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, 1999

                                      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,
           $.001 par value                           New York Stock Exchange

       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 13,  1999,  31,672,539  shares of Common  Stock  ($.001 par value) and
11,500,000  shares of 7.75%  Series A  Convertible  Preferred  Stock  ($.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,
              1998):

                 Consolidated  Balance  Sheets at March 31,  1999
                 and December 31, 1998                                      3

                 Consolidated Statements of Operations for the
                 three months ended March 31, 1999 and 1998                 4

                 Consolidated Statement of Stockholders'
                 Equity for the three months ended March 31, 1999           5

                 Consolidated Statements of Cash Flows for
                 the three months ended March 31, 1999 and 1998           6-7

                 Notes to Consolidated Financial Statements              8-18

Item 2.       Management's Discussion and Analysis of Financial
              Condition and Results of Operations                       19-25

PART II       OTHER INFORMATION

Item 1.       Legal Proceedings                                         26-27

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

Item 5.       Other Information                                            27

Item 6.       Exhibits and Reports on Form 8-K                             28

SIGNATURES                                                                 29

EXHIBIT INDEX                                                              30


                                       2
<PAGE>

Part I.           FINANCIAL INFORMATION

Item 1.           Financial Statements


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


                                                     March 31,      December 31,
                                                       1999             1998
                                                    (Unaudited)      (Audited)
                                                   ------------    ------------
ASSETS
   Rental property, net of accumulated
    depreciation of $76,064 and $72,941
    in  1999  and  1998, respectively               $1,644,620      $1,720,579 
   Real estate held for sale                            91,618          21,860
   Investments in Development                           36,772          35,131
   Investments in Associated Companies                   8,992           8,807
   Mortgage loans receivable                            43,413          42,420
   Cash and cash equivalents                             3,808           4,357
   Other assets                                         46,614          45,862
                                                   ------------    ------------
      TOTAL ASSETS                                  $1,875,837      $1,879,016
                                                   ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Mortgage loans                                   $  730,376      $  708,578
   Unsecured Series A Senior Notes                     150,000         150,000
   Unsecured bank line                                  54,307          63,519
   Other liabilities                                    23,812          28,921
                                                   ------------    ------------
     Total liabilities                                 958,495         951,018
                                                   ------------    ------------

Commitments and contingencies                               --              --

Minority interest                                       98,403          99,465

Stockholders' Equity:
   Common stock, 31,689,539 and 31,758,915 shares
     issued and outstanding at March 31, 1999 and
     December 31, 1998, respectively                        32              32
   Preferred  stock,  11,500,000  shares issued
     and outstanding at March 31, 1999 and 
     December 31, 1998                                      11              11
   Additional paid-in capital                          864,372         865,692
   Deferred compensation                                  (158)           (181)
   Retained earnings (deficit)                         (45,318)        (37,021)
                                                   ------------    ------------
     Total stockholders' equity                        818,939         828,533
                                                   ------------    ------------

        TOTAL LIABILITIES AND STOCKHOLDERS'
         EQUITY                                     $1,875,837      $1,879,016
                                                   ============    ============

           See accompanying notes to consolidated financial statements

                                       3
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               For the three months ended March 31, 1999 and 1998
                    (in thousands, except per share amounts)
                                   (Unaudited)

                                                      1999               1998
                                                   -----------       -----------
REVENUE
   Rental revenue                                   $  64,641         $  45,963
   Fees and reimbursements from affiliates              1,131               473
   Interest and other income                            1,659               357
   Equity in earnings of Associated Companies             309               352
   Net gain on sales of real estate assets              1,351             1,446
                                                   -----------       -----------
     Total revenue                                     69,091            48,591
                                                   -----------       -----------

EXPENSES
   Property operating expenses                         22,001            14,324
   General and administrative                           2,222             2,222
   Depreciation and amortization                       15,092            10,009
   Interest expense                                    16,540             9,145
                                                   -----------       -----------
     Total expenses                                    55,855            35,700
                                                   -----------       -----------

Income from operations before minority
   interest and extraordinary item                     13,236            12,891
  Minority interest                                      (667)             (678)
                                                   -----------       -----------
  Net income before extraordinary item                 12,569            12,213
Extraordinary item:
Loss on early extinguishment of debt                   (1,991)               --
                                                   -----------       -----------
Net income                                             10,578            12,213
Preferred dividends                                    (5,570)           (3,910)
                                                   -----------       -----------
Net income available to Common Stockholders         $   5,008         $   8,303
                                                   ===========       ===========

