES, INC.

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

               FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996
                             (dollars in thousands)
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                          Series A     Series B      Common      Class B      Class C       Common      Additional  
                                         Preferred    Preferred      Stock        Common       Common      Stock Par     Paid-in    
                                           Stock        Stock        Shares    Stock Shares Stock Shares     Value       Capital    
                                           -----        -----        ------    -------------------------     -----       -------    
<S>                                       <C>          <C>         <C>           <C>          <C>          <C>           <C>        
BALANCE AT DECEMBER 31, 1995              $ 23,949     $102,064    26,724,074    2,000,000           -     $      3      $303,320   
  Common Stock Offering                          -            -     5,022,500           -            -            -       121,368   
  Class C Common Stock Offering                  -            -             -           -     1,176,470           -        29,963   
  Stock Options Exercised                        -            -        41,750           -            -            -           856   
  Restricted Stock Grant                         -            -         8,000           -            -            -           200   
  Non-cash Compensation Merit Fund               -            -             -           -            -            -            75   
  Conversion of Operating Partnership            -            -        15,537           -            -            -           386   
Interests
  Amortization of Deferred Compensation          -            -             -           -            -            -             -   
  Dividends Declared                             -            -             -           -            -            -       (23,256)  
  Net Income                                     -            -             -           -            -            -             -   
                                          --------     --------    ----------    --------     --------     --------      --------   

BALANCE AT SEPTEMBER 30, 1996             $ 23,949     $102,064    31,811,861    2,000,000    1,176,470    $      3      $432,912   
                                          ========     ========    ==========    =========    =========    ========      ========   
</TABLE>


<TABLE>
<CAPTION>

                                                       Retained                 
                                           Deferred    Earnings                 
                                         Compensation  (Deficit)      Total      
                                         ------------  ---------      -----      
<S>                                      <C>          <C>           <C>                                                
BALANCE AT DECEMBER 31, 1995             $   (652)    $ (8,837)    $419,847    
  Common Stock Offering                         -            -      121,368    
  Class C Common Stock Offering                 -            -       29,963    
  Stock Options Exercised                       -            -          856    
  Restricted Stock Grant                     (200)           -            -    
  Non-cash Compensation Merit Fund              -            -           75    
  Conversion of Operating Partnership           -            -          386    
Interests                                                                      
  Amortization of Deferred Compensation       291            -          291    
  Dividends Declared                            -      (31,766)     (55,022)   
  Net Income                                    -       40,603       40,603    
                                         --------     --------     --------    
                                                                               
BALANCE AT SEPTEMBER 30, 1996            $   (561)    $      -     $558,367    
                                         =========    ========     ========    
                                        
</TABLE>



        The accompanying notes are an integral part of these statements.
<PAGE>   8

                            SPIEKER PROPERTIES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

          FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
                             (dollars in thousands)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                 Nine Months Ended
                                                                                 -----------------
                                                                                    September 30
                                                                                    ------------
                                                                                 1996          1995
                                                                                 ----          ----
<S>                                                                           <C>          <C>      
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income                                                                  $  40,603    $  16,357
  Adjustments to reconcile net income to net cash provided by
    operating activities-
  Depreciation and amortization                                                  27,373       23,384
  Amortization of prepaid interest and deferred financing costs                     956        7,418
  Non-cash compensation                                                             381          276
  Minority share of net income                                                    6,121        3,885
  Loss on sale of real estate                                                     1,483           --
  Decrease (increase) in deferred rent receivable                                   307         (275)
  (Increase) decrease in accounts receivable                                         (2)       1,002
  Decrease in receivable from related party                                         277           65
  Decrease (increase) in prepaid expenses and other assets                        1,239         (994)
  Decrease in assessment bonds payable                                             (573)        (342)
  (Decrease) increase in accounts payable                                          (185)       5,155
  Increase in accrued real estate taxes                                           4,512        3,390
  Increase (decrease) in accrued interest                                         7,148         (480)
  Increase in other accrued expenses and liabilities                              2,520        2,294
  Decrease in unearned rental income                                               (562)      (1,181)
  Decrease in payable to related party                                               --       (1,186)
                                                                              ---------    ---------
      Net cash provided by operating activities                                  91,598       58,768
                                                                              ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Additions to properties                                                      (253,374)    (128,401)
  Additions to leasing costs                                                     (4,288)      (2,994)
  Additions to investment in mortgages                                          (14,342)          --
  Proceeds from disposal of property                                              2,001           --
                                                                              ---------    ---------
      Net cash used for investing activities                                   (270,003)    (131,395)
                                                                              ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from debt                                                            513,050      139,431
  Payments on debt                                                             (407,151)    (196,755)
  Payment of financing fees                                                      (2,250)        (303)
  Payment of dividends/distributions                                            (60,463)     (38,201)
  Proceeds from sale of Common Stock, net of issuance costs                     121,368      117,158
  Proceeds from sale of Class B Common Stock, net of issuance costs                  --       49,961
  Proceeds from sale of Class C Common Stock, net of issuance costs              29,963           --
  Proceeds from stock options exercised                                             856          645
                                                                              ---------    ---------
      Net cash provided by financing activities                                 195,373       71,936
                                                                              ---------    ---------
      Net increase (decrease) in cash and cash equivalents                       16,968         (691)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  7,573        9,663
                                                                              ---------    ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                    $  24,541    $   8,972
                                                                              =========    =========
SUPPLEMENTAL CASH FLOW DISCLOSURE
  Cash paid for interest                                                         20,181       29,119
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Debt assumed in relation to property acquisitions                                  --         22,827
Increase to land and assessment bonds payable                                       609        4,034
Minority interest capital recorded in relation to property acquisitions            --         10,113
Write-off of fully depreciated property                                          12,979        3,369
Write-off of fully amortized deferred financing and leasing costs                 4,098        1,847
Conversion of operating partnership units into Common Stock with resulting
  reduction in minority interest and increase in additional paid-in-capital         386          343
Restricted Stock Grants                                                             200           --
</TABLE>



        The accompanying notes are an integral part of these statements.
<PAGE>   9




                            SPIEKER PROPERTIES, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1996 AND 1995
                    (dollars in thousands, except share data)
                                   (UNAUDITED)


1.    ORGANIZATION AND BASIS OF PRESENTATION

     Spieker Properties, Inc.

