SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


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

                  For the quarterly period ended March 31, 2000

                                       OR

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

                        Commission File Number: 001-14162


                      GLENBOROUGH REALTY TRUST INCORPORATED
             (Exact name of registrant as specified in its charter)

               Maryland                                    94-3211970
     (State or other jurisdiction                       (I.R.S. Employer
   of incorporation or organization)                   Identification No.)

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

              Securities registered under Section 12(b) of the Act:

                                                         Name of Exchange
           Title of each class:                        on which registered:
     Common Stock, $.001 par value                    New York Stock Exchange
7.75% Series A Convertible Preferred Stock,           New York Stock Exchange
  $.001 par value

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                   Yes X  No___


As of May 9,  2000,  29,335,603  shares of Common  Stock  ($.001  par value) and
10,097,800  shares of 7.75%  Series A  Convertible  Preferred  Stock  ($.001 par
value) were outstanding.


                                       1
<PAGE>

                                      INDEX
                      GLENBOROUGH REALTY TRUST INCORPORATED

                                                                        Page No.
PART I      FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements of Glenborough Realty Trust
         Incorporated (Unaudited except for the Consolidated Balance Sheet
         at December 31, 1999):

             Consolidated Balance Sheets at March 31, 2000 and
             December 31, 1999                                                 3

             Consolidated Statements of Income for the three months ended
             March 31, 2000 and 1999                                           4

             Consolidated Statement of Stockholders' Equity for the three
             months ended March 31, 2000                                       5

             Consolidated Statements of Cash Flows for the three months
             ended March 31, 2000 and 1999                                   6-7

             Notes to Consolidated Financial Statements                     8-20

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations                                                     21-26

PART II  OTHER INFORMATION

Item 1.  Legal Proceedings                                                    27

Item 4.  Submission of Matters to a Vote of Security Holders                  27

Item 6.  Exhibits and Reports on Form 8-K                                     27

SIGNATURES                                                                    28

EXHIBIT INDEX                                                                 29


                                       2
<PAGE>
<TABLE>
<CAPTION>

Part I.           FINANCIAL INFORMATION

Item 1.           Financial Statements

                                          GLENBOROUGH REALTY TRUST INCORPORATED
                                               CONSOLIDATED BALANCE SHEETS
                                          (in thousands, except share amounts)

                                                                                   March 31,               December 31,
                                                                                      2000                     1999
                                                                                  (Unaudited)               (Audited)
                                                                                -----------------        -----------------
ASSETS
<S>                                                                             <C>                      <C>
     Rental properties, gross                                                   $    1,717,717           $     1,756,061
     Accumulated depreciation                                                         (125,136)                 (114,170)
                                                                                -----------------        -----------------
     Rental properties, net                                                          1,592,581                 1,641,891

     Real estate held for sale, gross                                                    7,017                         -
     Accumulated depreciation                                                             (289)                        -
                                                                                -----------------        -----------------
     Real estate held for sale, net                                                      6,728                         -

     Investments in Development and Joint Ventures                                      48,344                    44,452
     Investments in Associated Companies                                                 9,259                     9,404
     Mortgage loans receivable                                                          37,401                    37,582
     Cash and cash equivalents                                                             846                     6,482
     Other assets                                                                       48,083                    54,793
                                                                                -----------------        -----------------

         TOTAL ASSETS                                                           $    1,743,242           $     1,794,604
                                                                                =================        =================

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Mortgage loans                                                             $      685,615           $       701,715
     Unsecured term debt                                                               126,475                   125,015
     Unsecured bank line                                                                72,901                    70,628
     Other liabilities                                                                  21,044                    30,625
                                                                                -----------------        -----------------
       Total liabilities                                                               906,035                   927,983
                                                                                -----------------        -----------------

Commitments and contingencies                                                                -                         -

Minority interest                                                                       80,803                    82,287

Stockholders' Equity:
     Common stock, 29,705,603 and 30,820,646  shares issued
       and outstanding at March 31, 2000 and
       December 31, 1999, respectively                                                      30                        31
     Preferred stock, 11,236,300 and 11,330,000 shares issued and
       outstanding at March 31, 2000 and December 31, 1999,
        respectively                                                                        11                        11
     Additional paid-in capital                                                        829,116                   846,693
     Deferred compensation                                                                (585)                     (613)
     Retained earnings (deficit)                                                       (72,168)                  (61,788)
                                                                                -----------------        -----------------
       Total stockholders' equity                                                      756,404                   784,334
                                                                                -----------------        -----------------

           TOTAL LIABILITIES AND STOCKHOLDERS'
              EQUITY                                                            $    1,743,242           $     1,794,604
                                                                                =================        =================


                                          See accompanying notes to consolidated financial statements
</TABLE>


                                       3
<PAGE>
<TABLE>
<CAPTION>


                                        GLENBOROUGH REALTY TRUST INCORPORATED
                                          CONSOLIDATED STATEMENTS OF INCOME
                                 For the three months ended March 31, 2000 and 1999
                                      (in thousands, except per share amounts)
                                                     (Unaudited)

                                                                                2000                       1999
                                                                           ---------------            ----------------
REVENUE
<S>                                                                        <C>                        <C>
     Rental revenue                                                        $      63,161              $      64,641
     Fees and reimbursements from affiliates                                         468                      1,131
     Interest and other income                                                     1,216                      1,659
     Equity in earnings of Associated Companies                                       46                        309
     Equity in loss of joint ventures                                                (31)                         -
     Net gain (loss) on sales of real estate assets                                 (695)                     1,351
                                                                           ---------------            ----------------

       Total revenue                                                              64,165                     69,091
                                                                           ---------------            ----------------

EXPENSES
     Property operating expenses                                                  21,557                     22,001
     General and administrative                                                    2,309                      2,222
     Depreciation and amortization                                                15,129                     15,092
     Interest expense                                                             16,347                     16,540
                                                                           ---------------            ----------------
       Total expenses                                                             55,342                     55,855
                                                                           ---------------            ----------------

Income from operations before minority interest and
     extraordinary item                                                            8,823                     13,236
 Minority interest                                                                  (306)                      (667)
                                                                           ---------------            ----------------
 Net income before extraordinary item                                              8,517                     12,569
Extraordinary item:
Net loss on early extinguishment of debt                                            (466)                    (1,991)
                                                                           ---------------            ----------------
Net income                                                                         8,051                     10,578
Preferred dividends                                                               (5,488)                    (5,570)
                                                                           ---------------            ----------------
Net income available to Common Stockholders                                $       2,563              $       5,008
                                                                           ===============            ================


Basic Per Share Data:
Net income before extraordinary item                                       $        0.10              $        0.22
Extraordinary item                                                                 (0.02)                     (0.06)
                                                                           ---------------            ----------------
Net income available to Common Stockholders                                $        0.08              $        0.16
                                                                           ===============            ================
Basic weighted average shares outstanding                                     30,355,685                 31,764,834
                                                                           ===============            ================

Diluted Per Share Data:
Net income before extraordinary item                                       $        0.10              $        0.21
Extraordinary item                                                                 (0.02)                     (0.05)
                                                                           ---------------            ----------------
Net income available to Common Stockholders                                $        0.08              $        0.16
                                                                           ===============            ================
Diluted weighted average shares outstanding                                   34,096,464                 36,098,374
                                                                           ===============            ================


                                         See accompanying notes to consolidated financial statements
</TABLE>

                                       4
<PAGE>
<TABLE>
<CAPTION>


                                                 GLENBOROUGH REALTY TRUST INCORPORATED
                                            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                               For the three months ended March 31, 2000
                                                            (in thousands)
                                                              (Unaudited)

                                           Common Stock        Preferred Stock
                                       --------------------- ---------------------
                                                                                 Additional   Deferred      Retained
                                                     Par                Par       Paid-in     Compen-      Earnings
                                         Shares     Value     Shares   Value      Capital     sation       (Deficit)       Total
                                       --------------------------------------------------------------------- -----------------------

<S>                                       <C>       <C>       <C>       <C>     <C>           <C>          <C>          <C>
Balance at December 31, 1999              30,821    $  31     11,330    $  11   $   846,693   $    (613)   $  (61,788)  $   784,334

Conversion of Operating Partnership
    units into common stock                   10        -          -        -           145           -             -           145

Common and preferred stock repurchases    (1,125)      (1)       (94)       -       (17,722)          -             -       (17,723)

Amortization of deferred compensation          -        -          -        -             -          28             -            28

Distributions                                  -        -          -        -             -           -       (18,431)      (18,431)

Net income                                     -        -          -        -             -           -         8,051         8,051
                                       ---------------------------------------------------------------------------------------------

Balance at March 31, 2000                 29,706    $  30     11,236    $  11   $   829,116   $    (585)   $  (72,168)  $   756,404
                                       ========== ========= ========== ======== ============= =========== ============= ============

                                         See accompanying notes to consolidated financial statements
</TABLE>


                                       5
<PAGE>
<TABLE>
<CAPTION>


                                      GLENBOROUGH REALTY TRUST INCORPORATED
                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                For the three months ended March 31, 2000 and 1999
                                                  (in thousands)
                                                   (Unaudited)


