<PAGE>
================================================================================

                       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 March 31, 2002

                                       OR

  [_]      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 1-12566

                               ------------------

                               G & L REALTY CORP.
             (Exact name of Registrant as specified in its charter)

                Maryland                                      95-4449388
    (State or other jurisdiction of                        (I.R.S. Employer
     incorporation or organization)                       Identification No.)

          439 N. Bedford Drive
       Beverly Hills, California                                 90210
    (Address of Principal Executive                            (Zip Code)
                Offices)

       Registrant's telephone number, including area code: (310) 273-9930

                                ----------------

         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 __.
                                             ---

================================================================================

<PAGE>

                                G&L REALTY CORP.

                                     INDEX

<TABLE>
<CAPTION>
                                                                                                         Page
Part I             Financial Information                                                                Number
<S>                <C>                                                                                 <C>
      Item 1       Financial Statements
                         Condensed Consolidated Balance Sheets as of March 31, 2002 (unaudited)
                           and December 31, 2001...................................................        3
                         Condensed Consolidated Statements of Operations for the Three Month
                           Periods Ended March 31, 2002 and 2001 (unaudited).......................        4
                         Condensed Consolidated Statements of Cash Flows for the Three Month
                           Periods Ended March 31, 2002 and 2001 (unaudited).......................     5 - 6
                        Notes to Condensed Consolidated Financial Statements (unaudited)...........     7 - 17
      Item 2            Management's Discussion and Analysis of Financial Condition and Results of
                           Operations..............................................................    19 - 25
      Item 3            Quantitative and Qualitative Disclosures About Market Risk                        26
Part II              Other Information
      Item 1            Legal Proceedings..........................................................       27
      Item 2            Changes in Securities......................................................       27
      Item 3            Defaults Upon Senior Securities............................................       27
      Item 4            Submission of Matters to a Vote of Security Holders........................       27
      Item 5            Other Information..........................................................       27
      Item 6            Exhibits and Reports on Form 8-K...........................................    27 - 30

Signature                  ........................................................................       31
</TABLE>

                                      Page 2

<PAGE>


                                G&L REALTY CORP.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                March 31,        December 31,
                                                                                  2002               2001
                                                                            -------------------------------------
<S>                                                                                 <C>                <C>
                                                                                (Unaudited)
                                                ASSETS
                                                ------
Rental properties (Note 3):
      Land                                                                          $28,933            $28,599
      Buildings and improvements, net                                               143,761            137,410
                                                                                   --------           --------
          Total rental properties                                                   172,694            166,009
Cash and cash equivalents                                                             2,726              2,039
Restricted cash                                                                       4,089              4,252
Tenant rent and reimbursements receivable, net                                        6,256              6,178
Unbilled rent receivable, net                                                         2,682              2,661
Other receivables, net                                                                   10                 19
Mortgage loans and notes receivable, net                                              2,017             11,976
Investments in unconsolidated affiliates (Note 6)                                     3,293              4,581
Deferred charges and other assets, net (Note 4)                                       6,709              7,309
                                                                                   --------           --------
   TOTAL ASSETS                                                                    $200,476           $205,024
                                                                                   ========           ========

                                 LIABILITIES AND STOCKHOLDERS' EQUITY
                                 ------------------------------------
LIABILITIES:
      Notes payable                                                                $190,843           $192,698
      Accounts payable and other liabilities                                          6,025             10,313
      Distributions payable                                                             131                270
      Tenant security deposits                                                        1,513              1,561
                                                                                -----------          ---------
          Total liabilities                                                         198,512            204,842

Commitments and Contingencies (Note 8)                                                   --                 --

Minority interest in consolidated affiliates                                         (1,043)              (719)
Minority interest in Operating Partnership                                               --                 --

STOCKHOLDERS' EQUITY (Note 5):
      Preferred shares - $.01 par value, 10,000,000 shares authorized,
        liquidation preference of $25.00 per share
        . Series A Preferred - 1,495,000 shares issued and outstanding as of
          March 31, 2002 and December 31, 2001                                           15                 15
        . Series B Preferred - 1,380,000 shares issued and outstanding
          as of March 31, 2002 and December 31, 2001                                     14                 14
      Common shares - $.01 par value, 50,000,000 shares authorized, 710,199
        shares issued and outstanding as of March 31, 2002 and
        December 31, 2001                                                                 7                  7
      Additional paid-in capital                                                     40,827             40,827
      Distributions in excess of net income                                         (32,616)           (34,722)
      Notes receivable from stockholders                                             (5,240)            (5,240)
                                                                                   --------           --------
          Total stockholders' equity                                                  3,007                901
                                                                                   --------           --------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $200,476           $205,024
                                                                                   ========           ========
</TABLE>

      See accompanying notes to Condensed Consolidated Financial Statements

                                      Page 3

<PAGE>

                                G&L REALTY CORP.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                      For the Three Month
                                                                    Periods Ended March 31,
                                                                     2002            2001
                                                                -------------------------------
<S>                                                                    <C>             <C>
REVENUES:
   Rent                                                                $7,091          $6,581
   Patient revenues                                                     5,724           5,008
   Tenant reimbursements                                                  563             409
   Parking                                                                357             346
   Interest and loan fees (Note 9)                                      1,800             510
   Lease termination income                                                --           2,613
   Other income                                                           379             437
                                                                --------------    -------------
       Total revenues                                                  15,914          15,904
                                                                --------------    -------------

EXPENSES:
   Property operations                                                  2,161           1,958
    Skilled nursing operations                                          5,098           4,530
   Depreciation and amortization                                        1,574           1,473
   Provision for doubtful accounts, notes and bonds receivable            209             219
   Interest                                                             4,609           3,298
   General and administrative                                             789             848
                                                                --------------    -------------
       Total expenses                                                  14,440          12,326
                                                                --------------    -------------
 Income from operations before minority interests and equity
   in earnings (loss) of unconsolidated affiliates                      1,474           3,578

Equity in earnings (loss) of unconsolidated affiliates                     89             (83)
Minority interest in consolidated affiliates                             (125)            (62)
                                                                --------------    -------------

Income from operations before discontinued operations                   1,438           3,433
Discontinued operations (Notes 2 and 9)
   Gain from discontinued operations (Including
      gain on disposal of $2,458)                                       2,458              --
                                                                --------------    -------------
Net income                                                              3,896           3,433
Dividends on preferred stock                                           (1,790)         (1,790)
                                                                --------------    -------------
Net income available to common stockholders                            $2,106        $  1,643
                                                                ==============    =============
</TABLE>

      See accompanying notes to Condensed Consolidated Financial Statements

                                      Page 4

<PAGE>

                                G&L REALTY CORP.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                 Three Months Ended March 31,
                                                                                   2002                2001
                                                                             ------------------------------------
                                                                                          (Unaudited)
<S>                                                                                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                      $3,896             $3,433
   Adjustments to reconcile net income to net cash provided by
       Operating activities:

           Depreciation and amortization                                            1,574              1,473
           Amortization of deferred loan costs                                        320                170
           Net gain on sale of assets                                              (2,458)                --
           Loss on change in value of interest rate hedge                             628                 --
           Minority interests                                                         125                 62
           Equity in (income) loss of unconsolidated affiliates                       (89)                83
           Provision for doubtful accounts and notes receivables                      209                219
           Unbilled rent receivable, net                                             (131)               (76)
           (Increase) decrease in:
                Other receivables                                                       9                 (2)
                Tenant rent and reimbursements receivable                            (265)             1,650
                Prepaid expense and other assets                                     (141)              (258)
                Accrued interest and loan fees receivable                            (152)                18
           Increase (decrease) in:
                Accounts payable and other liabilities                             (4,305)            (1,047)
                Tenant security deposits                                              (22)               173
                                                                             -----------------   ----------------
Net cash (used in) provided by operating activities                                  (802)             5,898
                                                                             -----------------   ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of real estate assets                                                          4,839                 --
Additions to rental properties                                                       (286)              (487)
Pre-acquisition costs, net                                                            (42)               (10)
Construction in progress                                                               --                171
Leasing commissions                                                                   (44)              (178)
Investment in mortgage loans and notes receivable                                    (310)              (300)
Contributions to unconsolidated affiliates                                            (46)              (155)
Distributions from unconsolidated affiliates                                        1,092                 --
Principal payments received from mortgage loans and notes receivable                9,130                128
                                                                             -----------------   ----------------
Net cash provided by (used in) investing activities                                14,333               (831)
                                                                             -----------------   ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable proceeds                                                                 --              5,100
Repayment of notes payable                                                        (11,752)            (5,813)
Payment of deferred loan costs                                                        187               (208)
Decrease (increase) in restricted cash                                                657               (656)
Minority interest equity contribution                                                  25                 --
Distributions                                                                      (1,961)            (2,263)
                                                                             -----------------   ----------------
Net cash used in financing activities                                             (12,844)            (3,840)
                                                                             -----------------   ----------------
                                                                                                     Continued...
</TABLE>

      See accompanying notes to Condensed Consolidated Financial Statements

                                      Page 5

<PAGE>

                                  G&L REALTY CORP.