     Spieker Properties, Inc. (the "Company") was organized in the state of
     Maryland on August 20, 1993, and commenced operations on November 19, 1993.
     On November 18, 1993, the Company completed an initial public offering
     ("IPO") and issued 20,400,000 shares of Common Stock at $20.50 per share,
     or $418,200. Net proceeds of $386,800 were used to purchase an approximate
     77.6 percent general partnership interest in Spieker Properties L.P. (the
     "Operating Partnership"). The Company and the Operating Partnership are
     collectively referred to as the Company. The Company qualifies as a real
     estate investment trust ("REIT") under the Internal Revenue Code of 1986
     (the "Code"), as amended.

     The Company is primarily engaged in the ownership, operation, management,
     leasing, acquisition, expansion and development of industrial, suburban
     office, and retail income-producing properties. As of September 30, 1996,
     the Company owned (i) 100 percent of 134 properties, (ii) an effective 100
     percent general partner interest in Spieker Washington Interest Partners
     ("SWIP"), a California general partnership, which owns 100 percent of 13
     properties, (iii) a 90 percent interest in 1 property, (iv) a 92.5 percent
     interest with SWIP in 1 property, and (v) 95 percent of the Series A
     Preferred Stock of Spieker Northwest, Inc., which provides fee management
     and other services for properties not owned by the Company. The Company's
     149 stabilized properties, aggregating approximately 20.4 million leasable
     square feet, are comprised of 80 industrial properties, 54 office
     properties, and 15 retail properties. All of the properties are located in
     California and the Pacific Northwest.

     The Company owned approximately 84.9 percent of the Operating Partnership
     as of September 30, 1996.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Consolidation

     The Company's consolidated financial statements include the consolidated
     financial position of the Operating Partnership and its subsidiaries as of
     September 30, 1996, and December 31, 1995, its consolidated results of
     operations, for the three and nine month periods ended September 30, 1996
     and 1995, and its consolidated cash flows for the nine month periods ended
     September 30, 1996 and 1995. The Company's investment in Spieker Northwest,
     Inc. is accounted for under the equity method. The carrying value of
     Spieker Northwest, Inc. of $53 at September 30, 1996, and December 31,
     1995, is included in prepaid expenses and other assets. All significant
     intercompany balances and transactions have been eliminated in the
     consolidated financial statements.

     Interim Financial Information

     The consolidated financial statements have been prepared pursuant to the
     rules and regulations of the Securities and Exchange Commission ("SEC")
     and, in management's opinion, include all adjustments necessary for a fair
     presentation of results for such interim periods. Certain information and
     note disclosures normally included in annual financial statements prepared
     in accordance with generally accepted accounting principles have been
     condensed or omitted pursuant to SEC rules or regulations; however, the
     Company believes that adequate disclosures have been made.

     The interim results for the three and nine month periods ended September
     30, 1996 and 1995 are not necessarily indicative of results for the full
     year. It is suggested that these financial statements be read in
     conjunction with the consolidated financial statements and notes thereto
     included in the Company's Annual Report on Form 10-K/A for the year ended
     December 31, 1995.


<PAGE>   10
 

     Investments in Real Estate

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

     Land improvements and leasehold interests         18 to 40 years
     Buildings and improvements                        10 to 40 years
     Tenant improvements                               Term of the related lease

     Investments in properties are stated at the lower of depreciated cost or
     estimated fair value. Fair value for financial reporting purposes is
     evaluated periodically by the Company on a property by property basis using
     undiscounted cash flow. If a potential impairment is identified, it is
     measured by the property's fair value based on either sales comparables or
     the net cash expected to be generated by the property, less estimated
     carrying costs (including interest) during the anticipated holding period,
     plus the estimated cash proceeds from the ultimate disposition of the
     property. To the extent that the carrying value exceeds the estimated fair
     value, a provision for decrease in net realizable value is recorded.
     Estimated fair value is not necessarily an indication of a property's
     current value or the amount that will be realized upon the ultimate
     disposition of the property. As of September 30, 1996, none of the carrying
     values of the properties exceeded their estimated fair values.

     As of September 30, 1996, the properties are located primarily in
     California, Oregon and Washington. As a result of this geographic
     concentration, the operations of these properties could be adversely
     affected by a recession or general economic downturn in the areas where
     these properties are located.

     The Company is considering the sale of certain retail properties, though as
     of September 30, 1996, the Board of Directors had not yet approved a plan
     of disposition.

     Project costs clearly associated with the development and construction of a
     real estate project are capitalized as construction in progress. In
     addition, interest and real estate taxes are capitalized during the period
     in which activities necessary to get the property ready for its intended
     use are in progress.

     In January 1996, the Company acquired two mortgage loans for the initial
     cost of $14,333. The mortgages are secured by real estate, have an
     aggregate face value of $21,000, require monthly principal and interest
     payments of $163, and mature in December 1999. The Company assesses
     possible impairment of these loans on a quarterly basis by reviewing the
     fair value of the underlying real estate. At September 30, 1996, the value
     of the underlying real estate was in excess of the carrying value of the
     mortgage loans.