Basic Per Share Data:
Net income available to Common
   Stockholders before extraordinary item           $    0.22         $    0.26
Extraordinary item                                      (0.06)               --
                                                   -----------       -----------
Net income available to Common Stockholders         $    0.16         $    0.26
                                                   ===========       ===========
Basic weighted average shares outstanding          31,764,834        31,548,706
                                                   ===========       ===========
Diluted Per Share Data:
Net income available to Common
   Stockholders before extraordinary item           $    0.21         $    0.26
Extraordinary item                                      (0.05)               --
                                                   -----------       -----------
Net income available to Common Stockholders         $    0.16         $    0.26
                                                   ===========       ===========
Diluted weighted average shares outstanding        36,098,374        34,372,364
                                                   ===========       ===========

           See accompanying notes to consolidated financial statements

                                       4
<PAGE>

<TABLE>
<CAPTION>

                                   GLENBOROUGH REALTY TRUST INCORPORATED
                               CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                 For the three months ended March 31, 1999
                                               (in thousands)
                                                (Unaudited)

                                 Common         Preferred
                                 Stock            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, 1998   31,759   $ 32   11,500   $ 11   $ 865,692   $ (181)   $(37,021)   $828,533

Exercise of stock options          50     --       --     --         750       --          --         750

Conversion of Operating
   Partnership units into
   common stock                     1     --       --     --          --       --          --          --

Common stock repurchases         (120)    --       --     --      (2,070)      --          --      (2,070)

Amortization of deferred
   compensation                    --     --       --     --          --       23          --          23

Unrealized gain on
   marketable securities           --     --       --     --          --       --          34          34

Distributions                      --     --       --     --          --       --     (18,909)    (18,909)

Net income                         --     --       --     --          --       --      10,578      10,578
                           -------------------------------------------------------------------------------

Balance at March 31, 1999      31,690   $ 32   11,500   $ 11   $ 864,372   $ (158)   $(45,318)   $818,939
                           ===============================================================================

                        See accompanying notes to consolidated financial statements
</TABLE>


                                       5
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               For the three months ended March 31, 1999 and 1998
                                 (in thousands)
                                   (Unaudited)



                                                   1999                1998
                                                -----------         ----------
Cash flows from operating activities:
   Net income                                   $  10,578           $  12,213
   Adjustments to reconcile net income
     to net cash provided by operating
     activities:
      Depreciation and amortization                15,092              10,009
      Amortization of loan fees,
       included in interest expense                   485                 418
      Minority interest in income from
        operations                                    667                 678
      Equity in earnings of Associated
        Companies                                    (309)               (352)
      Net gain on sales of real estate assets      (1,351)             (1,446)
      Loss on early extinguishment of debt          1,991                  --
      Amortization of deferred compensation            23                  23
      Changes in certain assets and
        liabilities, net                           (5,189)             (4,771)
                                                -----------         ----------
        Net cash provided by operating
           activities                              21,987              16,772
                                                -----------         ----------

Cash flows from investing activities:
   Net proceeds from sales of real
      estate assets                                17,522              28,559
   Additions to real estate assets                (14,176)           (412,585)
   Investments in Development                      (3,488)                 --
   Additions to mortgage loans receivable            (993)                (49)
   Principal receipts on mortgage loans
      receivable                                       --                   1
   Advances to affiliates                            (200)                 --
   Distributions from Associated Companies            124                 548
                                                -----------         ----------
        Net cash used for investing
           activities                              (1,211)           (383,526)
                                                -----------         ----------


                                    continued

           See accompanying notes to consolidated financial statements


                                       6
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED
                CONSOLIDATED STATEMENTS OF CASH FLOWS -continued
               For the three months ended March 31, 1999 and 1998
                                 (in thousands)
                                   (Unaudited)


                                                   1999               1998
                                                -----------       -----------
Cash flows from financing activities:
   Proceeds from borrowings                     $  44,000         $ 159,365
   Repayment of borrowings                        (45,514)         (201,005)
   Draws from (payments into ) lender
      impound accounts, net                         2,147            (1,445)
   Proceeds from issuance of Series A
      Senior Notes                                     --           150,000
   Distributions to minority interest holders      (1,729)           (1,005)
   Distributions to stockholders                  (18,909)          (13,250)
   Exercise of stock options                          750                10
   Repurchases of common stock                     (2,070)               --
   Proceeds from issuance of preferred
      stock, net of offering costs                     --           275,680
                                                -----------       -----------