                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (In thousands)

<TABLE>
<CAPTION>
                                                                                 Three Months Ended March 31,
                                                                                 2002                 2001
                                                                            -------------------------------------
                                                                                       (Unaudited)
<S>                                                                                <C>               <C>

NET INCREASE IN CASH AND CASH EQUIVALENTS                                             687             1,227
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                      2,039             2,791
                                                                            -----------------   -----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                           $2,726            $4,018
                                                                            =================   =================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest                                           $4,506            $3,126
                                                                            =================   =================
NONCASH INVESTING AND FINANCING ACTIVITIES

Distributions declared not yet paid                                                $   --            $  370
                                                                            =================   =================
Preferred distributions due to minority partner                                    $   44            $   15
                                                                            =================   =================
Transfers from projects under development to building                              $   --            $  374
                                                                            =================   =================

Acquisition of property and other assets through assumption of notes payable:
                   Restricted cash                                           $         597
                   Land                                                              1,390
                   Buildings and improvements                                       10,760
                   Deferred charges and other assets                                   463
                   Note receivable                                                  (1,269)
                                                                            =================
                   Total                                                     $      11,941
                                                                            =================

Assumption of note payable for property and other assets:
                   Note payable                                              $      11,941
                                                                            =================

                                                                                      Concluded.
</TABLE>

      See accompanying notes to Condensed Consolidated Financial Statements

                                      Page 6

<PAGE>

                                G&L REALTY CORP.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.  GENERAL

      G&L Realty Corp. (the "Company") was formed as a Maryland corporation to
continue the ownership, management, acquisition and development activities
previously conducted by G&L Development, a California general partnership, the
Company's predecessor. All of the Company's assets are held by, and all of its
operations are conducted through, the following entities:

<TABLE>
<S>               <C>
                  G&L Realty Partnership, L.P., a Delaware limited partnership
                      (the "Operating Partnership")
                  G&L Senior Care Partnership, L.P., a Delaware limited partnership
                      (the "Senior Care Partnership")
                  G&L Realty Financing Partnership II, L.P., a Delaware limited partnership
                      (the "Realty Financing Partnership")*
                  G&L Medical Partnership, L.P., a Delaware limited partnership
                      (the "Medical Partnership")*
                  G&L Gardens, LLC, an Arizona limited liability company
                       ("Maryland Gardens")*
`                 435 North Roxbury Drive, Ltd., a California limited partnership
                      (the "Roxbury Partnership")
                  GL/PHP, LLC, a Delaware limited liability company ("GL/PHP")*
                  G&L Hampden, LLC, a Delaware limited liability company ("Hampden")*
                  G&L Valencia, LLC, a California limited liability company ("Valencia")
                  G&L Tustin, LLC, a California limited liability company ("Tustin")*
                  G&L Holy Cross, LLC, a California limited liability company ("Holy Cross")*
                  G&L Burbank, LLC, a California limited liability company ("Burbank")*
                  GLH Pacific Gardens, LLC, a California limited liability company ("Pacific Gardens")
                  G&L Hoquiam, LLC, a California limited liability company ("Hoquiam")
                  G&L Lyons, LLC, a California limited liability company ("Lyon")
                  G&L Coronado (1998), LLC, a California limited liability company ("Coronado")
                  GLH Tarzana, LLC, a California limited liability company ("Tarzana")
                  G&L Heritage Care, LLC, a Delaware limited liability company ("Heritage")
                  G&L Massachusetts, LLC, a Delaware limited liability company ("Massachusetts")
                  G&L Aspen, LLC, a California limited liability company ("Aspen")
                  G&L Tustin II, LLC, a Delaware limited liability company ("Tustin II")
                  G&L Tustin III, LLC, a Delaware limited liability company ("Tustin III")
                  G&L St. Thomas More, Inc., a Maryland corporation ("St. Thomas More")
</TABLE>

      * The Realty Financing Partnership, the Medical Partnership, Maryland
        Gardens, GL/PHP, Hampden, Tustin, Holy Cross, and Burbank are herein
        collectively referred to as the "Financing Entities" and individually as
        the "Financing Entity."

      The Company, as the sole general partner and as owner of an approximately
95% ownership interest, controls the Operating Partnership and the Senior Care
Partnership. The Company controls the Financing Entities through wholly owned
subsidiaries incorporated either in the State of Delaware or the State of
California (collectively, the "Subsidiaries" and individually, a "Subsidiary").
Each Subsidiary either (i) owns, as sole general partner or sole managing
member, a 1% ownership interest in its related Financing Entity or (ii) owns no
interest and acts as the manager of the Financing Entity. The remaining 99%
ownership interest in each Financing Entity, which is owned 1% by a Subsidiary,
is owned by the Operating Partnership, acting as sole limited partner or member.
Financing Entities in which a Subsidiary owns no interest are 100% owned by the
Operating Partnership.

                                      Page 7

<PAGE>

                                G&L REALTY CORP.

         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                  (Unaudited)

      References in these consolidated financial statements to the Company
include its operations, assets and liabilities including the operations, assets
and liabilities of the Operating Partnership, the Senior Care Partnership, the
Subsidiaries, the Financing Entities, the Roxbury Partnership (in which the
Operating Partnership owns a 32.81% partnership interest and is the sole general
partner), Pacific Gardens (in which the Operating Partnership owns a 93%
membership interest and is a co-managing member), Tarzana (in which the
Operating Partnership owns a 85% membership interest and is a co-managing
member) and Hoquiam, Lyons, Coronado, Heritage, Massachusetts, Aspen, Tustin II,
Tustin III and St. Thomas More (in which the Operating Partnership or the Senior
Care Partnership own a 100% interest).

      In addition to the Subsidiaries, the Company also owns interests in
various unconsolidated affiliates. Although the Company's investment represents
a significant portion of the capital of such unconsolidated affiliates and the
Company exercises influence over the activities of these entities, the Company
does not have the requisite level of voting control to include the assets,
liabilities and operating activities of these entities in the consolidated
financial statements of the Company. The entities in which the Company has
unconsolidated financial interests are as follows:

    .    GLN Capital Co., LLC ("GLN") is a Delaware limited liability company
         formed in 1996. GLN is owned 49.9% by the Operating Partnership and
         50.1% by an affiliate of Nomura Asset Capital Corp. ("Nomura"). GLN was
         formed to fund loans to the senior care industry. In October 2001, the
         Operating Partnership transferred its interest in GLN to the Senior
         Care Partnership.

    .    G&L Grabel, San Pedro, LLC ("San Pedro") is a California limited
         liability company formed on March 10, 1998 by the Company through the
         Operating Partnership, and Gary Grabel, an experienced medical office
         building ("MOB") manager. The Company and Gary Grabel contributed to
         San Pedro 84% and 16% of the equity, respectively. However, the initial
         ownership interests of the parties will be adjusted to 50% as each
         partner receives a return of its initial capital contribution plus a
         preferred return on their initial contribution. San Pedro was formed
         for the purpose of acquiring three MOBs located at 1360 West 6th Street
         in San Pedro, California.

    .    G&L Penasquitos, LLC ("Penasquitos LLC") is a California limited
         liability company, formed by the Company on April 24, 1998, through
         the Operating Partnership, and Parsons House, LLC, a California
         limited liability company ("Parsons"). The Company and Parsons
         contributed to Penasquitos LLC 75% and 25% of the equity,
         respectively. However, the initial ownership interests of the parties
         will be adjusted to 50% as each partner receives a return of its
         initial capital contribution plus preferred distributions equal to 15%
         per annum on their capital contribution. Penasquitos LLC was formed
         for the purpose of acquiring and converting a building located in
         Rancho Penasquitos, California into an assisted living facility. In
         October 2001, the Operating Partnership transferred its interest in
         Penasquitos, LLC to the Senior Care Partnership.

    .    G&L Penasquitos, Inc. ("Penasquitos Inc.") is a California corporation
         formed on April 21, 1998 by the Company, through the Operating
         Partnership, and Parsons House, LLC, a California limited
         liability company. The Company owns 75% of the total equity in
         Penasquitos Inc. in the form of non-voting preferred stock. Parsons
         holds 25% of the total equity and all of the voting common stock.
         Penasquitos Inc. was formed for the purpose of operating an assisted
         living facility in Rancho Penasquitos, California. In October 2001,
         the Operating Partnership transferred its interest in Penasquitos,
         Inc. to the Senior Care Partnership.

    .    GLH Pacific Gardens Corp. ("Pacific Gardens Corp.") is a California
         corporation formed on June 25, 1998 by the Company, through the
         Operating Partnership, and ASL Santa Monica, Inc., a California
         corporation ("ASL"). The Company owns 93% of the total equity in
         Pacific Gardens Corp. in the form of non-voting preferred stock. ASL
         holds 7% of the total equity in the form of common stock. Pacific
         Gardens Corp. was formed for the purpose of operating an assisted
         living facility located in Santa Monica, California, which was
         purchased by the Company. Since July 1, 1999, Pacific Gardens Corp.
         has not operated the assisted living facility and a wholly owned
         subsidiary of ASL assumed all of the assets and liabilities of Pacific
         Gardens Corp. in order to operate the facility.

    .    G&L Parsons on Eagle Run, LLC ("Eagle Run") is a California limited
         liability company, formed on December 29, 1998, through the Operating
         Partnership and Parsons. The Company and Parsons each contributed 50%
         of the total equity in Eagle Run. Eagle Run was formed for the purpose
         of acquiring a vacant piece of land in Omaha, Nebraska upon which the
         members developed an assisted living facility. In October 2001, the
         Operating Partnership transferred its interest in Eagle Run to the
         Senior Care Partnership.

                                      Page 8

<PAGE>

                                G&L REALTY CORP.

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (Unaudited)

    .    G&L Parsons on Eagle Run, Inc. ("Eagle Run Inc.") is a California
         corporation formed on December 20, 1998 by the Company, through the
         Operating Partnership, and Parsons. The Company and Parsons each own
         50% of Eagle Run Inc. Eagle Run Inc. was formed for the purpose of
         operating an assisted living facility in Omaha, Nebraska on the land
         acquired by Eagle Run. In October 2001, the Operating Partnership
         transferred its interest in Eagle Run, Inc. to the Senior Care
         Partnership.

    .    Lakeview Associates, LLC ("Lakeview") is a California limited liability
         company, formed on September 2, 1999 by the Company, through the
         Operating Partnership and D.D.&F. ("Prestige"), an Oregon general
         partnership. The Company and Prestige each contributed 50% of the
         equity of Lakeview. The Company contributed land and construction in
         progress in exchange for 50% of the equity of Lakeview and two notes
         totaling $1.4 million. Prestige contributed $250,000 for a 50% interest
         in Lakeview. Lakeview was formed for the purpose of developing a
         two-story, 80 unit, 92 bed assisted living facility in Yorba Linda,
         California. In October 2001, the Operating Partnership transferred its
         interest in Lakeview to the Senior Care Partnership.

    .    Tustin Heritage Park, LLC ("Heritage Park") is a California limited
         liability company in which the Company has a 25% equity ownership
         interest. In June 1999, the Company sold a vacant piece of land in
         Tustin to Heritage Park. In exchange, the Company received $75,000 in
         cash, a $425,000 first deed of trust and a 25% equity ownership
         interest in Heritage Park. In September 2000, the first deed of trust
         was increased to $675,000 to reflect development fees and an extension
         of the note. Heritage Park intends to develop a 53-unit senior
         apartment residence on the land. In October 2001, the Operating
         Partnership transferred its interest in Heritage Park to the Senior
         Care Partnership.

    .    Pacific Park ("Pacific Park") is an approximately 23,000 square foot
         MOB located in Aliso Viejo, California in which the Company, through
         the Operating Partnership, holds a 50% ownership interest. The building
         was developed by the Company in 1999 and opened in January 2000.
         Triad/SCP Partners, LLC., a company owned by a former officer of the
         Company who developed the property, operates the building and holds the
         remaining 50% interest. A major not-for-profit medical provider
         occupies 16,950 square feet (approximately 73.4%) of the rentable area
         of the building.