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

     Cash and Cash Equivalents

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

     Deferred Financing and Leasing Costs

     Costs incurred in connection with financing or leasing are capitalized and
     amortized on a straight-line basis over the term of the related loan or
     lease for periods ranging from 2 to 25 years. Unamortized leasing costs are
     charged to expense upon the early termination of the lease.

     Fair Value of Financial Investments

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

<PAGE>   11

     investments in money market funds, with financial institutions. The
     carrying amount of cash and cash equivalents approximates fair value.

     Minority Interest

     Minority interest in the Company represents (i) the individual Spieker
     Partners' approximate 15.1 percent limited partnership interest in the
     Operating Partnership, and (ii) a 10 percent interest in one property and a
     7.5 percent interest in another property held by outside interests.

     Revenues

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

     Interest and Other Income

     Interest and other income includes interest income on cash, cash
     equivalents and mortgage investments, management fee income and a $150
     extraordinary gain on the early extinguishment of debt.

     Net Income (Loss) Per Share of Common Stock

     Per share amounts for the Company are computed using the weighted average
     common shares outstanding (including Class B Common Stock and Class C
     Common Stock) during the period, including the dilutive effect of vested
     stock options. The weighted average common shares outstanding for the three
     and nine month periods ended September 30, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>

                                                  Weighted Average
                                              Common Shares Outstanding
                                              -------------------------
<S>                                               <C>       
                    Three months ended:
                      September 30, 1996          35,728,317
                      September 30, 1995          29,247,568

                    Nine months ended:
                      September 30, 1996          34,280,115
                      September 30, 1995          25,023,655
</TABLE>

     Earnings used in the calculation are reduced by dividends owed to preferred
     stockholders.

     Reclassifications

     Certain items in the 1995 financial statements have been reclassified to
     conform to the 1996 presentation.

     Use of Estimates

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

3.    RELATED PARTY TRANSACTIONS

     Receivable From Related Party

     The receivable from related party at September 30, 1996, and December 31,
     1995, represents management fees and reimbursements from Spieker Partners
     related entities.

<PAGE>   12

4.   DEBT

     Unsecured Notes

     On July 19 and 22, 1996, the Company issued unsecured notes totaling
     $150,000 in principal, consisting of $100,000 of notes maturing in 2005
     with an 8.00% interest rate and $50,000 of notes maturing in 2001 with a
     7.58% interest rate. Net proceeds were used to repay borrowings on the
     unsecured line of credit.

     As of September 30, 1996, the Company has outstanding $510,000 in
     investment grade rated unsecured notes with varying interest rates from
     6.65% to 8.00% payable semi-annually. The notes are due on various dates
     from 2000 to 2005.

     Unsecured Line of Credit

     The maximum amount available under the Company's unsecured line of credit
     facility is $150,000. The facility carries interest at LIBOR plus 1.25% and
     matures in November 1997. The facility also includes a fee on average
     unused funds which varies between 0.125% and 0.20% based on the average
     outstanding balance. As of September 30, 1996, the amount drawn on the
     facility was $39,000.

     Mortgage Loans

     Mortgage loans of $47,301 as of September 30, 1996, are secured by a first
     or second deed of trust on related properties. The mortgage loans carry
     interest rates ranging from 7.5% to 13.75%, require monthly principal and
     interest payments, and mature on various dates from 1996 to 2012.

5.   DIVIDENDS AND DISTRIBUTIONS PAYABLE

     The dividends and distributions payable at September 30, 1996, and December
     31, 1995, represent amounts payable to stockholders of record and
     distributions payable to minority interest holders as of the same dates.
     The stockholders of record and minority interests holders as of September
     30, 1996, and December 31, 1995, are as follows:

<TABLE>
<CAPTION>

                                     September 30, 1996     December 31, 1995
                                     ------------------     -----------------
<S>                                      <C>                   <C>       
     Shares of:
      Common Stock                       31,811,861            26,724,074
      Class B Common Stock                2,000,000             2,000,000
      Class C Common Stock                1,176,470                     -
      Series A Preferred Stock            1,000,000             1,000,000
      Series B Preferred Stock            4,250,000             4,250,000

Minority Interest Holders                 6,549,819             6,565,356
</TABLE>

6.   STOCKHOLDERS' EQUITY

     Equity Offerings

     On February 28, 1996, the Company concurrently sold 4,887,500 shares of
     Common Stock, through an underwritten public offering, and directly placed
     1,176,470 shares of Class C Common Stock and 135,000 shares of Common Stock
     with a limited number of institutional investors at $25.50 per share. Net
     proceeds of $151,332 were used primarily to repay floating rate debt.

     In December 1995, the Company sold 4,250,000 shares of Series B Preferred
     Stock at $25.00 per share and concurrently sold $260,000 of unsecured
     investment grade rated notes through underwritten public offerings
     (collectively referred to as the "December 1995 Offerings"). Net proceeds
     of $358,900 were used to prepay cross-collateralized mortgage obligations
     outstanding and certain fees to Prudential Insurance Company.

     On May 11, 1995, the Company sold 5,750,000 shares of Common Stock for
     $19.75 per share through an underwritten public offering. Concurrently, the
     Company sold 506,329 shares of Common Stock at $19.75 per share and
     2,000,000 shares of Class B Common Stock at $25.00 per share to a limited
     number of institutional investors (collectively referred to as the
     "Concurrent Offerings"). Net proceeds from the underwritten public offering
     and the Concurrent Offerings

<PAGE>   13

     totaling $167,119 were used to repay indebtedness incurred by the Company
     to fund acquisition and development activities.