      Net cash provided by (used for)
         financing activities                     (21,325)          368,350
                                                -----------       -----------

Net increase (decrease) in cash and cash
   equivalents                                       (549)            1,596

Cash and cash equivalents at beginning
   of period                                        4,357             5,070
                                                -----------       -----------

Cash and cash equivalents at end of period      $   3,808         $   6,666
                                                ===========       ===========

Supplemental disclosure of cash flow information:

   Cash paid for interest (net of capitalized
      interest of $643 in 1999)                 $  16,684         $   7,329
                                                ===========       ===========

Supplemental disclosure of Non-Cash
   Investing and Financing Activities:

   Acquisition of real estate through
      assumption of first trust deed
      notes payable                             $  14,100         $ 105,756
                                                ===========       ===========

   Acquisition of real estate through
      issuance of shares of common stock
      and Operating Partnership units           $      --         $     116
                                                ===========       ===========


           See accompanying notes to consolidated financial statements


                                       7
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 1999


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,
1999, the following  Common Stock  transactions  occurred:  (i) 37,000 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)
448,172 shares were issued in connection with various acquisitions;  (iv) 72,407
shares were issued in connection  with the exercise of employee  stock  options;
(v) 52,310  shares  were issued in  connection  with the  exchange of  Operating
Partnership  units;  (vi) 120,000  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, 1999, of 31,689,539.  Assuming
the issuance of 4,218,192  shares of Common Stock  issuable  upon  redemption of
4,218,192  partnership  units  in the  Operating  Partnership,  there  would  be
35,907,731 shares of Common Stock outstanding as of March 31, 1999.

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. Shares of Preferred Stock issued
and outstanding at March 31, 1999, totaled 11,500,000.

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 January 1999,  the  Company's  Board of Directors  authorized  the Company to
repurchase  up to 3.1  million  shares of its  outstanding  Common  Stock.  This
represents  approximately 10% 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, 1999, 120,000 shares had been repurchased at an average price of $17.21.

To maintain the Company's  qualification as a REIT, no more than 50% in value of
the outstanding shares of the Company may be owned,  directly or indirectly,  by
five or fewer  individuals  (defined  to  include  certain  entities),  applying
certain  constructive  ownership rules. To help ensure that the Company will not
fail this test,  the  Company's  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
87.25% limited  partner  interest at March 31, 1999, is Glenborough  Properties,
L.P.  (the  "Operating  Partnership").  As of  March  31,  1999,  the  Operating
Partnership,  directly and through the  subsidiaries in which it and the Company
own  100% of the  ownership  interests,  controls  a total  of 181  real  estate
projects.


                                       8
<PAGE>

As of  March  31,  1999,  the  Operating  Partnership  also  holds  100%  of the
non-voting  preferred  stock of the  following  two  Associated  Companies  (the
"Associated Companies"):

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

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

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, 1999,  and  December  31, 1998,  and the
consolidated  results of operations  and cash flows of the Company for the three
months ended March 31, 1999 and 1998. 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, 1999, 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 is effective  for fiscal  years  beginning  after June 15,  1999,  and early
adoption is permitted.  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.

Investments in Real Estate
Investments in real estate 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  rental  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

                                       9
<PAGE>

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

Investments in Associated Companies
The Company's  investments in the  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 the 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.

Marketable Securities
The Company records its marketable  securities at fair value.  Unrealized  gains
and losses on securities are reported as a separate  component of  stockholders'
equity and realized gains and losses are included in net income.

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
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


                                       10
<PAGE>

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,  1999,  the  Company  was not a party to any  open  interest  rate
protection agreements.

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.

Investments in Development Alliances
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. See Note 6 for further discussion.

Minority Interest
Minority  interest  represents  the  11.75%  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, 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  an
unconsolidated affiliate.

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.

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  stockholders.   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 1998 Audited Financial Statements
These  unaudited  financial  statements  should be read in conjunction  with the
Notes  to  Consolidated  Financial  Statements  included  in  the  1998  audited
financial statements.


                                       11
<PAGE>

Note 3.     INVESTMENTS IN REAL ESTATE

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

Dispositions
In the first quarter of 1999, the Company sold seven properties,  including five
office/flex  properties and two retail properties,  and a small partial interest
in a REIT.  These assets were sold for an aggregate sales price of approximately
$27.3 million and generated an aggregate net gain of  approximately  $1,351,000.
These  transactions are reflected as the net gain on sales of real estate assets
on the  accompanying  consolidated  statement of operations for the three months
ended March 31, 1999.