GLN, San Pedro, Penasquitos Inc., Penasquitos LLC, Pacific Gardens Corp., Eagle
Run, Eagle Run, Inc., Lakeview, Heritage Park and Pacific Park are herein
collectively referred to as the "Unconsolidated Affiliates" and individually as
"Unconsolidated Affiliate".

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Business - The Company is a self-managed Real Estate Investment Trust
("REIT") that acquires, develops, manages, finances and leases healthcare
properties. The Company's business currently consists of investments in
healthcare properties and in debt obligations secured by healthcare properties.
Investments in healthcare property consist of acquisitions, made either directly
or through joint ventures, in medical office buildings ("MOBs"), skilled nursing
facilities ("SNFs") or assisted living facilities ("ALFs"). The Company's
lending activities consist of providing short-term secured loans to facilitate
third party acquisitions of healthcare properties.

         Basis of Presentation - The accompanying condensed consolidated
financial statements include the accounts of the Company and its Subsidiaries.
The interests in the Roxbury Partnership, Pacific Gardens, Tarzana, the
Operating Partnership and the Senior Care Partnership that are not owned by the
Company, have been reflected as minority interests in the Operating Partnership.
All significant intercompany accounts and transactions have been eliminated in
consolidation.

         The information presented as of and for the three-month period ended
March 31, 2002 and 2001 has not been audited by independent accountants, but
includes all adjustments (consisting of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair presentation of the results
for such periods. The results of operations for the three months ended March 31,
2002 are not necessarily indicative of results that might be expected for the
full fiscal year.

         Certain information and footnote disclosures normally included in
annual financial statements have been omitted. The Company believes that the
disclosures included in these financial statements are adequate for a fair

                                      Page 9

<PAGE>

                                 G&L REALTY CORP.

         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (Unaudited)

presentation and conform to reporting requirements established by the Securities
and Exchange Commission ("SEC"). These condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and the notes included in the Company's annual report on Form 10-K as
filed with the SEC.

         Recent accounting pronouncements-- In June 1998, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 133 "Accounting for Derivative Instruments and Hedging Activities," ("SFAS
133"). SFAS 133, as amended, is effective for fiscal years beginning after June
15, 2000 and requires all derivatives to be recorded on the balance sheet at
fair value as either assets or liabilities depending on the rights or
obligations under the contracts. SFAS 133 also establishes new accounting
methodologies for the following three classifications of hedges: fair value,
cash flow and net investment in foreign operations. The Company's adoption of
SFAS 133 on January 1, 2001 did not have a material impact on the Company's
financial position or results of operations.

     In November 2001, the Company purchased an interest rate cap for $0.9
million to protect against an increase in the one month LIBOR rate on a $35
million variable rate loan the Company obtained in October 2001. The interest
rate cap is for a term of five years and protects the Company on a specific
portion of the loan, which decreases over the term of the cap, on any increase
in the one month LIBOR rate above 4.25% per annum. SFAS 133 requires the Company
to record the interest rate cap on the balance sheet at fair value and to record
changes in the fair value of the interest rate cap in the statement of
operations. Based on a decline in the fair value of the interest rate cap as of
March 31, 2002 from December 31, 2001, the Company recorded a non-cash increase
in interest expense of $0.6 million in the statement of operations for the three
months ended March 31, 2002. This follows a $0.5 million non-cash increase in
the fair value of the interest rate cap for the final quarter of 2001.

         In July 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets."  SFAS No. 141 was effective immediately and SFAS No. 142 was effective
in January 2002. SFAS No. 141 prohibits the use of pooling-of-interests method,
requiring all business combinations to be accounted for using the purchase
method of accounting. SFAS No.  142 discontinues the practice of amortizing
goodwill and other intangible assets and requires the periodic review of
intangible assets for impairment. The Company's adoption of these new standards
is not expected to have a material impact on the Company's financial position or
results of operations.

         In October 2001, the Financial Accounting Standards Board issued SFAS
No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets," ("SFAS
144"). SFAS 144 addresses financial accounting and reporting for the disposal of
long-lived assets. SFAS 144 became effective for financial statements issued for
fiscal years beginning after December 15, 2001 and interim periods within those
fiscal years. The Company does not expect the pronouncement to have a material
impact on its financial position or results of operations.

                                      Page 10

<PAGE>

                                 G&L REALTY CORP.

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (Unaudited)

3.  BUILDINGS AND IMPROVEMENTS

         Buildings and improvements consist of the following:

<TABLE>
<CAPTION>
                                                                     March 31,          December 31,
                                                                       2002                 2001
                                                                -----------------------------------------
                                                                              (in thousands)
<S>                                                                     <C>                  <C>
Buildings and improvements....................................          $162,387             $155,774
Tenant improvements...........................................            11,787               11,983
Furniture, fixtures and equipment.............................             4,571                3,526
                                                                  -------------------   -----------------
                                                                         178,745              171,283
Less accumulated depreciation and amortization................           (34,984)             (33,873)
                                                                  -------------------   -----------------
       Total..................................................          $143,761             $137,410
                                                                  ===================   =================
</TABLE>

      Rental property is recorded at cost less accumulated depreciation.
Depreciation is computed on a straight-line basis over the estimated useful
lives of the assets as follows:

Buildings and improvements ....................      40 years
Tenant improvements ...........................      Life of lease
Furniture, fixtures and equipment .............      5 years

      Expenditures for maintenance and repairs are charged to operations as
incurred. Significant renovations and all external costs directly related to
acquisitions are capitalized.

4.  DEFERRED CHARGES AND OTHER ASSETS

..........Deferred charges and other assets consist of the following:

<TABLE>
<CAPTION>
                                                                      March 31,          December 31,
                                                                        2002                 2001
                                                                 ----------------------------------------
                                                                              (in thousands)
<S>                                                                         <C>                 <C>
Deferred loan costs..........................................               $6,777              $7,467
Pre-acquisition costs........................................                  164                 257
Leasing commissions..........................................                1,918               1,974
Prepaid expense and other assets.............................                  592                 483
                                                                  -------------------   -----------------
                                                                             9,451              10,181
Less accumulated amortization................................               (2,742)             (2,872)
                                                                  -------------------   -----------------
     Total...................................................               $6,709              $7,309
                                                                  ===================   =================
</TABLE>

                                      Page 11

<PAGE>

                                 G&L REALTY CORP.

         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (Unaudited)

5.  STOCKHOLDERS' EQUITY

         Distributions in excess of net income-- The Company has elected to be
treated, for federal income tax purposes, as a REIT. As such, the Company is
required to distribute annually, in the form of distributions to its
stockholders, at least 90% of its taxable income. In reporting periods in which
distributions exceed net income, stockholders' equity will be reduced by the
distributions in excess of net income in such period and will be increased by
the excess of net income over distributions in reporting periods in which net
income exceeds distributions. For tax reporting purposes, a portion of the
dividends declared represents a return of capital. The following table
reconciles net income and distributions in excess of net income for the three
months ended March 31, 2002 and for the year ended December 31, 2001:

<TABLE>
<CAPTION>
                                                                          March 31,         December 31,
                                                                            2002                2001
                                                                      ----------------------------------
                                                                                   (in thousands)
<S>                                                                          <C>             <C>
Distributions in excess of net income at beginning of period...              $(34,722)       $(32,602)
Net income during period.......................................                 3,896           6,130
Less: Distributions declared...................................                (1,790)         (8,250)
                                                                        ----------------  --------------
Distributions in excess of net income..........................              $(32,616)       $(34,722)
                                                                        ================  ==============
</TABLE>

                                      Page 12

<PAGE>

                              G&L REALTY CORP.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               (Unaudited)

6.   INVESTMENTS IN UNCONSOLIDATED AFFILIATES

The Company has investments in various unconsolidated affiliates as described in
Note 1. The following table provides a summary of the Company's investment in
each of these entities as of March 31, 2002. (In thousands).

<TABLE>
<CAPTION>
                                                    San      Penasquitos    Penasquitos     Heritage    Pacific    Eagle Run,
                                       GLN         Pedro        LLC             Inc.          Park        Park        Inc.
                                 ---------------------------------------------------------------------------------------------
<S>                                <C>          <C>          <C>            <C>            <C>          <C>        <C>
Opening balance at beginning
     of period...................  $     807    $    1,351   $     (358)    $        20    $      --    $    --    $    (501)
Equity in earnings (loss) of
     affiliates..................          5            22          (14)             --           --         33           31
Cash contributions...............          1            --           15              --           --         --           --
Cash distributions...............       (743)           --           --              --           --         --         (313)
                                   -----------  -----------  ------------   ------------   ----------   ---------  -----------
Equity, before inter-company
     adjustments.................         70         1,373         (357)             20           --         33         (783)
                                   -----------  -----------  ------------   ------------   ----------   ---------  -----------
Intercompany transactions:
Receivable (payable), net........         67            62          291             (20)          14       (360)          31
                                   -----------  -----------  ------------   ------------   ----------   ---------  -----------
Investment in unconsolidated
     affiliates..................  $     137    $    1,435   $      (66)    $        --    $      14    $  (327)   $    (752)
                                   ===========  ===========  ============   ============   ==========   =========  ===========

<CAPTION>
                                   Eagle Run    Lakeview       Total
                                 --------------------------------------
<S>                                <C>          <C>          <C>
Opening balance at beginning
     of period...................  $     375    $    398     $  2,092
Equity in earnings (loss) of
     affiliates..................         13          (1)          89
Cash contributions...............         --          31           47
Cash distributions...............         --          --       (1,056)
                                   ----------   ----------   ----------
Equity, before inter-company             388         428        1,172
     adjustments.................  ----------   ----------   ----------

Intercompany transactions:
Receivable (payable), net........         48       1,988        2,121
                                   ----------   ----------   ----------
Investment in unconsolidated       $     436    $  2,416     $  3,293
     affiliates..................  ==========   ==========   ==========
</TABLE>

                                      Page 13

<PAGE>

                              G&L REALTY CORP.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                (Unaudited)

      Following is a summary of the condensed financial information of each of
the unconsolidated affiliates as of and for the three months ended March 31,
2002. (In thousands).