                                                                            2000                        1999
                                                                       ---------------             ----------------
Cash flows from operating activities:
<S>                                                                    <C>                         <C>
     Net income                                                        $        8,051              $       10,578
     Adjustments to reconcile net income to net cash
       provided by operating activities:
         Depreciation and amortization                                         15,129                      15,092
         Amortization of loan fees, included in
           interest expense                                                       639                         485
         Minority interest in income from operations                              306                         667
         Equity in earnings of Associated Companies                               (46)                       (309)
         Net loss (gain) on sales of real estate assets                           695                      (1,351)
         Net loss on early extinguishment of debt                                 466                       1,991
         Amortization of deferred compensation                                     28                           23
         Changes in certain assets and liabilities, net                        (7,311)                     (3,042)
                                                                       ---------------             ----------------
           Net cash provided by operating activities                           17,957                      24,134
                                                                       ---------------             ----------------

Cash flows from investing activities:
     Net proceeds from sales of real estate assets                             20,181                      17,522
     Additions to rental properties                                            (7,013)                    (14,176)
     Investments in Development, net                                             (102)                     (3,488)
     Investment in Joint Ventures                                              (3,789)                          -
     Additions to mortgage loans receivable                                      (959)                       (993)
     Principal receipts on mortgage loans receivable                            1,141                           -
     Repayments of notes receivable                                               992                           -
     Advances to affiliates                                                         -                        (200)
     Distributions from Associated Companies                                      191                         124
                                                                       ---------------             ----------------
           Net cash provided by (used for) investing
                activities                                                     10,642                      (1,211)
                                                                       ---------------             ----------------

Cash flows from financing activities:
     Proceeds from borrowings                                                 130,239                      44,000
     Repayment of borrowings                                                  (39,274)                    (45,514)
     Retirement of Series A Senior Notes (less loss on
         retirement of $466 in 2000)                                          (87,526)                          -
     Distributions to minority interest holders                                (1,520)                     (1,729)
     Distributions to stockholders                                            (18,431)                    (18,909)
     Exercise of stock options                                                      -                         750
     Repurchases of common stock                                              (16,335)                     (2,070)
     Repurchases of preferred stock                                            (1,388)                          -
                                                                       ---------------             ----------------

         Net cash used for financing activities                               (34,235)                    (23,472)
                                                                       ---------------             ----------------


                                                               continued

                                         See accompanying notes to consolidated financial statements

</TABLE>

                                       6
<PAGE>
<TABLE>
<CAPTION>


                                      GLENBOROUGH REALTY TRUST INCORPORATED
                                CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
                                For the three months ended March 31, 2000 and 1999
                                                  (in thousands)
                                                   (Unaudited)

                                                                            2000                        1999
                                                                       ---------------             ----------------

<S>                                                                    <C>                         <C>
Net decrease in cash and cash equivalents                                     (5,636)                       (549)

Cash and cash equivalents at beginning of period                               6,482                       4,357
                                                                       ---------------             ----------------

Cash and cash equivalents at end of period                             $         846               $       3,808
                                                                       ===============             ================

Supplemental disclosure of cash flow information:

     Cash paid for interest (net of capitalized interest of
         $788 and $643 in 2000 and 1999, respectively)                 $      16,823               $      16,684
                                                                       ===============             ================

Supplemental disclosure of Non-Cash Investing and Financing
     Activities:
     Assumption of first trust deed notes payable in
         acquisition of real estate                                    $       4,300               $      14,100
                                                                       ===============             ================

     Disposition of real estate involving buyer's
         assumption of first trust deed notes payable                  $      20,571               $           -
                                                                       ===============             ================

     Conversion of Operating Partnership units into common
         stock, at current market value of common stock                $         145               $           -
                                                                       ===============             ================



                                         See accompanying notes to consolidated financial statements

</TABLE>


                                       7
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000


Note 1.      ORGANIZATION

Glenborough Realty Trust Incorporated (the "Company") was organized in the State
of  Maryland  on August 26,  1994.  The Company has elected to qualify as a real
estate  investment  trust ("REIT")  under the Internal  Revenue Code of 1986, as
amended (the "Code").  The Company completed a consolidation with certain public
California limited partnerships and other entities (the "Consolidation") engaged
in real estate activities (the "GRT Predecessor  Entities")  through an exchange
of assets of the GRT Predecessor  Entities for 5,753,709  shares of Common Stock
of the Company. The Consolidation occurred on December 31, 1995, and the Company
commenced operations on January 1, 1996.

Subsequent  to the  Consolidation  on December 31, 1995,  and through  March 31,
2000, the following  Common Stock  transactions  occurred:  (i) 70,250 shares of
Common Stock were issued to officers and directors as stock  compensation;  (ii)
25,446,000  shares were issued in four separate public equity  offerings;  (iii)
453,507 shares were issued in connection with various acquisitions; (iv) 107,414
shares were issued in connection  with the exercise of employee  stock  options;
(v) 660,398  shares were issued in  connection  with the  exchange of  Operating
Partnership  units;  (vi) 2,785,616  shares were repurchased by the Company (see
discussion below) and (vii) 59 shares were retired, resulting in total shares of
Common Stock issued and  outstanding at March 31, 2000, of 29,705,603.  Assuming
the issuance of 3,604,769  shares of Common Stock  issuable  upon  redemption of
3,604,769  partnership  units  in the  Operating  Partnership,  there  would  be
33,310,372 shares of Common Stock outstanding as of March 31, 2000.

In January 1998, the Company completed a public offering of 11,500,000 shares of
7-3/4% Series A  Convertible  Preferred  Stock (the  "January  1998  Convertible
Preferred Stock Offering"). The shares are convertible at any time at the option
of the holder thereof into shares of Common Stock at an initial conversion price
of $32.83 per share of Common Stock  (equivalent to a conversion  rate of 0.7615
shares of Common Stock for each share of Series A Convertible  Preferred Stock),
subject to  adjustment  in certain  circumstances.  Except in certain  instances
relating  to the  preservation  of the  Company's  status as a REIT,  the 7-3/4%
Series A  Convertible  Preferred  Stock is not  redeemable  prior to January 16,
2003.  On and after  January  16,  2003,  the  Series A  Preferred  Stock may be
redeemed at the option of the Company, in whole or in part, initially at 103.88%
of the liquidation  preference per share,  and thereafter at prices declining to
100% of the  liquidation  preference on and after January 16, 2008, plus in each
case accumulated,  accrued and unpaid dividends, if any, to the redemption date.
Shares of Preferred  Stock  issued and  outstanding  at March 31, 2000,  totaled
11,236,300. As of March 31, 2000, 263,700 shares, representing approximately 15%
of the  preferred  stock  repurchase  program (see  discussion  below) have been
repurchased.

In July 1998, the Company's Board of Directors adopted a stockholder rights plan
which is intended to protect the Company's stockholders in the event of coercive
or unfair takeover tactics,  or an unsolicited attempt to acquire control of the
Company in a  transaction  the Board of  Directors  believes  is not in the best
interests of the  stockholders.  Under the plan, the Company declared a dividend
of  Rights  on its  Common  Stock.  The  rights  issued  under  the plan will be
triggered, with certain exceptions, if and when any person or group acquires, or
commences a tender offer to acquire, 15% or more of the Company's shares.

In February  1999,  the Company's  Board of Directors  authorized the Company to
repurchase  up to 3.1  million  shares of its  outstanding  Common  Stock.  This
represented approximately 10% of the Company's total outstanding Common Stock at
the time of  authorization.  In November  1999,  the Company  announced that its
Board of Directors had doubled the size of the  repurchase  authorization  under
the Company's common stock repurchase plan. The repurchase plan was increased to
6.2 million shares,  or  approximately  20% of the Company's  total  outstanding
common stock.  Such  purchases will be made from time to time in the open market
or otherwise and the timing will depend on market  conditions and other factors.
As of March 31, 2000,  2,785,616 shares,  representing  approximately 45% of the
expanded repurchase  authorization,  have been repurchased.  In addition, during
the third quarter of 1999, the Company announced that its Board of Directors had
approved an expansion of the stock repurchase program to include preferred stock
as well as common  stock.  The Company is  authorized to repurchase up to 15% of
its preferred stock, or 1,725,000 shares.


                                       8
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000

To maintain the Company's qualification as a REIT, no more than 50% of the value
of the outstanding  shares of the Company may be owned,  directly or indirectly,
by five or fewer  individuals  (defined to include certain  entities),  applying
certain  constructive  ownership rules. To help ensure that the Company will not
fail this test,  the  Company's  Articles of  Incorporation  provide for certain
restrictions   on  the  transfer  of  the  Common   Stock  to  prevent   further
concentration of stock ownership.