Prospective Acquisitions and Dispositions
The Company has entered into a  definitive  agreement to acquire all of the real
estate assets of Prudential-Bache/Equitec  Real Estate Partnership, a California
limited  partnership in which the managing  general partner is  Prudential-Bache
Properties,  Inc.,  and in  which  GC  and  Robert  Batinovich  have  served  as
co-general  partners  since  March  1994,  but do not hold a material  equity or
economic  interest (the  "Pru-Bache  Portfolio").  The total  acquisition  cost,
including  capitalized  costs,  is expected to be  approximately  $49.9 million,
which is to be paid entirely in cash. The Company anticipates that the cash will
be funded with  proceeds  from the sales of real estate  assets.  The  Pru-Bache
Portfolio  comprises four office buildings  aggregating  405,825 square feet and
one office/flex  property  containing  121,645 square feet. This  acquisition is
subject to certain contingencies, including customary closing conditions and the
resolution of litigation relating to the proposed acquisition,  to which neither
the Company nor the Operating Partnership is a party.

The Company has entered into short-term lease agreements on the hotel properties
located in  Arlington,  Texas,  and Ontario,  California,  with the  prospective
purchasers of these properties.  These prospective  purchasers have entered into
purchase agreements for these properties, with anticipated closing dates of June
30,  1999.  The  leases  terminate  on  the  closing  date  of the  sale  of the
properties.  The net book value of the two hotel properties totals $7,832,000 at
March 31, 1999. Net income earned by the Company (before  depreciation) from the
two hotels  totaled  $192,000  and $229,000 for the three months ended March 31,
1999 and 1998, respectively.

The  Company  has  entered  into  separate  definitive  agreements  to sell  ten
properties,  including three office properties, four office/flex properties, one
industrial  property,  one retail property and one multifamily  property.  These
sales are expected to close in the second quarter of 1999 for an aggregate sales
price of  approximately  $51  million.  In  addition,  the  Company is in active
negotiations to sell another six properties,  including one office property, one
office/flex property,  one industrial property and three retail properties.  The
six  additional  properties  have an aggregate  net book value of  approximately
$77.3 million at March 31, 1999,  and are reflected as Real Estate Held For Sale
on the accompanying consolidated balance sheet as of March 31, 1999. See Note 12
for discussion of sales subsequent to March 31, 1999.


                                       12
<PAGE>

Note 4.INVESTMENTS IN ASSOCIATED COMPANIES

The Company accounts for its investments in the Associated Companies (as defined
in Note 1) using the equity  method as a substantial  portion of their  economic
benefits flow to the Company by virtue of its 100%  non-voting  preferred  stock
interest in each of them, which interests constitute  substantially all of their
capitalization.  Two of the holders of the voting  common stock of GC and one of
the  holders of the voting  common  stock of GHG are  officers  of the  Company;
however,  the Company has no direct voting or management control of either GC or
GHG. The Company records earnings on its investments in the Associated Companies
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 the Associated Companies are recorded as a reduction
of the Company's investments.

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

                                         GC        GHG       Total
                                      -------    -------    ------
Investment at December 31, 1998      $ 6,800    $ 2,007    $ 8,807
Distributions                           (124)        --       (124)
Equity in earnings (loss)                318         (9)       309
                                      -------    -------    ------
Investment at March 31, 1999         $ 6,994    $ 1,998    $ 8,992
                                      =======    =======    ======

Note 5.MORTGAGE LOANS RECEIVABLE

The Company's mortgage loans receivable consist of the following as of March 31,
1999, and December 31, 1998 (dollars in thousands):
                                                         1999            1998
                                                      ----------     -----------

Note  secured by an office  property in Phoenix,
AZ,  with a  fixed  interest  rate  of 11% and a
maturity date of November  1999. As of March 31,
1999, the Partnership is committed to additional
advances  totaling $221 for tenant  improvements
and other leasing costs.                              $   3,629       $   3,484

Note secured by a hotel property in Dallas,  TX,
with  a  fixed  interest  rate  of  9%,  monthly
interest-only  payments  and a maturity  date of
June 30, 1999                                             3,600           3,600

Note  secured  by Gateway  Park land  located in
Aurora, CO, with a stated fixed interest rate of
13%,  quarterly  interest-only  payments  and  a
maturity  date  of  July  2005  (see  below  for
further discussion)                                      36,184          35,336
                                                      ----------     -----------
Total                                                  $ 43,413       $  42,420
                                                      ==========     ===========

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,  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,  office/flex
and industrial space and 1,600 multifamily units over the next ten years.