     Preferred Stock

     The 1,000,000 shares of Series A Cumulative, Convertible, Preferred Stock
     rank senior to the Company's Common Stock as to dividends and liquidation
     rights. The shares are convertible at $20.50 per share into 1,219,512
     shares of the Company's Common Stock and have voting rights equal to
     1,219,512 shares of Common Stock. The dividend per share, calculated on the
     converted numbers of shares, is equal to the Common Stock dividend,
     provided that the dividend yield on the preferred stock may not be less
     than the initial dividend rate thereof. With respect to the payment of
     dividends and amounts upon liquidation, the Series A Preferred Stock ranks
     on parity with the Company's Series B Preferred Stock and ranks senior to
     the Company's Common Stock, Class B Common Stock and Class C Common Stock.

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

     Class B Common Stock

     The Class B Common Stock ranks on parity with the Company's Common Stock
     and Class C Common Stock with respect to dividends. In the event of any
     liquidation of the Company, the holders of Class B Common Stock rank on
     parity with Class C Common Stock and are entitled to receive prior and in
     preference to holders of Common Stock, an amount per share of Class B
     Common Stock equal to all declared but unpaid dividends for each share of
     Class B Common Stock.

     Class C Common Stock

     The Class C Common Stock ranks on parity with the Company's Common Stock
     and Class B Common Stock with respect to dividends. In the event of any
     liquidation of the Company, the holders of Class C Common Stock rank on
     parity with Class B Common Stock and are entitled to receive prior to and
     in preference to the holders of Common Stock, an amount per share of Class
     C Common Stock equal to all declared but unpaid dividends for each share of
     Class C Common Stock.

     Ownership Limitations

     To maintain its qualification as a REIT, not more than 50 percent in value
     of the outstanding shares of the Company may be owned, directly or
     indirectly, by five or fewer individuals (defined to include certain
     entities), applying certain constructive ownership rules. To help ensure
     that the Company will not fail this test, the Company's Charter provides
     for certain restrictions on the transfer of the Common Stock to prevent
     further concentration of stock ownership. Moreover, to evidence compliance
     with these requirements, the Company must maintain records that disclose
     the actual ownership of its outstanding Common Stock and will demand
     written statements each year from the record holders of designated
     percentages of its Common Stock disclosing the actual owners of such Common
     Stock.

7.   EMPLOYEE STOCK PLANS

     Employee Stock Incentive Pool

     At the time of the Company's initial public offering, the Senior Officers
     of the Company reserved a portion of their Operating Partnership Units for
     awards to personnel employed by the Company at the time of the IPO. The
     units are converted into Common Stock at the time of grant. The aggregate
     amount of interests reserved for the Employee Stock Incentive Pool is
     equivalent to 69,990 shares of Common Stock. The participants in the Pool
     were granted 25% of their respective allocations on January 1, 1994,
     January 1, 1995, and January 1, 1996, resulting in a total of 75% of
     potential stock awards having been granted. The remainder of the employees'
     allocations will be granted on January 1, 1997, provided that the employee
     has not previously terminated employment.

<PAGE>   14

     The initial deferred compensation of $1,320 pertaining to the 69,990 units
     was recorded on the books of the Company, and is being amortized annually
     based on the vesting period. The initial value was calculated by converting
     the 69,990 partnership units into shares of Common Stock and multiplying by
     the Company's Common Stock price on the date of the grant.

     Non-cash compensation expense for the awards is measured by the number of
     Operating Partnership units converted multiplied by the Company's Common
     Stock price on the date of conversion.

     For the nine month period ended September 30, 1996, non-cash compensation
     expense recognized for such awards was $291.

     Stock Incentive Plan

     The Company has adopted the Spieker Properties, Inc. 1993 Stock Incentive
     Plan (the "Stock Incentive Plan") to provide incentives to attract and
     retain officers and key employees. Under the Plan as amended on May 22,
     1996, the number of shares available for option grant is 9.9% of the number
     of shares of Common Stock outstanding as of the last day of the immediately
     preceding quarter, reduced by the number of shares of Common Stock reserved
     for issuance under other stock compensation plans of the Company. As of
     September 30, 1996, options on approximately 1,529,750 shares of Common
     Stock at an exercise price of $20.50 per share, and 200,000 shares of
     Common Stock at an exercise price of $25.00 per share have been granted
     under the Plan. To date, 75,250 share options have been exercised and
     747,000 share options are currently exercisable.

     Directors' Stock Option Plan

     On May 22, 1996, the Directors' Stock Option Plan was amended to increase
     the number of shares of Common Stock subject to automatic annual option
     grants to Independent Directors from 500 shares to 4,000 shares, to
     increase the number of shares of Common Stock available for option grant
     from 30,000 to 150,000, and to provide that, in the event of a Change in
     Control, outstanding options will become fully vested.

8.   ACQUISITIONS

     The Company acquired the following properties during the nine month period
     ended September 30, 1996:

<TABLE>
<CAPTION>

                                                                           Total Rentable
     Project Name                       Location         Property Type(1)    Square Feet    Date Acquired     Initial Cost
     ------------                       --------         ----------------    -----------    -------------     ------------
<S>                                     <C>                       <C>        <C>                <C>             <C>     
     Bayside Corporate Center           Foster City, CA           O             84,925          Jan '96         $ 10,000
     Benicia Industrial                 Benicia, CA               I          1,822,788          Jan '96         $ 41,100
     Everett Industrial                 Everett, WA               I            150,154          Mar '96         $  7,400
     Carmel Valley Centre I & II        San Diego, CA             O            106,921          Apr '96         $ 14,000
     2290 North First Street            San Jose, CA              O             75,680          May '96         $  6,000
     Everett 526                        Everett, WA               I             97,523          May '96         $  4,300
     Port of Oakland                    Oakland, CA               I            199,733          May '96         $  6,800
     Doolittle Drive                    San Leandro, CA           I            113,196          May '96         $  3,500
     10700 Northup Building             Bellevue, WA              O             55,854          May '96         $  4,600
     Dove Street                        Newport Beach, CA         O             78,052          June '96        $  7,900
     Fidelity Plaza                     Sacramento, CA            O             77,453          July '96        $  5,000
     The City                           Orange, CA                O            595,056          July '96        $ 34,400
     MacArthur Park                     Santa Ana, CA             I             93,158          Aug '96         $  6,200
     Fairchild Corporate Center         Irvine, CA                O            104,973          Aug '96         $ 10,100
     Stadium Plaza                      Anaheim, CA               I            769,003          Aug '96         $ 38,400
</TABLE>

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

     Additionally, the Company acquired two mortgages secured by two office
     properties in San Jose, California for the initial cost of $14,333.


<PAGE>   15

9.   DEVELOPMENTS

     During the nine month period ended September 30, 1996, the Company acquired
     five parcels of land for development. The total initial cost of these five
     parcels was $7,243.

<PAGE>   16
     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
     RESULTS OF OPERATIONS

     Statements contained in this Item 2, "Management's Discussion and Analysis
     of Financial Conditions and Results of Operations," and elsewhere in this
     Quarterly Report on Form 10-Q which are not historical facts may be
     forward-looking statements. Such statements are subject to certain risks
     and uncertainties which could cause actual results to differ materially
     from those projected, including, but not limited to, those risks and
     special considerations set forth in the Company's other SEC filings.
     Readers are cautioned not to place undue reliance on these forward-looking
     statements which speak only as of the date hereof. The Company undertakes
     no obligation to publicly release any revisions to these forward-looking
     statements to reflect events or circumstances after the date hereof or to
     reflect the occurrence of unanticipated events.

     RESULTS OF OPERATIONS

     The following comparison is of the Company's consolidated operations for
     the three and nine month periods ended September 30, 1996, as compared to
     the corresponding periods ended September 30, 1995.

     Rental revenues for the third quarter of 1996 increased by $12.5 million or
     32.4% to $51.1 million, as compared with $38.6 million for the quarter
     ended September 30, 1995. Of this increase, $3.5 million was generated by
     properties acquired during 1995 (the "1995 Acquisitions"). During 1995, the
     Company invested $164.8 million to acquire properties totaling 2.3 million
     square feet. As used herein, the terms "invested" and "total investment"
     represent the initial purchase price of acquisitions, plus the projected
     cost of certain repositioning capital expenditures anticipated at the time
     of purchase.

     $2.5 million of the rental increase in the third quarter of 1996 was
     generated by property developments (the "Developments"). During the nine
     month period ended September 30, 1996, seven properties totaling 0.9
     million square feet have been completed and added to the Company's
     portfolio of stabilized properties. The total cost of such properties,
     including the estimated cost to complete initial tenant improvements, is
     $63.0 million. The Company also has a current development pipeline
     consisting of eleven properties representing a total projected cost of
     $82.3 million and 1.3 million square feet. Certain of the properties in the
     development pipeline are shell complete and partially occupied. 

     $6.1 million of the rental revenue increase in the third quarter of 1996
     was generated by properties acquired during the nine month period ended
     September 30, 1996. During the first three quarters of 1996, the Company
     acquired properties totaling 3.4 million square feet, net of 1.0 million
     square feet, in two properties acquired, undergoing substantial
     repositioning (the "1996 Acquisitions"). The Company estimates the total
     investment in the 1996 Acquisitions completed as of September 30, 1996,
     will be $227.9 million.

     The remaining $0.4 million of the increase in rental revenues is
     attributable to revenue increases in the properties owned at January 1,
     1995, (the "Core Portfolio"). The revenue increase in the Core Portfolio is
     due to increased rental rates realized on the renewal and re-leasing of
     second-generation space. During the first nine months of 1996, the Company
     completed 470 lease transactions for the renewal or re-leasing of 2.7
     million square feet of second-generation space. On average, the new
     effective rates were 10.8% higher than the expiring rent.

     For the nine month period ended September 30, 1996, rental revenues
     increased by $31.6 million or 28.6% to $142.1 million, as compared to
     $110.5 million for the corresponding period ended September 30, 1995. The
     increase was attributable to revenues in the amount of $14.0 million from
     the 1995 Acquisitions, $5.3 million from the Developments, $10.0 million
     from the 1996 Acquisitions, and $2.3 million from the Core Portfolio.

     As a result of the 1995 Acquisitions, 1996 Acquisitions, and the
     Developments, the Company's rentable square footage increased by 4.8
     million square feet or 30.8% to 20.4 million square feet on September 30,
     1996, from 15.6 million on September 30, 1995. At September 30, 1996, the
     portfolio of stabilized properties was 94.9% leased. By property type, the
     office portfolio was 93.4% leased, the industrial portfolio was 95.8%
     leased and the retail portfolio was 93.7% leased.

     Interest and other income increased by $0.7 million and $1.5 million or
     175.0% and 100.0% for the three and nine month periods ended September 30,
     1996, respectively, as compared to the same periods in 1995. The net
     increases in interest and other income were primarily due to $0.5 million
     and $1.3 million in interest income earned on investments in mortgages
     during the three and nine month periods ended September 30, 1996,
     respectively.