The Company,  through its majority owned  subsidiaries,  is engaged primarily in
the  ownership,  operation,  management,  leasing,  acquisition,  expansion  and
development  of  various  income-producing   properties.   The  Company's  major
consolidated  subsidiary,  in which it holds a 1% general partner interest and a
88.18% limited  partner  interest at March 31, 2000, is Glenborough  Properties,
L.P.  (the  "Operating  Partnership").  Each  of the  holders  of the  remaining
interests in the Operating Partnership ("OP Units") has the option to redeem its
OP Units and to receive,  at the option of the Company,  in exchange for each OP
Unit, either (i) one share of common stock of the Company, or (ii) cash equal to
the fair market value of one share of common  stock of the Company.  As of March
31, 2000, the Operating  Partnership,  directly and through the  subsidiaries in
which  it and the  Company  own  100% of the  ownership  interests,  controls  a
portfolio of 148 real estate projects.

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

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

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

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

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

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

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


                                       9
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000


Note 2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
The  accompanying   financial  statements  present  the  consolidated  financial
position of the Company as of March 31, 2000,  and  December  31, 1999,  and the
consolidated  results of operations  and cash flows of the Company for the three
months ended March 31, 2000 and 1999. All intercompany transactions, receivables
and payables have been eliminated in consolidation.

In the opinion of management,  the accompanying  unaudited financial  statements
contain all  adjustments  (consisting  of only  normal  accruals)  necessary  to
present  fairly the financial  position and results of operations of the Company
as of March 31, 2000, and for the period then ended.

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

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

New Accounting Pronouncements
Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative Instruments and Hedging Activities" was issued in June 1998. SFAS No.
133 was  originally  effective for fiscal years  beginning  after June 15, 1999,
with early  adoption  permitted.  In June 1999,  SFAS No. 137,  "Accounting  for
Derivative  Instruments and Hedging  Activities - Deferral of the Effective Date
of FASB  Statement No. 133 - an amendment of FASB  Statement No. 133" was issued
which,  among other things,  deferred the final  implementation  to fiscal years
beginning  after June 15, 2000. SFAS No. 133 provides  comprehensive  guidelines
for the recognition  and  measurement of derivatives and hedging  activities and
specifically  requires all  derivatives  to be recorded on the balance  sheet at
fair  value.   Management  is  evaluating   the  effects,   if  any,  that  this
pronouncement  will  have  on the  Company's  consolidated  financial  position,
results of operations and financial statement position.

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

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


The useful lives are as follows:

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


                                       10
<PAGE>


                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000

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

Investments in Development and Joint Ventures
The  Company,  through  mezzanine  loans and  equity  contributions,  invests in
various  development  alliances with projects currently under  development.  The
interest on advances and other direct  project costs incurred by the Company are
capitalized to the investment  during the period in which the projects are under
development. The Company's investments in joint ventures are accounted for using
the equity method. See Note 6 for further discussion.

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

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

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

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

Derivative Financial Instruments
The  Company  may use  derivative  financial  instruments  in the event  that it
believes such  instruments  will be an effective  hedge against  fluctuations in
interest  rates  on  a  specific  anticipated  borrowing.  Derivative  financial
instruments  such as forward rate  agreements or interest rate swaps may be used
in this capacity.  To the extent such instruments do not qualify as hedges, they
will be accounted  for on a  mark-to-market  basis and recorded in earnings each
period as  appropriate.  The cost of terminated  instruments  not  qualifying as
hedges  will  be  recorded  in  earnings  in the  period  they  are  terminated.
Instruments  which  qualify as hedges upon  obtaining  the related  debt will be


                                       11
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000


recorded as a premium or discount on the related debt  principal  and  amortized
into earnings over the life of the debt instrument.  If the hedged instrument is
retired  early,  the  unamortized  discount  or premium  will be  included  as a
component of the calculation of gain or loss on retirement.

At March 31, 2000 and December 31, 1999, the Company was not a party to any open
interest rate  protection  agreements  other than the interest rate cap contract
entered into in August 1999 and discussed in Note 8 below.

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

Minority Interest
Minority  interest  represents  the  10.82%  limited  partner  interests  in the
Operating Partnership not held by the Company.

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

For the three months ended March 31, 2000 and 1999, no tenants  represented  10%
or more of rental revenue of the Company.

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

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

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

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

Income Taxes
The  Company  has made an  election  to be taxed as a REIT  under  Sections  856
through 860 of the Code. As a REIT, the Company generally will not be subject to
Federal  income tax to the extent that it  distributes  at least 95% of its REIT
taxable  income  to  its  shareholders.   REITs  are  subject  to  a  number  of
organizational and operational requirements.  If the Company fails to qualify as
a REIT in any taxable  year,  the Company will be subject to Federal  income tax
(including  any  applicable  alternative  minimum tax) on its taxable  income at
regular  corporate  tax rates.  Even if the Company  qualifies for taxation as a
REIT,  the Company may be subject to certain state and local taxes on its income
and property and to Federal income and excise taxes on its undistributed income.

Reference to 1999 Audited Financial Statements
These  unaudited  financial  statements  should be read in conjunction  with the
Notes  to  Consolidated  Financial  Statements  included  in  the  1999  audited
financial statements.


                                       12
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000


Note 3.   RENTAL PROPERTY

Acquisitions
In the first  quarter of 2000,  through one of its  development  alliances,  the
Company acquired Gateway 14 (with the proceeds from a tax deferred exchange),  a
113,538 square foot industrial property located in Denver,  Colorado.  The total
acquisition  cost of $6.2  million,  which  includes  third  party  expenditures
incurred for the purpose of this  transaction,  was paid for with  approximately
$1.9 million in cash and the assumption of $4.3 million in debt.

Dispositions
In the first quarter of 2000,  the Company sold an industrial  property known as
Columbia Warehouse, located in Columbia, Maryland, to an independent third party
for all cash  consideration  of  $1,640,000.  This resulted in a loss on sale of
approximately  $420,000  and is  included  in net loss on  sales of real  estate
assets on the accompanying consolidated statement of income for the three months
ended March 31, 2000.

In the first quarter of 2000,  the Company  formed a limited  liability  company
with an  independent  third  party and  contributed  its  interest in the office
property  known as 2000  Corporate  Ridge,  located  in McLean,  Virginia.  This
transaction resulted in a loss on sale of approximately $211,000 and is included
in net loss on sales of real  estate  assets  in the  accompanying  consolidated
statement of income for the three  months  ended March 31, 2000.  See Note 6 for
further discussion.

Prospective Dispositions
The Company  entered  into a separate  definitive  agreement  to sell one office
property.  The sale closed in April 2000 for a sales price of approximately $7.3
million.  This  property  is  reflected  in Real  Estate  Held  For  Sale on the
accompanying  consolidated  balance sheet as of March 31, 2000.  See Note 14 for
discussion of sales subsequent to March 31, 2000.

Note 4.   INVESTMENTS IN ASSOCIATED COMPANIES

The Company  accounts for its  investment in GC (as defined in Note 1) using the
equity  method as a  substantial  portion of its economic  benefits  flow to the
Company by virtue of its 100%  non-voting  preferred stock interest in GC, which
interest  constitutes  substantially  all of GC's  capitalization.  Three of the
holders of the voting  common stock of GC are officers of the Company;  however,
the  Company  has no direct  voting or  management  control of GC.  The  Company
records earnings on its investment in GC equal to its cash flow  preference,  to
the extent of earnings, plus its pro rata share of remaining earnings,  based on
cash flow allocation percentages. Distributions received from GC are recorded as
a reduction of the Company's investment.


                                       13
<PAGE>
<TABLE>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000


As of March 31, 2000 and 1999, the Company had the following  investments in the
Associated Companies (in thousands):

                                          GC (1)
                                      --------------
<S>                                     <C>
Investment at December 31, 1999         $   9,404
Distributions                                (191)
Equity in earnings                             46
Investment at March 31, 2000            $   9,259

                                          GC (1)
                                      --------------
Investment at December 31, 1998         $   8,807
Distributions                                (124)
Equity in earnings (loss)                     309
Investment at March 31, 1999            $   8,992

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

Note 5.   MORTGAGE LOANS RECEIVABLE

The Company's mortgage loans receivable consist of the following as of March 31,
2000, and December 31, 1999 (dollars in thousands):

                                                                                      2000                   1999
                                                                                  --------------        ---------------

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

Note  secured by Gateway  Park land  located in Aurora,  CO, with a stated fixed
interest rate of 13%,  quarterly  interest-only  payments and a maturity date of
July 2005 (see below for further discussion).                                            37,401                36,441
                                                                                  --------------        ---------------
Total                                                                                $   37,401         $      37,582
                                                                                  ==============        ===============

In September  1999, the Company sold a hotel property in Arlington,  Texas, to a
third  party for a sale  price of $2.1  million,  of which  $1.141  million  was
represented by a note receivable  secured by the hotel  property.  This note was
paid off in January 2000.

In 1998,  the  Company  entered  into a  development  alliance  with  The  Pauls
Corporation (see Note 6). In addition to this development alliance,  the Company
loaned approximately $34 million ($37.4 million,  including accrued interest, at
March 31,  2000),  secured by a First  Mortgage,  to continue  the  build-out of
Gateway  Park.  In this  arrangement,  the  Company  has  rights  under  certain
conditions and subject to certain  contingencies to purchase the properties upon
completion of development and, thus, through this arrangement, the Company could
acquire up to 2.2 million square feet of office and  industrial  space and 1,600
multifamily units over the next ten years.