Note 6. INVESTMENTS IN DEVELOPMENT

The Company has formed 4 development alliances to which it has committed a total
of approximately $43 million for the development of approximately 713,000 square
feet of office,  office/flex and distribution  properties and 1,710  multifamily
units in North Carolina, Colorado, Texas, New Jersey, Kansas and Michigan. As of

                                       13
<PAGE>

March 31, 1999, the Company has advanced  approximately  $34 million under these
commitments.  Under these development alliances,  the Company has certain rights
to purchase the properties  upon  completion of  development  over the next five
years.

Note 7. SECURED AND UNSECURED LIABILITIES

The Company had the following  mortgage loans,  bank lines,  unsecured notes and
notes payable  outstanding  as of March 31, 1999, and December 31, 1998 (dollars
in thousands):

                                                             1999        1998
                                                          ----------  ----------
Secured loans with various lenders,  net of unamortized
discount  of $5,984  and  $6,140 at March 31,  1999 and
December 31, 1998, 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
$405,796  and  $408,439 at March 31, 1999 and  December
31, 1998, respectively.                                   $ 234,383   $ 234,871

Secured loan with a bank with a fixed  interest rate of
7.50%,  monthly principal and interest payments of $443
and a maturity  date of  October  1, 2022.  The loan is
secured  by  ten  properties   with  an  aggregate  net
carrying  value of $109,226  and  $110,129 at March 31,
1999 and December 31, 1998, respectively.                    58,767      58,942

Secured  loan  with  an  investment  bank  with a fixed
interest rate of 7.57%,  monthly principal and interest
payments  (based upon a 25-year  amortization)  of $103
and a maturity  date of January 1, 2006.  This loan was
paid off in March 1999 with the proceeds from a new $26
million loan discussed below.                                    --      13,220

Secured loans with various lenders, bearing interest at
fixed  rates  between  6.95% and  9.25%  (approximately
$53,257 of these loans include an  unamortized  premium
of  approximately  $524  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 July
1, 2008.  These loans are secured by properties with an
aggregate  net carrying  value of $439,832 and $447,444
at March 31, 1999 and December 31, 1998,  respectively.     258,545     261,938

Secured loans with various  banks  bearing  interest at
variable rates ranging between 7.25% and 8.18% at March
31, 1999 (approximately $114,692 of these loans include
an unamortized  premium of  approximately  $1,492 which
reduces   the   effective   interest   rate  on   those
instruments to 6.75%),  monthly  principal and interest
payments  ranging  between $16 and $800 and maturing at
various  dates through  December 22, 2000.  These loans
are  secured  by  properties   with  an  aggregate  net
carrying  value of $227,756  and  $179,438 at March 31,
1999  and  December  31,  1998,  respectively.              164,332     125,230


                                       14
<PAGE>

                                                             1999        1998
                                                          ----------  ----------
Secured loans with a lender,  bearing interest at fixed
rates between 7.60% and 7.85%,  with monthly  principal
and interest  payments ranging between $11 and $22. All
of these  loans have a  maturity  date of  December  1,
2030. These loans are secured by multifamily properties
with an  aggregate  net  carrying  value of $18,062 and
$19,060  at March  31,  1999  and  December  31,  1998,
respectively.                                              $ 14,349    $ 14,377

Unsecured  $100,000 line of credit with a bank ("Credit
Facility") with a variable  interest rate of LIBOR plus
1.625%  (6.630%  and  7.401%  at  March  31,  1999  and
December 31, 1998, respectively), monthly interest only
payments and a maturity date of December 22, 2000, with
one option to extend for 10 years.                           54,307      63,519

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.                                                       150,000     150,000
                                                          ----------  ----------
Total                                                      $934,683    $922,097
                                                          ==========  ==========

In March 1999,  the Company  obtained a $26 million loan from a commercial  bank
which bears  interest at a variable rate of LIBOR plus 2.25% (7.25% at March 31,
1999).  The loan is  non-recourse  and is secured by seven  properties and has a
maturity date of December 22, 1999, with an option to extend for six months. The
proceeds were used to pay off a loan which was previously  secured by these same
properties  and to reduce other debt.  Five of the seven secured  properties are
currently being sold and the new loan provides  flexibility for partial releases
of collateral upon the sale of a property.