     Rental expenses increased by $3.4 million or 54.8% for the three month
     period ended September 30, 1996, as compared with the same period in 1995.
     Real estate taxes increased by $0.9 million or 29.0% for the three month
     period ended September 30, 1996, as compared with the same period in 1995.
     The overall increase in rental expenses and real estate

<PAGE>   17

     taxes (collectively referred to as "property operating expenses") is
     primarily a result of the growth in the total square footage of the
     Company's portfolio of properties. On a percentage basis, property
     operating expenses were 26.6% and 24.1% of rental revenues for the quarters
     ended September 30, 1996, and September 30, 1995, respectively. The total
     increase in property operating expenses is due to a $1.2 million increase
     attributable to the 1995 Acquisitions, a $0.6 million increase attributable
     to the Developments, a $2.1 million increase attributable to the 1996
     Acquisitions, and a $0.4 million increase attributable to the Core
     Portfolio.

     For the nine month period ended September 30, 1996, rental expenses
     increased by $6.8 million or 38.6% to $24.4 million, as compared to $17.6
     million for the corresponding period ended September 30, 1995. Real estate
     taxes increased by $2.5 million or 28.4% to $11.3 million for the nine
     month period ended September 30, 1996, as compared to $8.8 million for the
     corresponding period ended September 30, 1995. The total increase in
     property operating expenses is due to a $4.6 million increase attributable
     to the 1995 Acquisitions, a $1.5 million increase attributable to the
     Developments, a $0.3 million increase attributable to the Core Portfolio,
     and a $2.9 million increase attributable to the 1996 Acquisitions. On a
     percentage basis, property operating expenses were 25.1% and 23.9% of
     rental revenues for the nine month periods ended September 30, 1996 and
     1995, respectively.

     Interest expense decreased by $0.9 million or 8.4% to $9.8 million for the
     three month period ended September 30, 1996, from $10.7 million for the
     same period in 1995. For the nine month period ended September 30, 1996,
     interest expense decreased by $9.3 million or 26.1% to $26.4 million, from
     $35.7 million for the same period in 1995. The decrease in interest expense
     is due to the elimination of the amortization of debt discount as a result
     of the December 1995 refinancing of $347 million of secured mortgage debt
     (the "Prudential Debt"). The Prudential Debt was prepaid with the net
     proceeds from the concurrent underwritten public offering of $260.0 million
     of investment grade rated unsecured notes and 4.25 million shares of Series
     B Preferred Stock. The prepayment of the Prudential Debt resulted in the
     write-off of approximately $28.1 million in debt discount which was
     previously being amortized over the remaining term of the loans and
     recorded as interest expense.

     Depreciation and amortization expenses increased by $1.9 million or 23.5%
     and $4.0 million or 17.1% for the three and nine month periods ended
     September 30, 1996, respectively, as compared with the same periods in 1995
     due to the 1995 and 1996 Acquisitions and the Developments.

     General and administrative expenses and other expenses increased by $0.6
     and $1.2 million for the three and nine month periods ended September 30,
     1996, respectively, as compared with the same periods in 1995, primarily as
     a result of the increased number of employees. On a percentage basis,
     general and administrative expenses were 5.3% and 5.3% of rental revenues
     for the three and nine month periods ended September 30, 1996,
     respectively, as compared with 5.4% and 5.7%, respectively, for the same
     periods in 1995.

     Net income before minority interests and disposal of real estate properties
     increased by $7.3 million or 83.0% to $16.1 million for the three month
     period ended September 30, 1996, from $8.8 million for the same period in
     1995. For the nine month period ended September 30, 1996, net income before
     minority interests and disposal of real estate properties increased by
     $28.0 million or 138.6% to $48.2 million from the amount for the same
     period in 1995. The increase in net income is principally due to (i) the
     increase in income from the 1995 and 1996 Acquisitions, the Developments
     and the increased property operating income (rental revenue less property
     operating expenses) generated by the Core Portfolio as a result of 
     increased rental rates realized on the renewal and re-leasing of
     second-generation space and (ii) the decrease in interest expense.

     LIQUIDITY AND CAPITAL RESOURCES

     For the nine month period ended September 30, 1996, cash provided by
     operating activities increased by $32.8 million or 55.8% to $91.6 million,
     as compared to $58.8 million for the same period in 1995. The increase is
     primarily due to the increase in net income resulting from the 1995 and
     1996 Acquisitions, the Developments, increased property operating income
     generated by the Core Portfolio and a decrease in interest expense. Cash
     used for investing activities increased by $138.6 million or 105.5% to
     $270.0 million for the first nine months of 1996, as compared to $131.4
     million for the same period in 1995. The increase is attributable to the
     Company's ongoing acquisition and development of suburban office,
     industrial and retail properties. Cash provided by financing activities
     increased by $123.5 million or 171.8% to $195.4 million for the first nine
     months of 1996, as compared to $71.9 million for the same period in 1995.
     During the first nine months of 1996, cash provided by financing activities
     consisted, primarily, of $152.2 million in net proceeds from the sale of
     Common Stock and Class C Common Stock, and $248.1 million in net proceeds
     from the issuance of unsecured notes, which was offset by net payments of
     $78.7 million on the line of credit

<PAGE>   18

     and net payments of $65.4 million on mortgage loans. Additionally, payments
     of distributions increased by $22.3 million to $60.5 million for the first
     nine months of 1996, as compared with $38.2 million for the same period in
     1995. The increase is due to the greater number of shares outstanding and a
     2.4% increase in the distribution rate.
        
     The principal sources of funding for acquisitions, development, expansion
     and renovation of the properties are an unsecured line of credit,
     construction and permanent secured debt financings, public and privately
     placed equity financing, public unsecured debt financing, the issuance of
     partnership units in the Operating Partnership, and cash flow provided by
     operations. The Company believes that its liquidity and capital resources
     are adequate to continue to meet liquidity requirements for the foreseeable
     future.
        