<TABLE>
<CAPTION>
                                                    San       Penasquitos    Penasquitos      Heritage     Pacific     Eagle Run
                                       GLN         Pedro         LLC             Inc.           Park         Park         Inc.
                                 ------------------------------------------------------------------------------------------------
<S>                                <C>          <C>           <C>            <C>             <C>          <C>         <C>
Financial Position:
------------------
     Land........................  $      --    $    2,006    $      641     $        --     $     750    $    822    $      --
     Buildings...................         --         4,227         6,199              --            --       2,964           --
     Notes receivable, net                --            --            --              --            --          --           --
     Other assets................         46           315         1,215              --           238       1,098          374
     Notes payable...............         --        (4,615)       (8,409)             --          (940)     (4,076)          --
     Other liabilities...........         (7)         (743)         (261)            (10)          (48)       (574)      (1,540)
                                   -----------  ------------  ------------   -------------   ----------   ----------  -----------
Net assets.......................  $      39    $    1,190    $     (615)    $       (10)    $      --    $    234    $  (1,166)
                                   ===========  ============  ============   =============   ==========   ==========  ===========

Partner's equity:
----------------
     G&L Realty Partnership, L.P.  $      70    $    1,373    $     (357)    $        20     $      --    $     33    $    (783)
     Others......................        (31)         (183)         (258)            (30)           --         201         (383)
                                   -----------  ------------  ------------   -------------   ----------   ----------  -----------
Total equity ....................  $      39    $    1,190    $     (615)    $       (10)    $      --    $    234    $  (1,166)
                                   ===========  ============  ============   =============   ==========   ==========  ===========

Operations:
----------
     Revenues....................  $       9    $      303    $      227     $        --     $      --    $    202    $     893
     Expenses....................         --          (246)         (256)             --            --        (136)        (832)
                                   -----------  ------------  ------------   -------------   ----------   ----------  -----------
Net income (loss) ...............  $       9    $       57    $      (29)    $        --     $      --    $     66    $      61
                                   ===========  ============  ============   =============   ==========   ==========  ===========

Allocation of net (loss) income:
-------------------------------
     G&L Realty Partnership, L.P.  $       5    $       22    $      (14)    $        --     $      --    $     33    $      31
     Others......................          4            35           (15)             --            --          33           30
                                   -----------  ------------  ------------   -------------   ----------   ----------  -----------
Net income (loss)................  $       9    $       57    $      (29)    $        --     $      --    $     66    $      61
                                   ===========  ============  ============   =============   ==========   ==========  ===========

<CAPTION>
                                   Eagle Run     Lakeview       Total
                                 ---------------------------------------
<S>                                <C>           <C>          <C>
Financial Position:
------------------
     Land........................  $   1,191     $    947     $  6,357
     Buildings...................      4,665        7,461       25,516
     Notes receivable, net                --           --           --
     Other assets................      1,460           48        4,794
     Notes payable...............     (7,025)      (6,920)     (31,985)
     Other liabilities...........       (118)        (984)      (4,285)
                                   -----------   ----------   ----------
Net assets.......................  $     173     $    552     $    397
                                   ===========   ==========   ==========

Partner's equity:
----------------
     G&L Realty Partnership, L.P.  $     388     $    428     $  1,172
     Others......................       (215)         124         (775)
                                   -----------   ----------   ----------
Total equity ....................  $     173     $    552     $    397
                                   ===========   ==========   ==========

Operations:
----------
     Revenues....................  $     279     $     30     $  1,943
     Expenses....................  $    (252)    $    (32)    $ (1,754)
                                   -----------   ----------   ----------
Net income (loss) ...............  $      27     $     (2)    $    189
                                   ===========   ==========   ==========

Allocation of net (loss) income:
-------------------------------
     G&L Realty Partnership, L.P.  $      13     $     (1)    $     89
     Others......................         14           (1)         100
                                   -----------   ----------   ----------
Net income (loss)................  $      27     $     (2)    $    189
                                   ===========   ==========   ==========
</TABLE>

                                      Page 14

<PAGE>

                                G&L REALTY CORP.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

7.   SEGMENT INFORMATION

     The Company's business currently consists of the following segments:

     .   Medical office buildings - These investments consist of 24 high
         quality MOBs, two retail facilities and one parking facility totaling
         approximately 875,000 square feet and all located in Southern
         California. These properties are owned either directly by the Company
         or indirectly through joint ventures.

     .   Skilled nursing facilities - These investments consist of eight SNFs
         and one senior apartment complex which is located adjacent to the SNF
         in Phoenix, Arizona. The SNFs are located in Hampden, Massachusetts;
         Phoenix, Arizona; Hoquiam, Washington; Hyattsville, Maryland and Chico
         and Paso Robles, California. All of the SNFs and the apartment
         complex are owned 100% by the Company. In addition, the Company
         currently holds the operating license in three of the eight SNFs. On
         March 15, 2000, the Company obtained licenses from the Commonwealth of
         Massachusetts to operate the three SNFs owned by the Company in
         Hampden, Massachusetts. The Company then entered into a management
         agreement with a third-party company to manage the facility. As a
         result, all of the assets, liabilities, revenues and expenses of these
         SNFs are reflected in the condensed consolidated financial statements
         of the Company and the segment information provided below. The
         Company also held the license to operate its SNF located in Phoenix,
         Arizona until February 2002. On April 1, 2000, the Company terminated
         its lease with the operator of this SNF and entered into a management
         agreement with a new manager. For the nine months ended December 31,
         2000, the assets, liabilities, revenues and expenses of this SNF were
         also included in the condensed consolidated financial statements of
         the Company. On January 1, 2001, the Company entered into a new lease
         with a new manager which entitles the Company to monthly lease
         payments. As a result of this new lease, the assets, liabilities,
         revenues and expenses of this SNF are no longer included in the
         consolidated financial statements of the Company. The Company will be
         required to pay the applicable corporate income tax on any net income
         produced by the SNFs located in Hampden, Massachusetts, although the
         Company's REIT status will not be affected. While the Company does
         not intend to hold these operating licenses for the long term, the
         Company believes it is currently in the best interests to own the
         licenses to operate these facilities.

     .   Assisted living facilities - These investments consist of five ALFs,
         all owned through joint ventures. The five ALFs contain over 350 units
         that are typically occupied by residents who require a less intense
         level of care in comparison to the SNFs. The Company's joint venture
         partner in each of these ALFs operates the facility.

     .   Debt obligations - These investments consist of short-term secured and
         unsecured loans made to third parties to facilitate the acquisition of
         healthcare facilities. As of March 31, 2002, the Company had eight
         loans outstanding with a net book value of $2.0 million.

      The tables on the following pages reconcile the Company's income and
expense activity for the three months ended March 31, 2002 and 2001 and balance
sheet data as of March 31, 2002.

                                      Page 15

<PAGE>

                                G&L REALTY CORP.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

             2002 Reconciliation of Reportable Segment Information
                   For the three months ended March 31, 2002

<TABLE>
<CAPTION>
                                               Medical         Skilled        Assisted        Debt
                                               Office          Nursing         Living      Obligations     Other        Total
                                               ------          -------         ------      -----------     -----        -----
                                                                                 (In thousands)
<S>                                           <C>              <C>             <C>          <C>           <C>         <C>
Revenue:
   Rents, tenant reimb. and parking ......    $    6,626       $      659      $   726      $       --    $     --    $   8,011
   Patient revenues.......................            --            5,724           --              --          --        5,724
   Interest and loan fees.................            13                9           --           1,752          26        1,800
   Gain on sale of assets.................            --            2,458           --              --          --        2,458
   Other income...........................           360                3           --              --          16          379
                                            -------------    -------------   ----------   -------------   ---------   ---------
      Total revenues......................         6,999            8,853          726           1,752          42       18,372
                                            -------------    -------------   ----------   -------------   ---------   ---------
Expenses:
   Property operations....................         1,865              235           39              22          --        2,161
   Skilled nursing operations.............            --            5,098           --              --          --        5,098
   Depreciation and amortization..........         1,096              339          128              --          11        1,574
   Interest...............................         2,155              454          380             150       1,470        4,609
   Provision for doubtful accounts and
     notes receivable.....................             3              184           --              22          --          209
   General and administrative.............            --               --           --              --         789          789
                                            -------------    -------------   ----------   -------------   ---------   ---------
      Total expenses......................         5,119            6,310          547             194       2,270       14,440
                                            -------------    -------------   ----------   -------------   ---------   ---------
Income (loss) from operations.............         1,880            2,543          179           1,558      (2,228)       3,932
Equity in earnings (loss) of
   unconsolidated affiliates..............            55               --           29               5                       89
                                            -------------    -------------   ----------   -------------   ---------   ---------
Income (loss) from operations before
   minority interests.....................    $    1,935       $    2,543      $   208      $    1,563    $ (2,228)   $   4,021
                                            =============    =============   ==========   =============   =========   =========
</TABLE>

              2001 Reconciliation of Reportable Segment Information
                    For the three months ended March 31, 2001

<TABLE>
<CAPTION>
                                               Medical         Skilled        Assisted        Debt
                                               Office          Nursing         Living      Obligations     Other        Total
                                               ------          --------        ------      -----------     -----        -----
                                                                                (In thousands)
<S>                                           <C>              <C>             <C>          <C>           <C>           <C>
Revenue:
   Rents, tenant reimb. and parking .......   $    6,229       $      419      $   688      $       --    $     --      $ 7,336
   Patient revenues........................           --            5,008           --              --          --        5,008
   Interest and loan fees..................           44                3           --             408          55          510
   Lease termination income................        2,613               --           --              --          --        2,613
   Other income............................          105              318           --              --          14          437
                                            -------------    -------------   ----------   -------------   ---------   ----------
      Total revenues.......................        8,991            5,748          688             408          69       15,904
                                            -------------    -------------   ----------   -------------   ---------   ----------
Expenses:
   Property operations.....................        1,807               76           43              32          --        1,958
   Skilled nursing operations..............           --            4,530           --              --          --        4,530
   Depreciation and amortization...........        1,079              253          128              --          13        1,473
   Provision for doubtful accounts and
     notes receivable......................           38              177           --               4          --          219
   Interest................................        2,242              478          373             202           3        3,298
   General and administrative..............           --               --           --              --         848          848
                                            -------------    -------------   ----------   -------------   ---------   ----------
      Total expenses.......................        5,166            5,514          544             238         864       12,326
                                            -------------    -------------   ----------   -------------   ---------   ----------
Income (loss) from operations..............        3,825              234          144             170        (795)       3,578
Equity in earnings (loss) of
   unconsolidated affiliates...............           52               --         (135)             --          --          (83)
                                            -------------    -------------   ----------   -------------   ---------   ----------
Income (loss) from operations before
   minority interests......................   $    3,877       $      234      $     9      $      170    $   (795)     $ 3,495
                                            =============    =============   ==========   =============   =========   ==========
</TABLE>

                                      Page 16

<PAGE>

                                G&L REALTY CORP.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (Unaudited)