Note 6.   INVESTMENTS IN DEVELOPMENT AND JOINT VENTURES

The Company is currently involved in 4 development alliances for the development
of approximately  713,000 square feet of office and distribution  properties and
1,710 multifamily units in Colorado,  Texas, New Jersey, Kansas and Michigan. As
of March 31, 2000, the Company has advanced  approximately  $40 million to these
alliances.  Under these development alliances, the Company has certain rights to
purchase the properties upon completion of development over the next five years.
</TABLE>


                                       14
<PAGE>
<TABLE>
<CAPTION>

                     GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000

In the first quarter of 2000,  the Company  formed a limited  liability  company
(the "LLC") with an independent  third party and contributed its interest in the
office property known as 2000 Corporate Ridge, located in McLean, Virginia. This
transaction resulted in a loss on sale of approximately $211,000 and is included
in net loss on sales of real  estate  assets  in the  accompanying  consolidated
statement of income for the three  months  ended March 31,  2000.  Consideration
received for this contribution included $14.7 million in cash and the assumption
of a $20.6  million  mortgage by the LLC.  The Company now has a 10% interest in
the LLC and the LLC  agreement  provides for,  among other  things,  a 3% annual
management fee to the Company for property  management  services,  certain asset
management  fees and  certain  additional  distributions  in  excess  of its 10%
interest,  if available,  upon the ultimate sale of the property by the LLC. The
Company will account for its interest in the LLC under the equity method.

Note 7.   OTHER ASSETS

As of March 31, 2000 and  December 31,  1999,  other assets on the  consolidated
balance sheets consists of the following (in thousands):

                                                        2000              1999
                                                     ------------   ------------
<S>                                                   <C>             <C>
        Accounts receivable, net                      $   4,460       $    3,856

        Prepaid expenses                                  7,182            8,164

        Impound accounts                                  8,032           12,970

        Lease commissions and loan fees, net             20,138           20,867

        Corporate office fixed assets, net                5,325            4,726

        Related party receivable (Note 10)                1,847            1,847

        Other                                             1,099            2,363
                                                     ------------   ------------

        Total other assets                            $  48,083       $   54,793
                                                     ============   ============

Note 8.   SECURED AND UNSECURED LIABILITIES

The Company had the following  mortgage loans,  bank lines,  unsecured notes and
notes payable  outstanding  as of March 31, 2000, and December 31, 1999 (dollars
in thousands):
                                                                                           2000              1999
                                                                                      ------------       ------------
<S>                                                                                     <C>                 <C>
Secured loans with various  lenders,  net of unamortized  discount of $5,359 and
$5,515 at March 31, 2000 and December 31, 1999,  respectively.  All loans have a
fixed  interest  rate of 6.125% and a November 10, 2008 maturity  date.  Monthly
principal and interest  payments  range  between $296 and $458.  These loans are
secured by 35 properties  with an aggregate  net carrying  value of $398,584 and
$400,980 at March 31, 2000 and December 31, 1999, respectively.                         $ 232,162           $232,735

Secured  loans with various  lenders,  bearing  interest at fixed rates  between
6.95% and 9.25%  (approximately  $52,376 of these loans  include an  unamortized
premium of approximately $204 which reduces the effective interest rate on those
instruments  to 6.75%),  with monthly  principal and interest  payments  ranging
between $8 and $371 and  maturing  at various  dates  through  December 1, 2030.
These loans are secured by properties  with an aggregate  net carrying  value of
$505,882 and $547,264 at March 31, 2000 and December 31, 1999, respectively.              300,580            322,878
</TABLE>


                                       15
<PAGE>
<TABLE>
<CAPTION>

                     GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000


                                                                                           2000              1999
                                                                                      ------------       ------------
<S>                                                                                   <C>                 <C>
Secured  loans with various  banks  bearing  interest at variable  rates ranging
between  6.80% and 9.00% at March 31, 2000 and 6.53% and 8.52% at  December  31,
1999,  monthly  principal and interest  payments ranging between $4 and $790 and
maturing at various  dates through  August 30, 2004.  These loans are secured by
properties  with an  aggregate  net  carrying  value of $228,415 and $224,526 at
March 31, 2000 and December 31, 1999, respectively.                                      $152,873           $146,102

Unsecured  $142,500  line  of  credit  with a bank  ("Credit  Facility")  with a
variable  interest rate of LIBOR plus 1.75% (7.883% and 7.753% at March 31, 2000
and December 31,  1999,  respectively),  monthly  interest  only  payments and a
maturity date of June 10, 2002,  with one option to extend for 10 years.                   72,901             70,628

Unsecured  $125,000 term loan with a bank with a variable interest rate of LIBOR
plus  1.75%  (7.883%  and  8.25%  at  March  31,  2000 and  December  31,  1999,
respectively),  monthly  interest  only payments and a maturity date of June 10,
2002.                                                                                     122,385             33,865

Unsecured  Series A Senior Notes with a fixed interest rate of 7.625%,  interest
payable  semiannually on March 15 and September 15, and a maturity date of March
15,  2005.  Approximately  $87.1  million of the notes were retired in the first
three months of 2000 as discussed below.                                                    4,090             91,150

Total                                                                                 $   884,991         $  897,358

In August 1999,  the Company  closed a $97.6 million  secured  financing  with a
commercial bank ("Secured Financing"). In connection with the Secured Financing,
the Company  entered into an interest rate cap  agreement to hedge  increases in
interest  rates above a specified  level of 11.21%.  The agreement is for a term
concurrent with the Secured Financing instrument, is indexed to the 90-day LIBOR
rate, and is for a notional amount equal to the maximum amount  available on the
Secured  Financing  loan. As of March 31, 2000, the 90-day LIBOR rate was 6.29%.
The Company paid a premium of approximately $434,000 at the inception of the cap
agreement, which is being amortized as additional interest expense over the life
of the agreement.

In the first quarter of 2000, the Company retired approximately $87.1 million of
unsecured Series A Senior Notes at a discount. As a result of these transactions
and the related write-off of capitalized  original issuance costs, a net loss on
early  extinguishment  of debt of  approximately  $466,000  was  recorded in the
accompanying  consolidated  statement of income for the three months ended March
31,  2000,  as  discussed  in Note 9  below.  See  Note 14 for  debt  retirement
subsequent to March 31, 2000.

In the first quarter of 2000, the Company obtained a $10.5 million  construction
loan to build an 80,000 square foot office  property in Bedminster,  New Jersey.
Approximately  $2.5 million was  outstanding  at March 31, 2000.  The loan has a
maturity  date of November 12, 2001 and bears  interest at the floating  rate of
LIBOR plus 2.25%. The interest rate on this loan at March 31, 2000 was 8.38%.

In February 2000, the Company  contributed  its interest in the office  property
known as 2000 Corporate Ridge to a limited liability company (the "LLC") The LLC
assumed the $20.6 million mortgage loan on this property. See Note 6 for further
discussion.
</TABLE>


                                       16
<PAGE>
<TABLE>
<CAPTION>
                     GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000


In March 2000, related to the acquisition of an industrial  property from one of
the Company's  development alliances (as discussed in Note 3 above), the Company
assumed a $4.3 million secured loan. This loan has a maturity date of October 1,
2000  (with  options  for two  6-month  extensions)  and bears  interest  at the
floating  rate of LIBOR plus 1.55%.  The interest rate on this loan at March 31,
2000 was 7.68%.

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

The required  principal  payments on the Company's  debt for the next five years
and thereafter, as of March 31, 2000, are as follows (in thousands):

                                        Year Ending
                                       December 31,
<S>                                      <C>                   <C>
                                         2000                  $  104,368
                                         2001                      24,613
                                         2002                     209,103
                                         2003                      37,326
                                         2004                     124,829
                                         Thereafter               384,752
                                         Total                 $  884,991

Note 9.   NET LOSS ON EARLY EXTINGUISHMENT OF DEBT

In connection  with the unsecured  Series A Senior Notes  repurchases  discussed
above,  the  Company  recorded  a net  loss on early  extinguishment  of debt of
$466,000  for the three  months  ended  March 31,  2000.  This loss  consists of
$931,000 of discounts on  retirement  offset by  $1,397,000 of losses due to the
writeoff of unamortized original issuance costs.

Note 10.  RELATED PARTY TRANSACTIONS

Fee and reimbursement  income earned by the Company from related parties totaled
$468,000  and  $1,131,000  for the three  months  ended March 31, 2000 and 1999,
respectively,  and consisted of property  management fees, asset management fees
and other fee income. In addition,  the Company paid GC property management fees
and salary  reimbursements  totaling  $405,000 and $362,000 for the three months
ended March 31, 2000 and 1999,  respectively,  for  management of a portfolio of
residential  properties  owned by the  Company,  which is  included  in property
operating expenses and general and  administrative  expenses on the accompanying
consolidated statements of income.