In  connection  with the loan payoff  discussed  above and the payoff of another
loan upon the sale of an office/flex  property,  the Company  incurred a loss on
early  extinguishment  of debt of approximately  $1,991,000,  which consisted of
prepayment penalties and the write-off of unamortized loan fees.

Some of the Company's  properties are held in limited  partnerships  and limited
liability  companies in order to provide bankruptcy remote borrowers for certain
lenders.  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, 1999, are as follows (in thousands):

                         Year Ending
                         December 31,
                            1999           $122,966
                            2000            166,737
                            2001             15,528
                            2002             14,393
                            2003             37,981
                            Thereafter      577,078
                                            -------
                            Total          $934,683
                                            =======


                                       15
<PAGE>

Note 8.     RELATED PARTY TRANSACTIONS

Fee and reimbursement  income earned by the Company from related parties totaled
$1,131,000  and  $473,000  for the three  months  ended March 31, 1999 and 1998,
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  $362,000 and $295,000 for the three months
ended March 31, 1999 and 1998,  respectively,  for  management of a portfolio of
residential  properties  owned by the  Company,  which is  included  in property
operating expenses on the accompanying consolidated statements of operations.

The Company acquired from a Managed  Partnership an option to acquire all of its
rights  under a Lease with  Option to  Purchase  Agreement,  to acquire  certain
undeveloped  land located in  Burlingame,  California.  Upon  expiration  of the
option  period,  the  independent  members of the  Company's  Board of Directors
concluded  that  proceeding  with the  development  of the  property  would have
required that the 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  $2,130,000 of  predevelopment  costs,  $283,000 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
development  and sale of the  property.  The  principal  balance  of the note is
included in Other Assets on the  accompanying  consolidated  balance sheet as of
March 31, 1999.

Note 9.EARNINGS PER SHARE

In March 1997,  the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 128 (SFAS 128),  "Earnings Per Share." SFAS
No. 128 requires  the  disclosure  of basic  earnings per share and modified the
guidance for computing  diluted 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,
                                     ----------------------
                                        1999        1998
                                     ----------  ----------
Net income available to common
    Stockholders - Basic             $   5,008   $    8,303
Minority interest                          667          678
                                     ----------  ----------
Net income available to common
    Stockholders - Diluted           $   5,675   $    8,981
                                     ----------  ----------

Weighted average shares:
Basic                               31,764,834   31,548,706
Stock options                          115,154      456,829
Convertible Operating Partnership
    units                            4,218,386    2,366,829
                                    ----------- -----------
Diluted                             36,098,374   34,372,364
                                    ----------- -----------

Basic earnings per share             $    0.16   $     0.26
Diluted earnings per share           $    0.16   $     0.26

                                       16
<PAGE>

Note 10.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.  The Company accounts for the fair value of the options and bonus grants
in  accordance  with APB Opinion No. 25. As of March 31, 1999,  37,000 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 March 31,  1999,  2,791,293
options to purchase shares of Common Stock were outstanding.  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 11.SEGMENT INFORMATION

The Company owns a diverse portfolio of properties comprising six product types:
office, office/flex,  industrial,  retail, multifamily and hotels. Each of these
product  types  represents a reportable  segment with  distinct  uses and tenant
types which require the 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  office/flex  portfolio  consists of  properties  designed for a
combination of office and warehouse uses. The industrial  portfolio  consists of
properties  designed for warehouse,  distribution  and light  manufacturing  for
single-tenant or multi-tenant  use. The retail portfolio  consists  primarily of
community  shopping centers  anchored with national or regional  supermarkets or
drug stores. The properties in the multifamily portfolio are apartment buildings
with units rented to residential tenants on either a month-by-month basis or for
terms of one year or less. The Company's  hotel  operations are limited  service
"all-suite"  properties  leased to and  operated  by third  parties.  Two of the
Company's hotels are in contract to be sold.