     At September 30, 1996, the Company had no material commitments for capital
     expenditures related to the renewal or re-leasing of space. The Company
     believes that the cash provided by operations and its line of credit
     provide sufficient sources of liquidity to fund capital expenditure costs
     associated with the renewal or re-leasing of space.
        
     The Company has a $150.0 million unsecured line of credit facility (the
     "Facility") with interest at London Interbank Offered Rates ("LIBOR") plus
     1.25%. The Facility matures in November 1997 and the Company has an option
     to extend the Facility for one year upon payment of a fee equal to 0.12% of
     the total Facility. The Facility also includes a fee on average unused
     funds, which varies between 0.125% and 0.20% based on the average
     outstanding balance. At September 30, 1996, the Company had $39.0 million
     outstanding under the Facility.
        
     In December 1995, the Company issued in a public offering $260.0 million of
     unsecured investment grade rated notes (the "Unsecured Notes") and the
     Company issued $106.3 million of Series B Preferred Stock (the offering of
     the Unsecured Notes and the offering of the Series B Preferred Stock are
     collectively referred to as the "December Offerings"). The Unsecured Notes
     were issued in three tranches as follows: $100.0 million of 6.65% notes due
     December 15, 2000, priced to yield 6.683%, $50.0 million of 6.80% notes due
     December 15, 2001, priced to yield 6.823%, and $110.0 million of 6.95%
     notes due December 15, 2002, priced at par. The Series B Preferred Stock
     was issued at $25.00 per share and a dividend yield of 9.45%.

     The proceeds from the December Offerings of $358.9 million were used to
     prepay a cross-collateralized mortgage obligation outstanding to Prudential
     Insurance Company. The amount paid to Prudential Insurance Company included
     the repayment of principal, interest due through December 10, 1995, and a
     negotiated prepayment penalty of $11.8 million. The prepayment resulted in
     the unencumbrance of 55 of the Company's properties.

     On January 19, 1996, the Company issued $100.0 million of investment grade
     rated unsecured notes. The notes carry an interest rate of 6.90%, were
     priced to yield 6.97%, and mature on January 15, 2004. Net proceeds of
     $98.9 million were used to repay borrowings on the unsecured line of
     credit. In June 1996, the Company commenced a $200.0 million medium-term
     note program. In July 1996, the Company issued $100.0 million of 8.00%
     medium-term notes due July 19, 2005 and $50.0 million of 7.58% medium-term
     notes due December 17, 2001 (the "July Notes"). The net proceeds of $149.2
     million from the issuance of the July Notes were used to repay borrowings
     on the line of credit and to fund ongoing acquisition and development
     projects. As of September 30, 1996, $50.0 million of debt securities
     remained available for issuance under the medium-term note program.

     As of September 30, 1996, the Company had $510.0 million of investment
     grade rated unsecured notes outstanding. The notes have interest rates
     which vary from 6.65% to 8.00%, and various maturity dates which range
     from 2000 to 2005.

     In addition to the Unsecured Notes and the Facility, the Company has $47.3
     million of secured indebtedness (the "Mortgages") at September 30, 1996.
     The Mortgages have interest rates varying from 7.5% to 13.75% and maturity
     dates from 1996 to 2012. The Mortgages are secured by a first or second
     deed of trust on the related properties and generally require monthly
     principal and interest payments. The Company also has $12.2 million of
     assessment bonds outstanding as of September 30, 1996.

     On February 28, 1996, the Company concurrently sold 4,887,500 shares of
     Common Stock (including 637,500 shares sold pursuant to the underwriters'
     exercise of their over-allotment option) through an underwritten public
     offering and directly placed 1,176,470 shares of Class C Common Stock and
     135,000 shares of Common Stock with a limited number of institutional
     investors at $25.50 per share. The net proceeds of $151.3 million were used
     primarily to repay floating rate debt.

     In January 1996, the Company filed a shelf registration statement (the
     "January 1996 Shelf Registration Statement") with the SEC to register
     1,407,005 shares of Common Stock issuable by the Company upon conversion of
     shares of

<PAGE>   19

     Series A Preferred Stock and upon conversion of partnership units in the
     Operating Partnership by certain holders thereof. The January 1996 Shelf
     Registration Statement was declared effective by the SEC on February 28,
     1996. The Company will receive no proceeds from the sale of Common Stock
     under the January 1996 Shelf Registration Statement.

     In May 1996, the Company and the Operating Partnership filed a shelf
     registration statement (the "May 1996 Shelf Registration Statement") with
     the SEC which registered $250.0 million of equity securities of the Company
     and $250.0 million of debt securities of the Operating Partnership. The May
     1996 Shelf Registration Statement was declared effective by the SEC on June
     20, 1996.

     After completion of the issuance of the July Notes, the Company has the
     capacity pursuant to the October 1995 Shelf Registration Statement and the
     May 1996 Shelf Registration Statement to issue up to approximately $392.0
     million in equity securities and the Operating Partnership has the capacity
     pursuant to the October 1995 Shelf Registration Statement and the May 1996
     Shelf Registration Statement to issue up to $240.0 million in debt
     securities (including the $50.0 million of medium-term notes available
     under the medium-term note program).

     In August 1996, the Company filed a shelf registration statement (the
     "August 1996 Shelf Registration Statement") with the SEC to register 50,000
     shares of Common Stock issuable by the Company upon exchange of partnership
     units in the Operating Partnership by certain holders thereof. In October
     1996, the Company filed a registration statement (the "October 1996 Shelf
     Registration Statement") with the SEC to register 245,738 shares of Common
     Stock issuable by the Company upon exchange of partnership units in the
     Operating Partnership by certain holders thereof. The Company will receive
     no proceeds from the sale of Common Stock under the August 1996 Shelf
     Registration Statement and the October 1996 Shelf Registration Statement.