In 1998, the Company  acquired from a Managed  Partnership an option to purchase
all of its rights under a Lease with Option to Purchase  Agreement,  for certain
undeveloped  and  unentitled  land  located  in  Burlingame,   California.  Upon
expiration of the option period, the independent  members of the Company's Board
of Directors  concluded  that  proceeding  with the  development of the property
would have required that the Company incur  substantial  debt.  Accordingly,  on
February 1, 1999, the Company  elected not to proceed with the  development  and
not to exercise the option in return for the Managed Partnership's  agreement to
reimburse the Company for  $2,309,000 of  predevelopment  costs,  $462,000 to be
paid in cash with the balance in a promissory  note bearing  interest at 10% and
due on the earlier of sale,  refinance or March 31, 2002. The note also contains
a participation in profits realized by the Managed  Partnership from the sale of
the property if such sale occurs within 3 years.  The  principal  balance of the
note is  included  in other  assets  in the  accompanying  consolidated  balance
sheets.
</TABLE>


                                       17
<PAGE>
<TABLE>
<CAPTION>
                     GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000

Note 11.  EARNINGS PER SHARE

Basic  earnings  per share is computed as earnings  divided by weighted  average
shares,  excluding the dilutive  effects of stock options and other  potentially
dilutive securities. Earnings per share are as follows (in thousands, except for
weighted average shares and per share amounts):

                                                             Three months ended
                                                                 March 31,
                                                       -------------------------------
                                                           2000              1999
                                                       --------------    -------------
<S>                                                    <C>               <C>
Net income available to common
     Stockholders - Basic                              $       2,563     $      5,008
Minority interest                                                306              667
                                                       --------------    -------------
Net income available to common
     Stockholders - Diluted                            $       2,869     $      5,675
                                                       --------------    -------------

Weighted average shares:
Basic                                                     30,355,685       31,764,834
Stock options                                                140,471          115,154
Convertible Operating Partnership Units                    3,600,308        4,218,386
                                                       --------------    --------------
Diluted                                                   34,096,464       36,098,374
                                                       --------------    --------------

Basic earnings per share                               $        0.08     $       0.16
Diluted earnings per share                             $        0.08     $       0.16

Note 12.  STOCK COMPENSATION PLAN

In May 1996, the Company  adopted an employee stock  incentive plan (the "Plan")
to provide  incentives to attract and retain high quality executive officers and
key employees.  Certain amendments to the Plan were ratified and approved by the
stockholders   of  the  Company  at  the  Company's   1997  Annual   Meeting  of
Stockholders.  The Plan,  as  amended,  provides  for the grant of (i) shares of
Common Stock of the Company, (ii) options, stock appreciation rights ("SARs") or
similar  rights with an exercise or conversion  privilege at a fixed or variable
price related to the Common Stock and/or the passage of time,  the occurrence of
one or more  events,  or the  satisfaction  of  performance  criteria  or  other
conditions, or (iii) any other security with the value derived from the value of
the Common Stock of the Company or other securities  issued by a related entity.
Such awards include,  without  limitation,  options,  SARs,  sales or bonuses of
restricted  stock,  dividend  equivalent  rights ("DERs"),  Performance Units or
Preference  Shares.  The total number of shares of Common Stock  available under
the Plan is equal to the  greater  of  1,140,000  shares or 8% of the  number of
shares  outstanding  determined  as of the day  immediately  following  the most
recent issuance of shares of Common Stock or securities  convertible into shares
of Common Stock;  provided that the maximum aggregate number of shares of Common
Stock available for issuance under the Plan may not be reduced.  For purposes of
calculating  the number of shares of Common Stock  available under the Plan, all
classes  of  securities  of the  Company  and  its  related  entities  that  are
convertible  presently  or in the future by the  security  holder into shares of
Common Stock or which may  presently or in the future be exchanged for shares of
Common Stock pursuant to redemption  rights or otherwise,  shall be deemed to be
outstanding shares of Common Stock. Notwithstanding the foregoing, the aggregate
number of shares  as to which  incentive  stock  options,  one type of  security
available under the Plan, may be granted under the Plan may not exceed 1,140,000
shares.  In May 1999, the Company's  stockholders  approved the grant of 700,000
non-qualified  stock  options to Robert  Batinovich  and  300,000  non-qualified
options to Andrew  Batinovich,  outside the Plan.  The Company  accounts for the
fair value of the options and bonus  grants in  accordance  with APB Opinion No.
25. As of March 31, 2000,  70,250  shares of bonus grants have been issued under
the Plan.  The fair value of the shares  granted have been  recorded as deferred
compensation  in the  accompanying  financial  statements and will be charged to
earnings  ratably  over the  respective  vesting  periods that range from 2 to 5
years.  As of March 31,  2000,  3,367,786  options to purchase  shares of Common
</TABLE>
                                       18
<PAGE>
<TABLE>
<CAPTION>

                     GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000


Stock were  outstanding  under the Plan and 1,177,000  options were  outstanding
outside  the Plan,  including  the  1,000,000  stock  options  granted to Robert
Batinovich and Andrew  Batinovich as described above. The exercise price of each
incentive  stock option  granted is greater than or equal to the per-share  fair
market value of the Common Stock on the date the option is granted and, as such,
no  compensation  expense has been  recognized.  The options  vest over  periods
between 1 and 6 years, and have a maximum term of 10 years.

Note 13.  SEGMENT INFORMATION

The Company  owns a diverse  portfolio  of  properties  comprising  five product
types: office, industrial,  retail, multifamily and hotels. Effective January 1,
2000, in order to simplify  reporting,  the Company  eliminated the  office/flex
property type and  reallocated the properties to either the office or industrial
category.  Each of these  product  types  represents a  reportable  segment with
distinct  uses and tenant  types which  require the Company to employ  different
management  strategies.  Each  segment  contains  properties  located in various
regions and markets  within the United  States.  The office  portfolio  consists
primarily of suburban office  buildings.  The industrial  portfolio  consists of
properties  designed for warehouse,  distribution  and light  manufacturing  for
single-tenant or multi-tenant  use. The retail portfolio  consists  primarily of
community  shopping centers  anchored with national or regional  supermarkets or
drug stores. The properties in the multifamily portfolio are apartment buildings
with units rented to residential tenants on either a month-by-month basis or for
terms of one year or less. The Company's hotel  operations are from one 227 room
property leased to and operated by a third party.

The accounting  policies of the segments are the same as those  described in the
summary of significant accounting policies. The Company evaluates performance of
its property types based on net operating  income derived by subtracting  rental
expenses  and real estate  taxes  (operating  expenses)  from  rental  revenues.
Significant  information  used by the Company for its reportable  segments as of
and for the  three  months  ended  March  31,  2000 and 1999 is as  follows  (in
thousands):

                                                                       Multi-family
2000                             Office      Industrial     Retail                    Hotel         Total
                               ------------  -----------  -----------  -----------  -----------  -------------
<S>                            <C>            <C>          <C>          <C>           <C>         <C>
Rental revenue                 $   32,952     $   9,945    $   2,866    $  17,023     $    375    $    63,161
Property operating expenses        12,433         2,604          937        7,412           60         23,446
                               ------------  -----------  -----------  -----------  -----------  -------------
Net operating income (NOI)     $   20,519     $   7,341    $   1,929    $   9,611     $    315    $    39,715
                               ============  ===========  ===========  ===========  ===========  =============

1999
Rental revenue                 $   32,629     $  11,503    $   3,241    $  16,670     $    598    $    64,641
Property operating expenses        12,288         3,188        1,176        7,255           97         24,004
                               ------------  -----------  -----------  -----------  -----------  -------------
Net operating income (NOI)     $   20,341     $   8,315    $   2,065    $   9,415     $    501    $    40,637
                               ============  ===========  ===========  ===========  ===========  =============

The following is a reconciliation of segment revenues and income to consolidated
revenues and income for the periods presented above (in thousands):

                                                             2000                 1999
                                                       -----------------    -----------------
Revenues
<S>                                                      <C>                  <C>
Total revenue for reportable segments                    $     63,161         $     64,641
Other revenue (1)                                               1,004                4,450
                                                       -----------------    -----------------
Total consolidated revenues                              $     64,165         $     69,091
                                                       =================    =================
</TABLE>

                                       19
<PAGE>
<TABLE>
<CAPTION>

                     GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2000


                                                             2000                 1999
                                                       -----------------    -----------------
Net Income
<S>                                                      <C>                  <C>
NOI for reportable segments                              $     39,715         $     40,637
Elimination of internal property management fees                1,889                2,003
Unallocated amounts:
   Other revenue (1)                                            1,004                4,450
   General and administrative expenses                         (2,309)              (2,222)
   Depreciation and amortization                              (15,129)             (15,092)
   Interest expense                                           (16,347)             (16,540)
                                                       -----------------    -----------------
Income from operations  before minority  interest and
   extraordinary items                                   $      8,823         $     13,236
                                                       =================    =================

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

Note 14.  SUBSEQUENT EVENTS

Dispositions
Subsequent  to March 31, 2000,  the Company sold three  office  properties,  two
retail properties and one industrial property. These properties were sold for an
aggregate  sales price of $75 million,  which  approximated  their aggregate net
book value.