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,  1999 and 1998 is as  follows  (in
thousands):

                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                                                        Multi-
1999                             Office      Office/Flex   Industrial      Retail       family        Hotel         Total
----                           -----------  -------------  -----------  -----------  ------------ ------------  -------------
<S>                            <C>           <C>            <C>          <C>          <C>           <C>          <C>        
Rental revenue                 $   29,836    $    9,532     $   4,764    $   3,241    $  16,670     $     598    $    64,641
Property operating expenses        11,512         2,849         1,115        1,176        7,255            97         24,004
                               ===========  =============  ===========  ===========  ============ ============  =============
Net operating income (NOI)     $   18,324    $    6,683     $   3,649    $   2,065    $   9,415     $     501    $    40,637
                               ===========  =============  ===========  ===========  ============ ============  =============

1998
----
Rental revenue                 $   26,058    $    8,579     $   3,293    $   2,388    $   3,762     $   1,883    $    45,963
Property operating expenses         9,483         2,569           800          865        1,466           480         15,663
                               ===========  =============  ===========  ===========  ============ ============  =============
Net operating income (NOI)     $   16,575    $    6,010     $   2,493    $   1,523    $   2,296     $   1,403    $    30,300
                               ===========  =============  ===========  ===========  ============ ============  =============
</TABLE>

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

<TABLE>
<CAPTION>

                                                            1999                  1998
                                                      ----------------     ----------------
Revenues
<S>                                                     <C>                  <C>         
Total revenue for reportable segments                   $     64,641         $     45,963
Other revenue (1)                                              4,450                2,628
                                                      ================     ================
Total consolidated revenues                             $     69,091         $     48,591
                                                      ================     ================

Net Income
NOI for reportable segments                             $     40,637         $     30,300
Elimination of internal property management fees               2,003                1,339
Unallocated amounts:
   Other revenue (1)                                           4,450                2,628
   General and administrative expenses                        (2,222)              (2,222)
   Depreciation and amortization                             (15,092)             (10,009)
   Interest expense                                          (16,540)              (9,145)
                                                      ================     ================
Income from operations  before minority interest and
   extraordinary items                                  $     13,236         $     12,891
                                                      ================     ================
</TABLE>

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

Note 12.    SUBSEQUENT EVENTS

Subsequent to March 31, 1999,  and through the date of this filing,  the Company
sold three properties,  including one office property,  one office/flex property
and one retail property. These properties were sold for an aggregate sales price
of $11,370,000 and generated an aggregate net gain of approximately $400,000.


                                       18
<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,
1999,  the Company  owned and  operated  181  income-producing  properties  (the
"Properties," and each a "Property").  The Properties are comprised of 54 office
Properties,  44  office/flex  Properties,  31 industrial  Properties,  11 retail
Properties,  38  multifamily  Properties and 3 hotel  Properties,  located in 24
states.

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,  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 87.25% limited  partner
interest at March 31,  1999.  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.

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

   Acquired 20  properties in 1996, 90 properties in 1997, 69 properties in 1998
   and 2  properties  in 1999.  The  total  acquired  Properties  consist  of an
   aggregate  of  approximately  15.7  million  rentable  square feet of office,
   office/flex,  industrial and retail space,  9,638  multifamily  units and 227
   hotel  suites and had  aggregate  acquisition  costs,  including  capitalized
   costs, of approximately $1.8 billion.
   
   From January 1, 1996 to the date of this  filing,  sold 39  properties  which
   were comprised of two office properties,  eight office/flex  properties,  six
   industrial  properties,  19 retail properties,  one multifamily  property and
   three hotel  properties,  to redeploy  capital  into  properties  the Company
   believes have  characteristics more suited to its overall growth strategy and
   operating goals.
   
   Completed  four offerings of Common Stock in October 1996,  March 1997,  July
   1997 and October 1997 (respectively,  the "October 1996 Offering," the "March
   1997 Offering," the "July 1997  Offering," and the "October 1997  Offering"),
   resulting in aggregate gross proceeds of approximately $562 million.
  
   Completed  an offering of 7 3/4% Series A  Convertible  Preferred  Stock (the
   "January 1998 Convertible Preferred Stock Offering") for total gross proceeds
   of $287.5 million.
 
   Issued $150 million of unsecured 7.625% Series A Senior Notes which mature on
   March 15, 2005.

   Entered into 4  development  alliances to which the Company has made advances
   of approximately  $33 million and a loan (including  accrued interest) of $36
   million as of March 31, 1999.

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.

                                       19
<PAGE>

Results of Operations

Comparison  of the three  months  ended March 31, 1999 to the three months ended
March 31, 1998.