             2002 Reconciliation of Reportable Segment Information
                              As of March 31, 2002

<TABLE>
<CAPTION>
                                               Medical         Skilled        Assisted        Debt
                                               Office          Nursing         Living      Obligations     Other        Total
                                               ------          -------         ------      -----------     -----        -----
                                                                                (In thousands)
<S>                                           <C>             <C>            <C>           <C>            <C>         <C>
Rental properties.........................    $ 111,383       $   39,927     $  21,194     $        --    $    190    $ 172,694
Mortgage loans and notes receivable, net..           --              304            --           1,713          --        2,017
Cash and cash equivalents.................          130              211           141              --       2,244        2,726
Restricted cash ..........................        2,684            1,237            33              --         135        4,089
Tenant rent and reimb. receivable, net....          549            3,961         1,506              --         240        6,256
Unbilled rent receivable, net.............        2,682               --            --              --          --        2,682
Other receivables, net....................           (7)              --            --              --          17           10
Investment in unconsolidated affiliates...        1,108               --         2,048             137          --        3,293
Deferred loan costs, net..................        3,803              772           559              --          --        5,134
Pre-acquisition costs.....................           --               --            --               1         163          164
Deferred lease costs, net.................          819               --            --              --          --          819
Prepaid expense and other ................          214              335            43              --          --          592
   Total assets...........................    $ 123,365        $  46,747      $ 25,524      $    1,851    $  2,989    $ 200,476
</TABLE>

8.   COMMITMENTS AND CONTINGENCIES

      Neither the Company, the Operating Partnership, the Financing Entities,
the Subsidiaries, Maryland Gardens, the Roxbury Partnership, Valencia, Pacific
Gardens, Hoquiam, Lyons, Coronado, Tarzana, Heritage, Massachusetts, Aspen, the
Unconsolidated Affiliates nor any of the assets within their portfolios of MOBs,
parking facilities, and retail space (the "Properties") is currently a party to
any material litigation, except as discussed below.

      In February 2000, the Operating Partnership filed a declaratory relief
action in the New Jersey State Court seeking a determination that LaSalle
National Bank ("LaSalle") did not have any rights against certain assets held by
the Operating Partnership. In December 2001, the Operating Partnership entered a
settlement agreement with LaSalle whereby it would pay LaSalle $1.1 million and
assign certain claims in full satisfaction of any amounts owed by the Operating
Partnership to LaSalle. The Operating Partnership paid the $1.1 million to
LaSalle in January 2002.

      In November 1999, Landmark Healthcare Facilities, LLC ("Landmark") filed a
lawsuit against Valencia, a subsidiary of the Company, entitled Landmark
Healthcare Facilities, LLC v. G&L Valencia, LLC, case number 816391 in the
Superior Court of California, County of Orange, claiming that Landmark is
entitled to approximately $600,000 plus interest under an agreement for the
development of an MOB in Valencia, California. In December 1999, the Company
filed a counter suit to recover approximately $400,000 plus interest that was
already paid under the development agreement and for a judgment and declaration
that all of Landmark's rights, title and interest in Valencia have been
terminated or assigned to the Company. On July 5, 2001, the court issued a
ruling in favor of the Company in an amount in excess of $900,000. In January
2002, the Company accepted a settlement offer for $310,000 to be paid off over
10 months.

        In January 2001, the Company settled a lawsuit with Cigna Healthcare,
Inc and Cigna Healthcare of California ("Cigna") and received a settlement of
$4.1 million. The settlement ended litigation against Cigna for delinquent rent
, future rent and other amounts owed under a lease at the Company's MOB located
in Irwindale, California. At the time of the settlement the total delinquent
rent was approximately $1.5 million. The Company recorded lease termination
income of $2.6 million in the first quarter of 2001 for the remainder of the
proceeds.

                                      Page 17

<PAGE>

                                G&L REALTY CORP.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (Unaudited)

      There are a number of stockholder class actions pending against the
Company and its directors that arose out of the proposal by Daniel M. Gottlieb,
the Chief Executive Officer of the Company, and Steven D. Lebowitz, the
President of the Company, to acquire all of the outstanding shares of the
Company's common stock not then owned by them. The first suit, Lukoff v. G & L
Realty Corp. et al., case number BC 241251, was filed in the Superior Court for
the State of California, County of Los Angeles, on December 4, 2000. A second
suit, Abrons v. G & L Realty Corp. et al., case number 24-C-00-006109, was filed
in the Circuit Court for Baltimore City, Maryland, on December 14, 2000. This
suit was voluntarily dismissed without prejudice on June 7, 2001, and re-filed
in the Superior Court for the State of California, County of Los Angeles, case
number BC 251479, on May 31, 2001. Morse v. G & L Realty Corp. et al., case
number 221719-V, was filed in the Circuit Court for Montgomery County, Maryland,
on May 17, 2001. Another suit, Harbor Finance Partners v. Daniel M. Gottlieb et
al., case number BC 251593, was filed in the Superior Court for the State of
California, County of Los Angeles, on June 1, 2001. In addition, on April 5,
2002, four former stockholders filed an individual suit in the Superior Court
for the State of California, County of Los Angeles, Lyle Weisman, et al., v. G&L
Realty Corp., et al., case number BC 27140. All these actions assert claims for
breach of fiduciary duty and seek compensatory damages and other relief. The
Lukoff, Abrons and Harbor Finance actions have been consolidated for all
purposes, and the court has set a trial date of February 3, 2003. The Morse
action has been stayed by stipulation of the parties subject to approval of the
court.

      The Company is the guarantor on a $300,000 letter of credit in favor of
NVHF Affiliates, LLC, a non-profit low-income apartment owner. The Company holds
an unsecured promissory note from NVHF Affiliates, LLC in the amount of
$562,000. The Company does not anticipate having to pay anything under this
letter of credit.

9.   ACQUISITIONS, DISPOSITIONS AND FINANCINGS

     In January 2002, the Company received proceeds of $4.6 million related to
the sale of a 183-bed hospital located in Tustin, California. The Company used
$2.3 million of these proceeds to repay an outstanding loan on the hospital that
was due in January 2002. The Company recorded a $2.5 million net gain on the
sale of assets related to this sale.

     In January 2002, the Company received proceeds of $10.8 million related to
the repayment of two notes receivable from Heritage Care, Inc, the operator of a
SNF located in Hyattsville, Maryland (the "Heritage Care Notes"). The Company
used the proceeds to repay an outstanding loan balance of $8.3 million secured
by the Heritage Care Notes. The Company recognized $1.5 million of non-recurring
interest income in the first quarter as a consequence of the early repayment of
the Heritage Care Notes. Upon repayment of the notes, the Company purchased the
SNF for $14.9 million which included the assumption of a new $11.9 million loan
bearing interest at 7.05% per annum, due in January 2027 and secured by the SNF.

     In January 2002, the Company received cash proceeds of $0.7 million as
return of capital related to its investment in GLN. In May 1997, the Company,
through GLN, funded a secured loan of approximately $1.5 million to a limited
partnership created to acquire a recreational vehicle park in Florida for
approximately $1.2 million. The loan provided for monthly interest only payments
and was in default as of December 31, 2001. In January 2002, the borrower sold
the property for approximately $1.8 million and repaid the outstanding loan
balance due GLN using the net proceeds from the sale.

10.  SUBSEQUENT EVENTS

      On April 10, 2002, the Company acquired, through a joint venture, a
120-bed SNF in Massachusetts for approximately $6.5 million. The Company funded
approximately $1.0 million in order to acquire a 75% interest in this property
through a joint venture with Radius Development Ring, LLC, the operator of the
facility. The Company's interest in the joint venture will be reduced to 50%
after the Company has received a return of its initial capital contribution plus
a preferred return on its initial contribution.

                                      Page 18

<PAGE>

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

      The following discussion should be read in conjunction with the Company's
Unaudited Condensed Consolidated Financial Statements and Notes thereto included
elsewhere in this Quarterly Report on Form 10-Q and the Company's 2001 Annual
Report on Form 10-K as previously filed with the SEC.

      Information contained in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contains forward-looking
statements. These statements can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "anticipate," "estimate" or
"continue" or the negative thereof or other comparable terminology. Any one
factor or combination of factors could cause the Company's actual operating
performance or financial results to differ substantially from those anticipated
by management. Factors influencing the Company's operating performance and
financial results include, but are not limited to, changes in the general
economy, the supply of, and demand for, healthcare related real estate in
markets in which the Company has investments, the availability of financing,
governmental regulations concerning, but not limited to, new construction and
development, the creditworthiness of tenants and borrowers, environmental
issues, healthcare services and government participation in the financing
thereof, and other risks and unforeseen circumstances affecting the Company's
investments which may be discussed elsewhere in this Quarterly Report on Form
10-Q and the Company's 2001 Annual Report on Form 10-K as previously filed with
the SEC.

Results of Operations
---------------------

      Comparison of the Three Month Period Ended March 31, 2002 versus the Three
Month Period Ended March 31, 2001.

      Total revenues increased by $2.5 million, or 16%, from $15.9 million in
the first quarter of 2001, to $18.4 million for the same period in 2002. The
main reason was an increase in interest and loan fee income of approximately
$1.3 million from $0.5 million in the first quarter of 2001, to $1.8 million for
the same period in 2002. This increase was due to fees associated with the early
repayment of the Company's two notes receivable related to a SNF located in
Hyattsville, Maryland.

      Patient revenues relating to the skilled nursing facilities operated by
the Company increased by $0.7 million from $5.0 million in the first quarter of
2001, to $5.7 million for the same period in 2002 due to increased occupancy.

      Rents, tenant reimbursements and parking revenues increased by $0.7
million, or 10%, from $7.3 million in the first quarter of 2001, to $8.0 million
for the same period in 2002. The January 2002 acquisition of a SNF in
Hyattsville, Maryland accounted for $0.3 million of this increase. In addition,
the Company leased its MOB located in Irwindale, California accounting for an
increase of $0.1 million. The MOB was vacant for the same period in 2001.
Increased occupancy and rental rates per the terms of its lease agreements at
the Company's MOB properties accounted for the remaining $0.3 million increase
in rental revenue.

      The Company recognized a net gain on the sale of assets in the amount of
$2.5 million in the first quarter of 2002. The sale, in January 2002, of a
183-bed hospital located in Tustin, California to Pacific Health Corporation,
the operator of the hospital, accounted for the gain.