     FUNDS FROM OPERATIONS

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

     Pursuant to the National Association of Real Estate Investment Trusts
     ("NAREIT") revised definition of Funds from Operations, beginning with the
     quarter ended March 31, 1996, the Company calculated Funds from Operations
     by adjusting net income before minority interest, calculated in accordance
     with GAAP, for certain non-cash items, principally the amortization and
     depreciation of real property and for dividends on shares and other equity
     interests that are not convertible into shares of Common Stock. The Company
     does not add back the depreciation of corporate items, such as computers or
     furniture and fixtures, or the amortization of deferred financing costs or
     debt discount. However, the Company includes an adjustment for the
     straight-lining of rent under GAAP, as management believes this presents a
     more meaningful picture of rental income over the reporting period.

     Funds from Operations per share is calculated based on weighted average
     shares equivalents outstanding, assuming the conversion of all shares of
     Series A Preferred Stock, Class B Common Stock, Class C Common Stock and
     all partnership units in the Operating Partnership into shares of Common
     Stock. Assuming such conversion, the average number of shares outstanding
     for the three and nine month periods ended September 30, 1996, are
     43,497,648 and 42,049,446, respectively, and 37,027,543 and 32,601,038 for
     the same periods in 1995.

<PAGE>   20


                       STATEMENT OF FUNDS FROM OPERATIONS
                      (based on the new NAREIT definition)
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                             Three Months Ended                 Nine Months Ended
                                                             ------------------                 -----------------
                                                      September 30,     September 30,    September 30,     September 30,
                                                      -------------     -------------    -------------     -------------
                                                           1996              1995             1996              1995
                                                           ----              ----             ----              ----

<S>                                                      <C>               <C>              <C>               <C>      
     Net income before minority interest    
       and disposal of real estate properties            $  16,096         $   8,811        $  48,207         $  20,242
     Add:

     Depreciation and Amortization                           9,938             8,081           27,135            23,275

     Dividends on Series B Preferred Stock                  (2,510)                -           (7,530)                -

     Other, net                                                116               107              201               247

     Straight-lined rent                                       252               (12)             307              (275)
                                                         ---------         ---------        ---------         ---------

         Funds from Operations                           $  23,892         $  16,987        $  68,320         $  43,489
                                                         =========         =========        =========         =========
</TABLE>

     Because of the impact of the December Offerings on the Company's balance
     sheet and result of operations, the Company believes that an adjusted
     calculation of 1995 Funds from Operations, based on the new NAREIT
     definition and reflecting the effect of the December Offerings and the
     conversion of the secured line of credit into an unsecured facility, as if
     such transactions had occurred on January 1, 1995, provides a helpful basis
     for analyzing the impact of the new NAREIT definition. The table below sets
     forth the Company's calculation of Funds from Operations for the three and
     nine month periods ended September 30, 1995, based on the new NAREIT
     definition and adjusted to reflect the December Offerings and the
     conversion of the secured line of credit into an unsecured facility.

                       STATEMENT OF FUNDS FROM OPERATIONS
                       1995 New NAREIT Definition Adjusted
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                                 Three Months Ended     Nine Months Ended
                                                                                 ------------------     -----------------
                                                                                 September 30, 1995    September 30, 1995
                                                                                 ------------------    ------------------

<S>                                                                                   <C>                   <C>     
     Funds From Operations - New Definition                                           $ 16,987              $ 43,489

     Add:

        Amortization of Discount and Deferred Financing Fees                             2,443                 7,417
                                                                                      --------              --------

     Funds From Operations - Old Definition                                             19,430                50,906

     Less:

         Restructuring of Secured Debt (1)                                                (958)               (2,874)

         Amortization of Discount and Deferred Financing Fees (2)                         (299)                 (985)
                                                                                      --------              --------

     Funds From Operations - Pro Forma New Definition                                 $ 18,173              $ 47,047
                                                                                      ========              ========
</TABLE>



(1)  Adjustment reflects interest cost of unsecured notes and dividend cost of
     Series B Preferred Stock less previously recorded cash interest cost on
     $347 million of prepaid debt.

(2)  Adjustment reflects amortization of discount and deferred financing fees
     added back in calculating FFO based on old NAREIT definition less
     amortization on the $347 million of prepaid debt and the previous secured
     line of credit and adding in amortization on the new unsecured line of
     credit.

<PAGE>   21


     PART II. OTHER INFORMATION

     Item 2.      Changes in Securities

     None.

     Item 6.      Exhibits and Reports on Form 8-K

     (A) Exhibits

        The exhibits listed below are filed or incorporated by reference as part
of this quarterly report on Form 10-Q.

     Exhibit Number
     --------------

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

         27.1 Article 5 Financial Data Schedule

     (B) Reports on Form 8-K

              The Company filed a current report on Form 8-K dated June 18,
         1996, containing combined statements of revenue and certain expenses
         for the six acquired properties and two investments in mortgages.

              The Company filed a current report on Form 8-K dated July 15,
         1996, containing combined statements of revenue and certain expenses
         for the City Portfolio.

<PAGE>   22



                                   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 by the
undersigned there unto duly authorized.




                                           Spieker Properties, Inc.
                                           (Registrant)




Dated: November 8, 1996                    /s/ ELKE STRUNKA
       -----------------------             -----------------------------
                                           Elke Strunka,
                                           Vice President
                                           Principal Accounting Officer


<PAGE>   23
                                 EXHIBIT INDEX

     Exhibit Number                                                Page Number
     --------------                                                ------------

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

         27.1 Article 5 Financial Data Schedule