Debt Retirement
Subsequent to March 31, 2000, the Company retired all of its unsecured  Series A
Senior  Notes,  subject  only to the  contractual  obligation  of the  remaining
holders  to be  redeemed  on May 19,  2000.  This  transaction  and the  related
write-off of capitalized  original  issuance costs generated a net loss on early
extinguishment of debt of approximately $79,000.
</TABLE>


                                       20
<PAGE>
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
     of Operations

Background

Glenborough Realty Trust Incorporated (the "Company") is a self-administered and
self-managed  real estate  investment  trust ("REIT")  engaged  primarily in the
ownership,   operation,   management,   leasing,   acquisition,   expansion  and
development  of various types of  income-producing  properties.  As of March 31,
2000,  the Company  owned and  operated  148  income-producing  properties  (the
"Properties," and each a "Property").  The Properties are comprised of 60 office
Properties,  37 industrial  Properties,  10 retail  Properties,  37  multifamily
Properties,  1 hotel Property and 3 joint  ventures,  located in 28 metropolitan
markets.

The Company was  incorporated  in the State of Maryland on August 26,  1994.  On
December 31, 1995, the Company completed a consolidation  (the  "Consolidation")
in which Glenborough  Corporation,  a California  corporation,  and eight public
limited  partnerships (the  "Partnerships")  collectively,  the "GRT Predecessor
Entities",  merged with and into the Company.  The Company (i) issued  5,753,709
shares  (the  "Shares")  of $.001 par value  Common  Stock of the Company to the
Partnerships  in exchange  for the net assets of the  Partnerships;  (ii) merged
with Glenborough Corporation, with the Company being the surviving entity; (iii)
acquired an interest in three  companies (the  "Associated  Companies"),  two of
which  merged  on June  30,  1997,  and the  remaining  two of which  merged  on
September 30, 1999, that provide asset and property management services, as well
as  other  services;  and  (iv)  through  a  subsidiary  operating  partnership,
Glenborough Properties,  L.P. (the "Operating Partnership"),  acquired interests
in certain  warehouse  distribution  facilities  from GPA,  Ltd.,  a  California
limited partnership ("GPA"). A portion of the Company's operations are conducted
through the  Operating  Partnership,  of which the  Company is the sole  general
partner,  and in which the Company holds a 88.18%  limited  partner  interest at
March 31, 2000. The Company  operates the assets  acquired in the  Consolidation
and in subsequent  acquisitions  (see further  discussion  below) and intends to
continue to invest in  income-producing  property  directly  and  through  joint
ventures.  In addition,  the Associated  Companies may acquire  general  partner
interests in other real estate limited partnerships.  The Company has elected to
qualify as a REIT under the  Internal  Revenue  Code of 1986,  as  amended.  The
common and preferred stock of the Company (the "Common Stock" and the "Preferred
Stock",  respectively)  are listed on the New York Stock Exchange ("NYSE") under
the trading symbols "GLB" and "GLB Pr A", respectively.

The  Company's  principal  business  objectives  are to  achieve  a  stable  and
increasing  source of cash flow available for distribution to  stockholders.  By
achieving  these  objectives,  the  Company  will seek to raise the value of its
shares over time.

Results of Operations

Comparison  of the three  months  ended March 31, 2000 to the three months ended
March 31, 1999.

Rental Revenues.  Rental revenue decreased $1,480,000, or 2%, to $63,161,000 for
the three  months  ended March 31, 2000 from  $64,641,000  for the three  months
ended March 31, 1999.  The  decrease  included  decreases  in revenues  from the
industrial,  retail and hotel  Properties  of  $1,558,000,  $375,000,  $223,000,
respectively.  These  decreases  are  primarily  due to the  sales  of  thirteen
industrial,  one retail and two hotels since March 31, 1999. These decreases are
partially  offset by  increases  in  revenue  from the  office  and  multifamily
Properties of $323,000 and $353,000, respectively.

Fees and Reimbursements from affiliates. Fees and reimbursements from affiliates
consist  primarily  of property  and asset  management  fees paid to the Company
under property and asset  management  agreements with the Managed  Partnerships.
This revenue decreased $663,000,  or 59%, to $468,000 for the three months ended
March 31,  2000,  from  $1,131,000  for the three  months  ended March 31, 1999,
primarily due to transaction fees received from GC in the first quarter of 1999.

Interest  and Other  Income.  Interest and other  income  decreased  $443,000 to
$1,216,000  for the three months ended March 31, 2000,  from  $1,659,000 for the
three months ended March 31, 1999. The decrease primarily consisted of decreases
in interest earned on notes receivable due to payoffs received.

Equity in Earnings of  Associated  Companies.  Equity in earnings of  Associated
Companies  decreased  $263,000,  or 85%, to $46,000 for the three  months  ended
March 31, 2000,  from  $309,000  for the three months ended March 31, 1999.  The
decrease is primarily due to a decrease in earnings  from GC due to  transaction
fees received in the first quarter of 1999.

                                       21
<PAGE>
Net Gain  (Loss) on Sales of Real Estate  Assets.  The net loss on sales of real
estate  assets  of  $695,000  during  the three  months  ended  March 31,  2000,
primarily  resulted  from the sales of one office  property  and one  industrial
property  from the  Company's  portfolio in 2000.  The net gain on sales of real
estate  assets of  $1,351,000  during the three  months  ended  March 31,  1999,
resulted from the sale of five industrial properties,  two retail properties and
a small partial interest in a REIT.

Property Operating Expenses.  Property operating expenses decreased $444,000, or
2%, to $21,557,000 for the three months ended March 31, 2000,  from  $22,001,000
for the three months ended March 31, 1999. This decrease  corresponded to the 2%
decrease in rental revenues resulting from the sale of properties.

General and Administrative Expenses. General and administrative expenses did not
change  significantly with an increase of $87,000,  or 4%, to $2,309,000 for the
three months ended March 31, 2000,  from  $2,222,000  for the three months ended
March 31, 1999.

Depreciation  and  Amortization.  Depreciation  and  amortization did not change
significantly  with an increase of $37,000,  or 0.20%,  to  $15,129,000  for the
three months ended March 31, 2000,  from  $15,092,000 for the three months ended
March 31, 1999.

Interest Expense.  Interest expense did not change significantly with a decrease
of $193,000,  or 1%, to  $16,347,000  for the three months ended March 31, 2000,
from $16,540,000 for the three months ended March 31, 1999.

Net Loss on Early  Extinguishment  of Debt. Net loss on early  extinguishment of
debt of  $466,000  during the three  months  ended March 31,  2000,  consists of
$931,000 of gains on retirement  of Series A Senior Notes at a discount,  offset
by the related  write-off of unamortized  loan fees in the amount of $1,397,000.
The net loss on early  extinguishment  of debt of  $1,991,000  during  the three
months ended March 31, 1999, consists of prepayment  penalties and the write-off
of unamortized loan fees upon early payoff of debt.

Liquidity and Capital Resources

Cash Flows
For the three months ended March 31, 2000, cash provided by operating activities
decreased by $6,177,000 to $17,957,000  as compared to $24,134,000  for the same
period in 1999.  The decrease is  primarily  due to an increase in cash used for
other  assets  and  liabilities  and  by  an  decrease  in  net  income  (before
depreciation  and  amortization,  minority  interest,  net gain on sales of real
estate assets and net gain on early extinguishment of debt) of $2,330,000 due to
the 1999 and 2000 sales of properties.  Cash from investing activities increased
by $11,853,000  to $10,642,000 of cash provided by investing  activities for the
three months ended March 31, 2000,  as compared to  $1,211,000  of cash used for
investing  activities for the same period in 1999. The increase is primarily due
to a  decrease  in  cash  used  for  investments  in  development  and  property
acquisitions in the first three months of 2000 as compared to the same period in
1999.  During the three months ended March 31,  1999,  the Company  acquired two
properties  as compared to one property  during the three months ended March 31,
2000. In addition, net proceeds from the sales of real estate assets,  principal
receipts  on  mortgage  loans  receivable  and  repayments  of notes  receivable
increased  in the first  three  months of 2000 as compared to the same period in
1999.  These  increases  are  partially  offset by an  increase in cash used for
investment  in joint  ventures in first three  months of 2000 as compared to the
same period in 1999. Cash from financing  activities decreased by $10,763,000 to
$34,235,000  of cash used for  financing  activities  for the three months ended
March 31, 2000, as compared to $23,472,000 of cash used for financing activities
for the same  period in 1999.  This change was  primarily  due to an increase in
cash used for the  retirement  of Senior  Notes and  repurchases  of common  and
preferred  stock offset by an increase in proceeds  from new debt and a decrease
in the repayment of other debt.

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

The  Company's  principal  sources of  funding  for  acquisitions,  development,
expansion  and  renovation  of  properties  and stock  repurchases  include  the

                                       22
<PAGE>
unsecured Credit Facility,  permanent  secured debt financing,  public unsecured
debt financing,  public and private equity and debt  issuances,  the issuance of
partnership units in the Operating Partnership, proceeds from property sales and
cash flow provided by operations.