      The Company recognized lease termination income in the amount of $2.6
million in the first quarter of 2001. This was related to the settlement of a
lawsuit for delinquent rent, future rent and other amounts owed under a lease at
the Company's MOB located in Irwindale, California. The Company sued the tenant,
which had been in default on their rent since December 1999, to recover the
delinquent rent payments as well as all future rent through the end of the lease
which was to expire on November 30, 2004. In January 2001, the Company received
a settlement in the amount of $4.1 million. At the time of the settlement the
total delinquent rent was approximately $1.5 million.

      Total expenses increased by $2.1 million, or 17%, from $12.3 million for
the three months ended March 31, 2001, to $14.4 million for the same period in
2002.

                                      Page 19

<PAGE>

      Increased skilled nursing operating costs at the three Hampden SNFs
accounted for $0.6 million of this increase in total expenses. This increase was
primarily related to rising insurance and staffing costs.

       Property operating expenses increased approximately $0.3 million, or 16%,
from $1.9 million in the first quarter of 2001 to $2.2 million for the same
period in 2002. Increased electricity, insurance and repairs and maintenance
costs at the Company's MOB properties accounted for this increase.

      Depreciation and amortization expense increased $0.1 million, or 7%, from
$1.5 million for the three months ended March 31, 2001, to $1.6 million for the
same period in 2002. This increase was related to the acquisition of the SNF in
Hyattsville, Maryland as well as additions to building improvements and leasing
commissions at the end of 2001 and during 2002.

      Interest expense increased $1.3 million, or 39%, from $3.3 million for the
three months ended March 31, 2001, to $4.6 million for the same period in 2002.
This increase was due to a $0.6 million decrease in the fair market value of the
LIBOR interest rate cap associated with the $35 million loan with GMAC as well
as an increase of $0.8 million in interest expense relating to the same loan.
These increases were offset by a $0.1 million decrease in interest payments on
the Company's variable rate mortgages due to lower interest rates. While the
Company recognized a $0.6 million loss related to the fair market value of its
LIBOR interest rate cap, the value of the LIBOR interest rate cap fluctuates
based upon current prevailing market interest rates. For the year ended December
31, 2001, the Company recognized a $0.5 million gain on the fair market value of
its LIBOR interest rate cap, thus, the net effect on earnings since the
Company's purchase of this financial instrument has been a $0.1 million loss.

      General & administrative costs decreased $0.1 million, or 11%, from $0.9
million for the three months ended March 31, 2001, to $0.8 million for the same
period in 2002. This decrease was attributed to a non-recurring first quarter
2001 write off of acquisition and construction costs related to a discontinued
development project.

      Equity in earnings of unconsolidated affiliates increased $0.2 million for
the three months ended March 31, 2002 compared to the same period in 2001. This
increase was primarily the result of increased occupancy rates at the
Penasquitos and Eagle Run ALFs. Occupancy rates at both facilities are
increasing, thus decreasing the Company's loss associated with these properties.

      Net income increased $0.5 million, from $3.4 million for the three months
ended March 31, 2001 to $3.9 million for the same period in 2002. This increase
was primarily due to the $1.3 million increase in interest and loan fee income,
the $2.5 million gain on sale of assets and the $0.7 million increase in patient
revenues. These increases were offset by the $2.6 million decrease in lease
termination income, and the $1.3 million increase in interest expense.

Liquidity and Capital Resources
-------------------------------

      As of March 31, 2002, the Company's direct investment in net real estate
assets totaled approximately $172.7 million, $3.3 million in joint ventures and
$2.0 million invested in notes receivable. Total debt outstanding as of March
31, 2002 totaled $190.8 million.

      The Company obtains its liquidity from multiple internal and external
sources. Internally, funds are derived from the operation of MOBs, SNFs, ALFs
and senior care lending activities. The MOB Properties produced approximately
$1.9 million of net income before minority interests for the three months ended
March 31, 2002. The MOB Properties contain approximately 875,000 rentable square
feet and, as of March 31, 2002, were approximately 97.0% leased to over 425
tenants with lease terms typically ranging from three to ten years. The ALF and
SNF Properties produced approximately $2.8 million of net income for the three
months ended March 31, 2002. All of the ALF and SNF Properties, except for the
three SNFs located in Hampden, Massachusetts where the Company holds the
operating licenses and has entered into a management agreement with a local
operator, are leased to operators who manage the facilities for the Company. All
of the leases are for five years or less with non-credit tenants. In the event
that the

                                      Page 20

<PAGE>

operators of these facilities are unable to effectively operate the facilities,
the ability of the operators to make rental payments to the Company may become
impaired and the Company may need to commit additional capital to the facilities
in order to keep them operating. If any of these operators experience financial
difficulty, the financial position of the Company and the ability of the Company
to make expected distributions might be adversely affected.

      The Company's principal external sources of capital consist of various
secured loans. As of March 31, 2002, the Company had secured loans outstanding
of approximately $189.8 million and unsecured loans outstanding of approximately
$1 million. The Company is currently negotiating to obtain a line of credit in
the amount of $3 million to $6 million. However, no assurance can be given that
the Company will be successful in obtaining a line of credit. While the Company
will still consider selective property acquisitions that are accretive to
earnings, the Company's primary goal over the next few years is to reduce the
balance on the $35 million loan obtained from GMAC in October 2001. The
Company's ability to reduce the balance on the $35 million loan along with its
ability to make selective acquisitions requires continued access to capital. If
the Company is unable to obtain access to new capital or to refinance its
existing investments, the Company's ability to reduce the balance on the $35
million loan and to expand and even its ability to maintain its current level of
distributions to its stockholders may be impaired. The Company is also
considering selling some of its assets in the future in order to provide
additional liquidity.

      During the first quarter of 2002, the Company received proceeds of $4.6
million related to the sale of a 183-bed hospital located in Tustin, California.
The Company used $2.3 million of these proceeds to repay an outstanding loan on
the hospital. In addition, the Company received proceeds of $10.8 million
related to the repayment of two notes receivable from Heritage Care, Inc. The
Company used the proceeds to repay an outstanding loan balance of $8.3 million
secured by the notes. In January 2002, the Company received $0.7 million as
repayment of a promissory note secured by a recreational vehicle park in
Florida.

         The Company paid monthly dividends of $0.6 million to holders of the
Company's Preferred Stock on the fifteenth day of each month during the first
quarter to holders of record on the first day of each month. The Company
distributed no dividends to holders of the Company's Common Stock during the
first three months of 2002.

      While the Company is highly leveraged, the Company expects to continue
meeting its short-term liquidity requirements through its working capital and
cash flow provided by operations. The Company also expects to maintain
stockholder distributions in accordance with REIT requirements, although no
assurances can be given that the current level of distributions will be
maintained. Long-term liquidity requirements such as refinancing mortgages,
financing acquisitions and financing capital improvements will be accomplished
through long-term borrowings and the sale of assets.

Historical Cash Flows
---------------------

      The Company's net cash from operating activities decreased $6.7 million,
or 114%, from net cash provided of $5.9 million for the three months ended March
31, 2001 to a net use of $0.8 million for the same period in 2002. The decrease
is due primarily to an increase in the change of accounts payable and other
liabilities of $3.3 million over 2000, a $2.5 million increase in net gain on
sale of assets and a $2.0 million increase in the change in tenant rent and
reimbursements receivable over 2000. These were offset by a $0.5 million
increase in net income and a $0.6 million increase in the loss on the change in
fair market value of the Company's LIBOR interest rate cap.

       Net cash from in investing activities increased $15.1 million from a net
use of $0.8 million for the three months ended March 31, 2001 to net cash
provided of $14.3 million for the same period in 2002. The increase was
primarily due to an $9.0 million increase in principal payments received from
mortgage loans

                                      Page 21

<PAGE>

and notes receivable, the $1.1 million increase in distributions from
unconsolidated affiliates and the $4.8 million increase in the sale of real
estate assets.

      Cash flows used in financing activities increased by approximately $9.0
million from $3.8 million for the three months ended March 31, 2001, to $12.8
million for the same period in 2002. The increase is mainly due to a $5.9
million increase in the repayment of notes payable as well as a $5.1 million
decrease in notes payable proceeds. These were offset by a $1.3 million decrease
in the change in restricted cash, a $0.3 million decrease in distributions and a
$0.4 million decrease in deferred loan costs.

                                      Page 22

<PAGE>

New Accounting Pronouncements
-----------------------------

      In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities," ("SFAS 133"). SFAS 133, as amended, is effective for
fiscal years beginning after June 15, 2000 and requires all derivatives to be
recorded on the balance sheet at fair value as either assets or liabilities
depending on the rights or obligations under the contracts. SFAS 133 also
establishes new accounting methodologies for the following three classifications
of hedges: fair value, cash flow and net investment in foreign operations. The
Company's adoption of SFAS 133 on January 1, 2001 did not have a material impact
on the Company's financial position or results of operations.

     In November 2001, the Company purchased an interest rate cap for $0.9
million to protect against an increase in the one month LIBOR rate on a $35
million variable rate loan the Company obtained in October 2001. The interest
rate cap is for a term of five years and protects the Company on a specific
portion of the loan, which decreases over the term of the cap, on any increase
in the one month LIBOR rate above 4.25% per annum. SFAS 133 requires the Company
to record the interest rate cap on the balance sheet at fair value and to record
changes in the fair value of the interest rate cap in the statement of
operations. Based on a decline in the fair value of the interest rate cap as of
March 31, 2002 and December 31, 2001 from December 31, 2001 and the date of
purchase, respectively, the Company recorded a non-cash increase in interest
expense of $0.6 million in the statement of operations for the three months
ended March 31, 2002 and a non-cash decrease in interest expense of $0.5 million
for the year ended December 31, 2001. Thus, the net effect on the Company's
earnings since the purchase of the interest rate cap has been a $0.1 million
loss.

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets."  SFAS No. 141 was effective immediately and SFAS No. 142 was effective
in January 2002. SFAS No. 141 prohibits the use of pooling-of-interests method,
requiring all business combinations to be accounted for using the purchase
method of accounting. SFAS No. 142 discontinues the practice of amortizing
goodwill and other intangible assets and requires the periodic review of
intangible assets for impairment. The Company's adoption of these new standards
is not expected to have a material impact on the Company's financial position or
results of operations.

     In October 2001, the Financial Accounting Standards Board issued SFAS
No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets," ("SFAS
144"). SFAS 144 addresses financial accounting and reporting for the disposal of
long-lived assets. SFAS 144 became effective for financial statements issued for
fiscal years beginning after December 15, 2001 and interim periods within those
fiscal years. The Company does not expect the pronouncement to have a material
impact on its financial position or results of operations.

                                      Page 23

<PAGE>

Recent Developments
-------------------

     Due to the events of September 11 and the general insurance environment,
the Company expects a large increase in the cost of its property, liability and
earthquake insurance upon their renewal in the third quarter of 2002. Depending
on the terms of the lease between the Company and its MOB tenant, in some cases,
the Company is able to pass all of the higher insurance costs onto its MOB
tenants; in other cases, the Company is able to pass only a portion of the
higher costs onto its MOB tenants, with the Company paying the remainder.
Generally, the operators of the Company's SNFs and ALFs pay the insurance costs.
However, the higher insurance costs could affect the ability of the MOB tenants
and SNF and ALF operators to pay the Company rent which could have a material
adverse effect on the Company's financial condition and results of operations.

Funds from Operations
---------------------

      Industry analysts generally consider FFO to be an appropriate measure of
the performance of a REIT. The Company's financial statements use the concept of
FFO as defined by the Board of Governors of the National Association of Real
Estate Investment Trusts ("NAREIT"). FFO is calculated to include the minority
interests' share of income from the Operating Partnership and Senior Care
Partnership since the Operating Partnership and Senior Care Partnership's net
income is allocated proportionately among all owners of Operating Partnership
and Senior Care Partnership units. The combined number of Operating Partnership
and Senior Care Partnership units held by the Company is identical to the number
of outstanding shares of the Company's Common Stock, and owners of Operating
Partnership and Senior Care Partnership units may, at their discretion, convert
their units into shares of Common Stock on a one-for-one basis.

      The Company believes that in order to facilitate a clear understanding of
the operating results of the Company, FFO should be examined in conjunction with
the Company's net income as presented in this Form 10-Q, the Selected Financial
Data and Consolidated Financial Statements and Notes thereto included in the
Company's 2001 Annual Report on Form 10-K and the additional data presented
below. The Company's FFO for the three months ended March 31, 2002 was $1.1
million compared to $0.4 million for the same period in 2001. The table on the
following page presents an analysis of FFO and additional data for the three
month periods ended March 31, 2002 and 2001.

                                      Page 24

<PAGE>

                                G&L REALTY CORP.
                    FUNDS FROM OPERATIONS AND ADDITIONAL DATA
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     For the Three Month
                                                                   Periods Ended March 31,
                                                                    2002           2001
                                                                -------------- -------------
                                                                        (in thousands)
<S>                                                                  <C>             <C>
Funds from Operations/(1)/
--------------------------
Net income ...............................................           $  3,896        $ 3,433
Minority interest in Operating Partnership................                 --             --
                                                                ----------------------------
Income for Operating Partnership..........................              3,896          3,433
Depreciation of real estate assets........................              1,353          1,272
Amortization of deferred lease costs......................                 65             67
Net gain on sale of assets................................            (2,458)             --
Lease termination income..................................                 --        (2,613)
Depreciation from unconsolidated affiliates...............                 99             70
Adjustment for minority interest in consolidated affiliates              (35)           (40)
Dividends on preferred stock..............................            (1,790)        (1,790)
                                                                ----------------------------
Funds from Operations/(1)/................................           $  1,130           $399
                                                                ============================

Additional Data
---------------
Cash flows:
    Operating activities..................................           $  (802)        $ 5,898
    Investing activities..................................             14,333          (831)
    Financing activities..................................           (12,844)        (3,840)

Capital expenditures
--------------------
    Building improvements.................................           $     98        $   215
    Tenant improvements...................................                147            578
    Furniture, fixtures & equipment.......................                 41             67
    Leasing commissions...................................                 44            178

Depreciation and amortization
-----------------------------
    Depreciation of real estate assets....................           $  1,353        $ 1,272
    Depreciation of non-real estate assets................                143            121
    Amortization of deferred lease costs..................                 65             67
    Amortization of deferred licensing costs..............                 13             13
    Amortization of capitalized financing costs...........                307            170

    Accrued rent in excess of billed rent                            $    131        $    76
</TABLE>

/1)/ FFO represents net income (computed in accordance with GAAP,
     consistently applied), excluding gains (or losses) from debt restructuring
     and sales of property, plus depreciation of real property, less preferred
     stock dividends paid to holders of preferred stock during the period and
     after adjustments for consolidated and unconsolidated entities in which the
     Company holds a partial interest. FFO is computed in accordance with the
     definition adopted by NAREIT. FFO should not be considered as an
     alternative to net income or any other indicator developed in compliance
     with GAAP, including measures of liquidity such as cash flows from
     operations, investing and financing activities. FFO is helpful in
     evaluating the performance of a real estate portfolio considering the fact
     that historical cost accounting assumes that the value of real estate
     diminishes predictably over time. FFO is only one of a range of indicators
     which should be considered in determining a company's operating
     performance. The methods of calculating FFO among different companies are
     subject to variation, and FFO therefore may be an invalid measure for
     purposes of comparing companies. Also, the elimination of depreciation and
     gains and losses on sales of property may not be a true indication of an
     entity's ability to recover its investment in properties. The Company
     implemented the new methods of calculating FFO effective as of the
     NAREIT-suggested adoption dates of January 1, 1996 and January 1, 2000,
     respectively.

                                      Page 25

<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       The primary risk inherent in the Company's market sensitive instruments
is the risk of loss resulting from interest rate fluctuations. Approximately 32%
of the Company's notes payable bear interest at a rate indexed to the one-month
LIBOR rate or Prime Rate. The table below provides information as of March 31,
2002 about the Company's long-term debt obligations that are sensitive to
changes in interest rates, including principal cash flows by scheduled maturity,
weighted average interest rate and estimated fair value. The weighted average
interest rates presented are the actual rates as of March 31, 2002.

<TABLE>
<CAPTION>
                                                   PRINCIPAL MATURING IN:                                  Fair Market
                                --------------------------------------------------------------                 Value
                                                                                                             March 31,
                                  2002      2003      2004      2005       2006     Thereafter     Total       2002
                                  ----      ----      ----      ----       ----     ----------     -----       ----
                                                      (in thousands)
<S>                             <C>        <C>       <C>       <C>         <C>        <C>        <C>          <C>
Liabilities:
Mortgage debt:
    Fixed rate                  $ 1,658    $2,458    $2,637    $34,122     $31,418    $57,065    $129,358     $149,317
    Average interest rate         7.78%     7.78%     7.78%      7.78%       7.78%      7.78%       7.78%

    Variable rate                22,693     5,589     1,542      1,542       1,542     27,163      60,071       60,071
    Average interest rate         7.33%     7.33%     7.33%      7.33%       7.33%      7.33%       7.33%

Line of credit:
    Variable rate                1,414                                                              1,414        1,414
    Average interest rate        6.75%                                                              6.75%

                               --------   --------  --------   ---------  ---------  ---------  ----------   ----------
                               $25,765     $8,047    $4,179     $35,664    $32,960    $84,228    $190,843     $210,802
                               ========   ========  ========   =========  =========  =========  ==========   ==========
</TABLE>

       The Company's future earnings and cash flows relating to market sensitive
instruments are primarily dependent upon prevailing LIBOR market interest rate.
Based upon interest rates as of March 31, 2002, a 1% increase in the LIBOR rate
would decrease future earnings by $601,000, but future cash flow would not be
materially affected. A 1% decrease in the LIBOR rate would increase future
earnings by $601,000, but future cash flow would not be affected. A 1% change in
the LIBOR rate would not have a material impact on the fair value of the
Company's debt.

       In November 2001, the Company purchased an interest rate cap for $0.9
million to protect against an increase in the one month LIBOR rate on a $35
million variable rate loan the Company obtained in October 2001. The interest
rate cap is for a term of five years and protects the Company on a specific
portion of the loan, which decreases over the term of the cap, on any increase
in the one month LIBOR rate above 4.25% per annum. The one month LIBOR rate has
not exceeded 4.25% since the Company purchased the interest rate cap.

<TABLE>
<CAPTION>
                                                   PRINCIPAL MATURING IN:                                  Fair Market
                                --------------------------------------------------------------                 Value
                                                                                                             March 31,
                                  2001      2002      2003      2004       2005     Thereafter     Total       2002
                                  ----      ----      ----      ----       ----     ----------     -----       ----
                                                      (in thousands)
<S>                             <C>        <C>       <C>       <C>         <C>        <C>        <C>          <C>
Liabilities:
Mortgage debt:
    Fixed rate                 $   890    $ 2,145   $ 2,307    $ 2,475     $ 9,253   $ 96,086    $113,156     $110,208
    Average interest rate         7.73%      7.73%     7.73%      7.73%       7.73%      7.73%       7.73%

    Variable rate                9,310     22,947        88         95         103     10,852      43,395       43,395
    Average interest rate         7.83%      7.83%     7.83%      7.83%       7.83%      7.83%       7.83%

Line of credit:
    Variable rate                1,678                                                              1,678        1,678
    Average interest rate        11.50%                                                             11.50%

                               -------    -------   -------    -------     -------   --------    --------     --------
                               $11,878    $25,092   $ 2,395    $ 2,570     $ 9,356   $106,938    $158,229     $158,281
                               =======    =======   =======    =======     =======   ========    ========     ========
</TABLE>

       The Company's future earnings and cash flows relating to market sensitive
instruments are primarily dependent upon prevailing LIBOR market interest rate.
Based upon interest rates as of March 31, 2001, a 1% increase in the LIBOR rate
would decrease future earnings by $429,000, future cash flow would not be
affected. A 1% decrease in the LIBOR rate would increase future earnings by
$429,000, future cash flow would not be affected. A 1% change in the LIBOR rate
would not have a material impact on the fair value of the Company's debt.

                                     Page 26

<PAGE>

                           PART II OTHER INFORMATION

Item 1.       Legal Proceedings.

                  Neither the Company or any of its consolidated or
                  unconsolidated affiliates nor any of the assets within their
                  portfolios of MOBs, SNFs, ALFs, parking facilities, and retail
                  space is currently a party to any material litigation, except
                  as discussed in Note 8 to the Condensed Consolidated Financial
                  Statements.

Item 2        Changes in Securities.

                  None.

Item 3        Defaults Upon Senior Securities.

                  None.

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

                  None.

Item 5        Other Information.

                  None.

Item 6        Exhibits and Reports on Form 8-K

                  There were no reports on Form 8-K filed during the three month
                  period ended March 31, 2002.

                                      Page 27

<PAGE>

(a)      Exhibits

<TABLE>
<CAPTION>
 Exhibit No.   Note                                    Description
------------  ------  ------------------------------------------------------------------------------------------
   <S>         <C>    <C>
    2.1        (12)   The Agreement and Plan of Merger between G&L Acquisition, LLC and G&L Realty Corp.