Mortgage Loans Receivable
Mortgage loans  receivable  decreased from  $37,582,000 at December 31, 1999, to
$37,401,000  at  March  31,  2000.  This  decrease  was due to the  payoff  of a
$1,141,000 loan made by the Company to the buyer of one of the hotel properties,
offset by accrued  interest  on a loan made by the Company  under a  development
alliance.

Secured and Unsecured Financing
Mortgage  loans payable  decreased  from  $701,715,000  at December 31, 1999, to
$685,615,000  at March 31, 2000.  This decrease  resulted from the assumption by
the buyer of one of the Company's properties of a mortgage loan in the amount of
$20,571,000 and scheduled principal payments of approximately  $2,319,000.  This
decrease is partially  offset by $6,790,000 of new mortgage  loans in connection
with an acquisition and the construction of a property in Bedminster, New Jersey
(see below for further discussion).

In August 1999,  the Company  closed a $97.6 million  secured  financing  with a
commercial bank ("Secured Financing"). In connection with the Secured Financing,
the Company  entered into an interest rate cap  agreement to hedge  increases in
interest  rates above a specified  level of 11.21%.  The agreement is for a term
concurrent with the Secured Financing instrument, is indexed to the 90-day LIBOR
rate, and is for a notional amount equal to the maximum amount  available on the
Secured  Financing  loan. As of March 31, 2000, the 90-day LIBOR rate was 6.29%.
The Company paid a premium of approximately $434,000 at the inception of the cap
agreement, which is being amortized as additional interest expense over the life
of the agreement.

In the first quarter of 2000, the Company retired approximately $87.1 million of
unsecured Series A Senior Notes at a discount, as previously discussed.

In the first quarter of 2000, the Company obtained a $10.5 million  construction
loan to build an 80,000 square foot office  property in Bedminster,  New Jersey.
Approximately  $2.5 million was  outstanding  at March 31, 2000.  The loan has a
maturity  date of November 12, 2001 and bears  interest at the floating  rate of
LIBOR plus 2.25%. The interest rate on this loan at March 31, 2000 was 8.38%.

In the first quarter of 2000,  the Company  formed a limited  liability  company
(the "LLC") with an independent  third party and contributed its interest in the
office  property known as 2000  Corporate  Ridge,  located in McLean,  Virginia.
Consideration  received for this contribution included $14.7 million in cash and
the assumption of a $20.6 million mortgage by the LLC.

In March 2000, related to the acquisition of an industrial  property from one of
the Company's development alliances,  the Company assumed a $4.3 million secured
loan.  This loan has a maturity  date of October 1, 2000 (with  options  for two
6-month extensions) and bears interest at the floating rate of LIBOR plus 1.55%.
The interest rate on this loan at March 31, 2000 was 7.68%.

The Company has an unsecured  line of credit  provided by a group of  commercial
banks (the "Credit Facility").  Outstanding borrowings under the Credit Facility
increased  from  $70,628,000  at December 31, 1999, to  $72,901,000 at March 31,
2000.  The  increase was due to draws of  $39,228,000  for  acquisitions,  stock
repurchases, and purchases of the Company's Series A Senior Notes, offset by pay
downs of  $36,955,000  generated  from proceeds from the sales of properties and
cash from operations. In February 2000, the maturity date on the Credit Facility
was extended from December 2000 to June 2002.

At March 31, 2000, the Company's total indebtedness  included fixed-rate debt of
$536,832,000 and floating-rate  indebtedness of $348,159,000.  Approximately 65%
of the Company's total assets,  comprising 103 properties, is encumbered by debt
at March 31, 2000.

It is the  Company's  policy to manage its  exposure to  fluctuations  in market
interest  rates  through  the use of fixed rate debt  instruments  to the extent
possible.  At March 31, 2000,  approximately  39% of the  Company's  outstanding
debt,  including  amounts  borrowed under the Credit  Facility,  were subject to
variable  rates.  The Company may,  from time to time,  enter into interest rate
protection  agreements  intended  to hedge the cost of new  borrowings  that are
reasonably  assured of completion.  It is not the Company's  policy to engage in
hedging   activities  for  previously   outstanding   debt  instruments  or  for

                                       23
<PAGE>
speculative purposes. At March 31, 2000, the Company was not a party to any open
interest rate  protection  agreements  other than the interest rate cap contract
associated with the Secured Financing loan discussed above.

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

Development Alliances
The Company is currently involved in 4 development alliances for the development
of  approximately  713,000 square feet of office,  office/flex and  distribution
properties and 1,710  multifamily units in Colorado,  Texas, New Jersey,  Kansas
and Michigan.  As of March 31, 2000, the Company has advanced  approximately $40
million to these alliances.  Under these development alliances,  the Company has
certain rights to purchase the properties  upon  completion of development  over
the next five years.  In addition,  the Company has loaned  approximately  $37.4
million  (including  accrued  interest)  under another  development  alliance to
continue the  build-out of a 1,200 acre  master-planned  development  in Denver,
Colorado.

Inflation

Substantially all of the leases at the industrial and retail Properties  provide
for pass-through to tenants of certain  operating  costs,  including real estate
taxes,  common  area  maintenance  expenses,   and  insurance.   Leases  at  the
multifamily properties generally provide for an initial term of one month or one
year and allow for rent adjustments at the time of renewal. Leases at the office
Properties  typically  provide for rent  adjustment and  pass-through of certain
operating  expenses  during the term of the lease.  All of these  provisions may
permit  the  Company to  increase  rental  rates or other  charges to tenants in
response to rising prices and therefore,  serve to reduce the Company's exposure
to the adverse effects of inflation.

Funds from Operations and Cash Available for Distribution

Funds from  Operations,  as defined by NAREIT,  represents  income (loss) before
minority  interests and  extraordinary  items,  adjusted for real estate related
depreciation   and   amortization  and  gains  (losses)  from  the  disposal  of
properties.  The  Company  believes  that FFO is a widely  used  measure  of the
financial  performance  of equity  REITs  which  provides a  relevant  basis for
comparison  among other  REITs.  Together  with net income and cash  flows,  FFO
provides investors with an additional basis to evaluate the ability of a REIT to
incur and service debt and to fund acquisitions,  developments and other capital
expenditures. FFO does not represent net income or cash flows from operations as
defined by GAAP,  and should not be considered as an  alternative  to net income
(determined in accordance with GAAP) as an indicator of the Company's  operating
performance  or as an alternative  to cash flows from  operating,  investing and
financing  activities  (determined  in  accordance  with  GAAP) as a measure  of
liquidity.  FFO does not necessarily indicate that cash flows will be sufficient
to fund  all of the  Company's  cash  needs  including  principal  amortization,
capital  improvements  and  distributions  to  stockholders.   Further,  FFO  as
disclosed by other REITs may not be comparable to the Company's  calculation  of
FFO.  The  Company  calculates  FFO in  accordance  with the White  Paper on FFO
approved by the Board of Governors of NAREIT in March 1995.

In October 1999,  NAREIT issued an update,  'White Paper on FFO-October 1999' to
clarify its definition of FFO. The  clarification  is effective  January 1, 2000
and requires  restatement for all periods  presented in financial  statements or
tables. FFO, as clarified by NAREIT,  represents "net income excluding gains (or
losses) from sales of property,  plus depreciation and  amortization,  and after
adjustments for unconsolidated partnerships and joint ventures.  Adjustments for
unconsolidated partnerships and joint ventures will be calculated to reflect FFO
on the same basis." The Company will report using the  clarified  definition  in
periods beginning after January 1, 2000.

Cash  available for  distribution  ("CAD")  represents  net income (loss) before
minority  interests  and  extraordinary  items,  adjusted for  depreciation  and
amortization  including  amortization  of  deferred  financing  costs  and gains

                                       24
<PAGE>
(losses) from the disposal of properties,  less lease  commissions and recurring
capital expenditures,  consisting of tenant improvements and normal expenditures
intended to extend the useful life of the property  such as roof and parking lot
repairs.  CAD should not be considered an alternative to net income (computed in
accordance with GAAP) as a measure of the Company's financial  performance or as
an alternative to cash flow from  operating  activities  (computed in accordance
with  GAAP) as a  measure  of the  Company's  liquidity,  nor is it  necessarily
indicative  of  sufficient  cash flow to fund all of the  Company's  cash needs.
Further,  CAD as disclosed by other REITs may not be comparable to the Company's
calculation of CAD.
<TABLE>
<CAPTION>
The following table sets forth the Company's  calculation of FFO and CAD for the
three months ended March 31, 2000 (in thousands,  except weighted average shares
and per share amounts):

                                                        March 31,
                                                           2000
                                                       -------------
<S>                                                    <C>
Income  from  operations  before  minority  interest,
   extraordinary items and preferred dividends         $     8,823
Preferred dividends                                         (5,488)
Net (gain) loss on sales of real estate assets                 695
Depreciation and amortization (1)                           14,915
Adjustment to reflect FFO of Unconsolidated
    JV's (2)                                                   190
Adjustment to reflect FFO of Associated Companies (3)          164

                                                       -------------
FFO                                                    $    19,299
                                                       =============

Amortization of deferred financing fees                        639
Capital reserve                                                  -
Capital expenditures                                        (4,989)
                                                       -------------
CAD                                                    $    14,949
                                                       =============

Distributions per share (4)                            $      0.42
                                                       =============

Diluted weighted average shares outstanding             34,096,464
                                                       =============

(1)  Excludes depreciation of corporate office fixed assets.
(2)  Reflects  the  adjustments  to  FFO  required  to  reflect  the  FFO of the
     unconsolidated  joint  ventures  allocable  to the Company.  The  Company's
     investments in the joint ventures are accounted for using the equity method
     of accounting.
(3)  Reflects  the  adjustments  to  FFO  required  to  reflect  the  FFO of the
     Associated Companies allocable to the Company. The Company's investments in
     the  Associated  Companies  are  accounted  for using the equity  method of
     accounting.
(4)  The  distributions  for the three months ended March 31, 2000, were paid on
     April 17, 2000.