    2.2        (13)   Amendment No. 1 to the Agreement and Plan of Merger between G&L Acquisition, LLC and G&L
                      Realty Corp. dated September 28, 2001.

    2.3        (14)   Amendment No. 2 to the Agreement and Plan of Merger between G&L Acquisition, LLC and G&L
                      Realty Corp. dated October 26, 2001.

    2.4        (16)   Partnership Merger Agreement dated as of May 10, 2001 by and among G&L Acquisition, LLC,
                      G&L Partnership, LLC, G&L Realty Corp. and G&L Realty Partnership, L.P.

    3.1        (1)    Amended and Restated Articles of Incorporation of G&L Realty Corp.

    3.2        (3)    Amended and Restated Bylaws of G&L Realty Corp.

   10.3        (2)    Agreement of Limited Partnership of G&L Realty Partnership, L.P.

   10.3.2      (15)   Amendment to Agreement of Limited Partnership of G&L Realty Partnership, L.P. dated as of
                      July 31, 2001.

   10.5        (1)    Form of Indemnity Agreement between G&L Realty Corp. and directors and certain officers.

   10.8.2      (2)    Option Notice with respect to Sherman Oaks Medical Plaza

   10.9.2      (1)    Agreement for Purchase and Sale of Limited Partnership Interests (435 North Roxbury Drive,
                      Ltd.) between the Selling Partner (as defined therein) and G&L Development, dated as of
                      October 29, 1993.

   10.11       (1)    Agreement for Transfer of Partnership Interests and Other Assets by and between G&L Realty
                      Corp. and Reese Milner, Helen Milner and Milner Development Corp., dated as of October 29,
                      1993.

   10.12.2     (3)    Amended and Restated Mortgage Loan Agreement dated as of January 11, 1995 among G&L
                      Financing Partnership, L.P., Nomura Asset Capital Corporation and Bankers Trust Company of
                      New York.

   10.22       (4)    Amended and Restated Mortgage Loan Agreement by and between G&L Realty Financing
                      Partnership II, L.P., as Borrower, and Nomura Asset Capital Corporation, as Lender, dated
                      as of October 31, 1995.

   10.24       (4)    Property Management Agreement between G&L Realty Financing Partnership II, L.P., as owner,
                      and G&L Realty Partnership, L.P., as agent, made August 10, 1995

   10.25       (5)    Commitment Letter between G&L Realty Partnership, L. P. and Nomura Asset Capital
                      Corporation, dated as of September 29, 1995.

   10.30       (6)    Mortgage Loan Agreement dated as of May 24, 1996 by and between G&L Medical Partnership,
                      L.P. as Borrower and Nomura Asset Capital Corporation as Lender.

   10.38       (7)    Limited Liability Company Agreement by and between G&L Realty Partnership, L.P., a
                      Delaware limited partnership, and Property Acquisition Trust I, a Delaware business trust,
                      for the purpose of creating a Limited Liability Company to be named GLN Capital Co., LLC,
                      dated as of November 25, 1996.

   10.39       (7)    Limited Liability Company Agreement by and between G&L Realty Partnership, L.P., a
                      Delaware limited partnership, and PHP Healthcare Corporation, a Delaware corporation, for
                      the purpose of creating a Limited Liability Company to be named GL/PHP, LLC, dated as of
                      February 26, 1997.
</TABLE>

                                      Page 28

<PAGE>

(a)   Exhibits - (continued from previous page)

<TABLE>
<CAPTION>
 Exhibit No.   Note                                    Description
------------  ------  ------------------------------------------------------------------------------------------
   <S>         <C>    <C>
   10.40       (7)    First Amendment To Limited Liability Company Agreement entered into as of March 31, 1997
                      by and between G&L Realty Partnership, L.P., a Delaware limited partnership, and Property
                      Acquisition Trust I, a Delaware business trust, for the purpose of amending that certain
                      Limited Liability Company Agreement of GLN Capital Co., LLC dated as of November 25, 1996.

   10.45       (8)    First Amendment to GL/PHP, LLC Limited Liability Company Agreement by and among G&L Realty
                      Partnership, L.P., a Delaware limited partnership (the "Retiring Manager"), G&L Realty
                      Partnership, L.P., a Delaware limited partnership ("G&L Member"), and G&L Management
                      Delaware Corp., a Delaware corporation ("Manager Member"), made as of August 15, 1997.

   10.46       (8)    Lease Agreement between GL/PHP, a Delaware limited liability company (the "Landlord") and
                      Pinnacle Health Enterprises, LLC, a Delaware limited liability company wholly owned by PHP
                      Healthcare Corporation, a Delaware corporation (the "Tenant"), dated August 15, 1997

   10.47       (8)    Guaranty of Lease by PHP Healthcare Corporation, a Delaware corporation (the "Guarantor"),
                      dated February 15, 1997.

   10.48       (8)    Non-Negotiable 8.5% Note Due July 31, 2007 in which G&L Realty Partnership, L.P., a
                      Delaware limited partnership (the "Maker"), promises to pay to PHP Healthcare Corporation
                      (the "Payee") the principal sum of $2,000,000.00, dated August 15, 1997.

   10.49       (8)    Mortgage Note in which GL/PHP, LLC a Delaware limited liability company (the "Maker")
                      promises to pay to the order of Nomura Asset Capital Corporation, a Delaware corporation,
                      the principal sum of $16,000,000.00, dated August 15, 1997.

   10.50       (8)    Mortgage, Assignment of Leases and Rents and Security Agreement by GL/PHP, LLC a Delaware
                      limited liability company (the "Mortgagor") to Nomura Asset Capital Corporation, a
                      Delaware corporation (the "Mortgagee"), dated August 15, 1997.

   10.51       (8)    Assignment of Leases and Rents by GL/PHP, LLC a Delaware limited liability company (the
                      "Assignor") to Nomura Asset Capital Corporation, a Delaware corporation (the "Assignee"),
                      dated August 15, 1997.

   10.52       (8)    Environmental and Hazardous Substance Indemnification Agreement by GL/PHP, LLC a Delaware
                      limited liability company (the "Borrower") to Nomura Asset Capital Corporation, a Delaware
                      corporation (the "Lender"), dated August 15, 1997.

   10.58       (9)    Limited Liability Company Agreement of G&L Hampden, LLC.

   10.77       (10)   Agreement for Transfer of Property by and among G&L Coronado, LLC as Transferor and G&L
                      Realty Partnership, L.P. as Operating Partnership dated as of December 30, 1998.

   10.78       (10)   Tenant Estoppel and Real Estate Lease between G&L Coronado, LLC as Landlord and Coronado
                      Managers Corp. as Tenant dated December 1, 1998.

   10.79       (10)   Guaranty of Lease between Steven D. Lebowitz and Daniel M. Gottlieb (collectively
                      "Guarantor") in favor of G&L Coronado, LLC ("Landlord").

   10.81       (11)   Loan Agreement in the amount of $13.92 million between G&L Hampden, LLC, as Borrower, and
                      GMAC Commercial Mortgage Corporation, as Lender.

   10.82       (15)   Credit Agreement among G&L Realty Partnership, L.P., G&L Partnership, LLC, the Several
                      Lenders from Time to Time Parties Hereto and GMAC Commercial Mortgage Corporation, as
                      Agent, dated as of October 29, 2001

   10.83       (15)   Guarantee and Collateral Agreement made by Daniel M. Gottlieb, Steven D. Lebowitz, G&L
                      Realty Corp. and G&L Realty Partnership, L.P. in favor of GMAC Commercial Mortgage
                      Corporation, as Agent, dated as of October 29, 2001.

   21                 List of Subsidiaries
</TABLE>

                                      Page 29

<PAGE>

1)   Previously filed as an exhibit of like number to the Registrant's
     Registration Statement on Form S-11 and amendments thereto (File No.
     33-68984) and incorporated herein by reference.

2)   Previously filed as an exhibit of like number to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1993 and incorporated
     herein by reference.

3)   Previously filed as an exhibit of like number to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1994 and incorporated
     herein by reference.

4)   Previously filed as Exhibits 10.1 (with respect to Exhibit 10.22), 10.2
     (with respect to Exhibit 10.23), and 10.3 (with respect to Exhibit 10.24)
     to the Registrant's Quarterly Report on Form 10-Q for the Quarter ended
     September 30, 1995 and incorporated herein by reference.

5)   Previously filed as an exhibit of like number to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1995 and incorporated
     herein by reference.

6)   Previously filed as an exhibit of like number to the Company's Quarterly
     Report on Form 10-Q for the quarter ended June 30, 1996 and incorporated
     herein by reference.

7)   Filed as an exhibit to the Company's Annual Report on Form 10-K for the
     year ended December 31, 1996 and incorporated herein by reference.

8)   Filed as an exhibit to the Company's Current Report on Form 8-K (filed as
     of August 15, 1997) and incorporated herein by reference.

9)   Filed as an exhibit to the Company's Current Report on Form 8-K (filed as
     of October 28, 1997) and incorporated herein by reference.

10)  Filed as an exhibit to the Company's Annual Report on Form 10-K (filed as
     of April 9, 1999) for the year ended December 31, 1998 and incorporated
     herein by reference.

11)  Filed as an exhibit to the Company's Quarterly Report on Form 10-Q (filed
     as of November 12, 1999) for the quarter ended September 30, 1999 and
     incorporated herein by reference

1)   Filed as an exhibit to the Company's Quarterly Report on Form 10-Q (filed
     as of May 15, 2001) for the quarter ended March 31, 2001 and incorporated
     herein by reference.

2)   Filed as an exhibit to the Company's Current Report on Form 8-K (filed as
     of October 4, 2001) and incorporated herein by reference.

3)   Filed as an exhibit to the Company's Current Report on Form 8-K (filed as
     of October 31, 2001) and incorporated herein by reference.

4)   Filed as an exhibit to the Company's Current Report on Form 8-K (filed as
     of November 13, 2001) and incorporated herein by reference.

5)   Filed as an exhibit to the Company's Quarterly Report on Form 10-Q (filed
     as of November 14, 2001) for the quarter ended September 30, 2001 and
     incorporated herein by reference.

c)   Management contract or compensatory plan or arrangement.

   ---

(b)  Reports on Form 8-K

     None.

                                      Page 30

<PAGE>

                                     SIGNATURE

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

                                                   G&L REALTY CORP.

Date:  May 15, 2002                     By:       /s/ David E.Hamer
                                            ------------------------------------
                                                   David E. Hamer
                                                   Chief Accounting Officer

                                      Page 31