Forward Looking Statements; Factors That May Affect Operating Results

This Report on Form 10-Q contains forward looking  statements within the meaning
of Section 27A of the  Securities  Act of 1933 and Section 21E of the Securities
and  Exchange  Act  of  1934,   including  statements  regarding  the  Company's
expectations,  hopes,  intentions,  beliefs and strategies  regarding the future
including  the  Company's  belief  that cash  generated  by  operations  will be
adequate to meet operating requirements and to make distributions, the Company's
expectations  as to the timing of the  completion  of the  development  projects
through  its  development  alliances  and  the  acquisition  by the  Company  of
properties  developed  through  its  development  alliances.  There  can  be  no
assurance  that the actual  outcomes  or results  will be  consistent  with such
expectations,   hopes,  intentions,  beliefs  and  strategies.  Forward  looking
statements include statements regarding potential acquisitions,  the anticipated
performance of future acquisitions, recently completed acquisitions and existing
properties,  and statements  regarding the Company's financing  activities.  All
forward  looking  statements  included in this document are based on information
available  to the Company on the date  hereof.  It is important to note that the
Company's actual results could differ materially from those stated or implied in
such forward-looking statements.
</TABLE>
                                       25
<PAGE>
Factors which may cause the Company's results to differ include the inability to
complete  anticipated  future  acquisitions,  defaults or non-renewal of leases,
increased  interest rates and  operational  costs,  failure to obtain  necessary
outside  financing,  difficulties  in  identifying  properties to acquire and in
effecting  acquisitions,  failure to qualify as a real estate  investment  trust
under the Internal  Revenue  Code of 1986,  environmental  uncertainties,  risks
related to natural  disasters,  financial market  fluctuations,  changes in real
estate and zoning laws,  increases in real  property tax rates and other factors
discussed under the caption "Forward Looking Statements; Factors That May Affect
Operating  Results" in the  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations"  section of the Company's  Annual Report on
Form 10-K for the year ended December 31, 1999, and other risk factors set forth
in the Company's other Securities and Exchange  Commission filings. In addition,
past performance of the Company's Common Stock is not necessarily  indicative of
results that will be obtained in the future from an  investment in the Company's
Common Stock.  Furthermore,  the Company makes distributions to stockholders if,
as and when  declared by its Board of  Directors,  and  expects to continue  its
policy of paying  quarterly  distributions,  however,  there can be no assurance
that distributions will continue or be paid at any specific level.

Risk Factors

Stockholders or potential stockholders should read the "Risk Factors" section of
the Company's  latest annual report on Form 10-K filed with the  Securities  and
Exchange  Commission  ("SEC") in conjunction  with this quarterly report on Form
10-Q to better  understand  the  factors  affecting  the  Company's  results  of
operations and the Company's common stock share price. The fact that some of the
risk factors may be the same or similar to the Company's past filings means only
that the risks are present in multiple  periods.  The Company believes that many
of the risks  detailed here and in the  Company's  other SEC filings are part of
doing  business  in the real estate  industry  and will likely be present in all
periods  reported.  The fact that certain risks are endemic to the industry does
not lessen the significance of the risk.

                                       26
<PAGE>



PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

On March 14,  2000,  the Federal  District  Court for the  Northern  District of
California  dismissed  with prejudice a class action  complaint  relating to the
Consolidation (the "BEJ Action"). The plaintiffs in the action failed to file an
appeal within the permitted  period,  so the BEJ Action is fully  resolved.  The
plaintiffs  in  the  BEJ  Action  had  voluntarily  stayed  the  action  pending
resolution  of a  separate  action  relating  to the  Consolidation,  which  was
resolved in 1999.  Following the  resolution  of the other  action,  the Company
filed a motion to dismiss the BEJ Action in January 2000. The plaintiffs did not
respond  to the  Company's  motion to dismiss  and,  as noted  above,  the court
dismissed the action and there was no appeal.

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

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

There were no matters submitted to a vote of security holders during the quarter
ended March 31, 2000.

Item 6.  Exhibits and Reports on Form 8-K

 (a)    Exhibits:

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

 (b)    Reports on Form 8-K:

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

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



                                       27
<PAGE>



                                                              SIGNATURES


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


                                  GLENBOROUGH REALTY TRUST INCORPORATED




                                  By: Glenborough Realty Trust Incorporated,



Date: May 15, 2000                /s/ Andrew Batinovich
                                  Andrew Batinovich
                                  Director, President
                                  and Chief Operating Officer
                                  (Principal Operating Officer)





Date: May 15, 2000                /s/ Stephen Saul
                                  Stephen Saul
                                  Executive Vice President
                                  and Chief Financial Officer
                                  (Principal Financial Officer)





Date: May 15, 2000                 /s/ Terri Garnick
                                  Terri Garnick
                                  Senior Vice President,
                                  Chief Accounting Officer,
                                  Treasurer
                                  (Principal Accounting Officer)



                                       28
<PAGE>


                                                             EXHIBIT INDEX



Exhibit No.                                                  Exhibit Title

11.01   Statement re:  Computation of Per Share Earnings is shown in Note 11 of
        the Consolidated Financial Statements of the Company in Item 1.

12.01   Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings
        to Fixed Charges and Preferred Dividends.

27.01   Financial Data Schedule.


                                       29
<PAGE>
<TABLE>
<CAPTION>


Exhibit 12.01

GLENBOROUGH REALTY TRUST INCORPORATED
Computation of Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Fixed Charges and Preferred Dividends
For the five years ended December 31, 1999
and the three months ended March 31, 2000
(in thousands)
                                               GRT
                                           Predecessor
                                            Entities,
                                             Combined                                    The Company
                                           -------------  ------------------------------------------------------------------------
                                                                                                                     Three Months

                                                                                                                        Ended
                                                                  Year Ended December 31,                             March 31,
                                           ----------------------------------------------------------------------    -------------
                                               1995          1996           1997         1998           1999             2000
                                           -------------  -----------    -----------  ------------   ------------    -------------
EARNINGS, AS DEFINED

Net Income (Loss) before Preferred
<S>                                        <C>            <C>              <C>        <C>            <C>              <C>
   Dividends (2)                           $     524      $  (1,609)       $19,368    $    44,602    $    50,286      $   8,051
Extraordinary items                                -            186            843          1,400           (984)           466
Federal & State income taxes                     357              -              -              -              -              -
Minority Interest                                  -            292          1,119          2,550          3,647            306
Fixed Charges                                  2,129          3,913          9,668         53,289         64,782         16,347
                                           -------------  -----------    -----------  ------------   ------------    -------------
                                           $   3,010      $   2,782        $30,998    $   101,841    $   117,731      $  25,170
                                           -------------  -----------    -----------  ------------   ------------    -------------

FIXED CHARGES AND PREFERRED DIVIDENDS, AS
   DEFINED

Interest Expense                           $   2,129      $   3,913       $  9,668    $    53,289    $    64,782      $  16,347
Capitalized Interest                               -              -              -          1,108          2,675            788
Preferred Dividends                                -              -              -         20,620         22,280          5,488
                                           -------------  -----------    -----------  ------------   ------------    -------------
                                           $   2,129      $   3,913       $  9,668    $    75,017    $    89,737      $  22,623

RATIO OF EARNINGS TO FIXED CHARGES (3)
                                                1.41           0.71  (1)      3.21           1.87           1.75           1.47
                                           -------------  -----------    -----------  ------------   ------------    -------------

RATIO OF EARNINGS TO FIXED CHARGES AND
   PREFERRED DIVIDENDS (3)
                                                1.41           0.71  (1)      3.21           1.36           1.31           1.11
                                           -------------  -----------    -----------  ------------   ------------    -------------

(1)  For the twelve months ended December 31, 1996,  earnings were  insufficient
     to cover fixed charges by $1,131.
(2)  Net Income (Loss) before  Preferred  Dividends  includes  depreciation  and
     amortization expense as a deduction.
(3)  Ratio of Earnings to Fixed  Charges and Ratio of Earnings to Fixed  Charges
     and Preferred Dividends includes depreciation and amortization expense as a
     deduction from earnings.
</TABLE>

                                       30
<PAGE>