Rental Revenue. Rental revenue increased $18,678,000, or 41%, to $64,641,000 for
the three  months ended March 31, 1999,  from  $45,963,000  for the three months
ended March 31, 1998. The increase  included  growth in revenue from the office,
industrial,  office/flex,  retail  and  multifamily  Properties  of  $3,778,000,
$1,471,000,  $953,000, $853,000 and $12,908,000,  respectively.  These increases
were  partially  offset  by a  $1,285,000  decrease  in  revenue  from the hotel
Properties due to the 1998 sales of three hotels.  Rental revenue generated from
the 1996 Acquisitions and the 1997 Acquisitions  (excluding properties that have
been sold)  increased  $247,000 for the three  months  ended March 31, 1999,  as
compared to the three months ended March 31, 1998. Rental revenue generated from
the first quarter 1998 Acquisitions  (excluding  properties that have been sold)
increased  $2,155,000  for the three months ended March 31, 1999, as compared to
the three months ended March 31, 1998. Rental revenue for the three months ended
March 31, 1999, also included  $17,657,000 from the 1998  Acquisitions  acquired
subsequent  to March 31,  1998.  In  addition,  rental  revenue of $456,000  was
generated   from  the   acquisition   of  two  properties  in  1999  (the  "1999
Acquisitions").  These increases were offset by a $1,837,000  decrease in rental
revenue due to the sales of 18 properties in 1998 and 1999.

Fees and Reimbursements from Affiliates. Fees and reimbursements from affiliates
consist  primarily of property  management fees, asset management fees and lease
commissions paid to the Company under property and asset  management  agreements
with the Managed  Partnerships.  This revenue  increased  $658,000,  or 139%, to
$1,131,000  for the three  months ended March 31,  1999,  from  $473,000 for the
three months ended March 31, 1998. The increase was primarily due to transaction
fees from GC.

Interest and Other Income.  Interest and other income increased  $1,302,000,  or
365%, to $1,659,000 for the three months ended March 31, 1999, from $357,000 for
the three  months  ended March 31, 1998.  The  increase  primarily  consisted of
interest income on a mortgage loan receivable secured by land located in Aurora,
Colorado  which  originated  on June 30,  1998,  and  interest  earned on lender
impound  accounts,  invested  cash  balances  and notes  receivable  for  tenant
improvements.

Equity in Earnings of Associated  Companies.  Equity in earnings from Associated
Companies  decreased  $43,000,  or 12%, to $309,000  for the three  months ended
March 31, 1999,  from  $352,000  for the three months ended March 31, 1998.  The
decrease is primarily due to a decrease in earnings from GHG resulting  from the
sales and pending sales of the Company's hotel  properties which resulted in the
June 30,  1998,  cancellation  of GHG's  hotel  leases  with the  Company.  This
decrease is partially  offset by a  transaction  fee earned by GC from a Managed
Partnership.

Net Gain on  Sales of Real  Estate  Assets.  A 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  office/flex  properties,  two  retail  properties  and a small
partial interest in a REIT from the Company's  portfolio.  The net gain on sales
of real estate  assets of  $1,446,000  during the three  months  ended March 31,
1998,  resulted  from  the  sale of one  multifamily  property,  two  industrial
properties and one office/flex property from the Company's portfolio.

Property Operating Expenses.  Property operating expenses increased  $7,677,000,
or 54%,  to  $22,001,000  for the  three  months  ended  March  31,  1999,  from
$14,324,000  for the three  months  ended  March  31,  1998.  Of this  increase,
$7,960,000  represents increases in property operating expenses  attributable to
the 1998  Acquisitions  and the 1999  Acquisitions.  This  increase is partially
offset by  decreases  in property  operating  expenses  due to the 1998 and 1999
sales of properties.

General  and  Administrative  Expenses.   General  and  administrative  expenses
remained  constant at  $2,222,000  for the three months ended March 31, 1999 and
1998.  However,  as a percentage of rental revenue,  general and  administrative
expenses  decreased  from 4.8% for the three months ended March 31, 1998 to 3.4%
for the three months ended March 31, 1999.

                                       20
<PAGE>

Depreciation  and   Amortization.   Depreciation   and  amortization   increased
$5,083,000,  or 51%, to  $15,092,000  for the three months ended March 31, 1999,
from  $10,009,000  for the three months  ended March 31,  1998.  The increase is
primarily  due  to  depreciation  and  amortization  associated  with  the  1998
Acquisitions and 1999 Acquisitions.

Interest Expense.  Interest expense increased $7,395,000, or 81%, to $16,540,000
for the three months ended March 31, 1999,  from $9,145,000 for the three months
ended March 31, 1998. Substantially all of the increase was the result of higher
average  borrowings during the three months ended March 31, 1999, as compared to
the three  months ended March 31, 1998,  due to new debt and the  assumption  of
debt related to the 1998 Acquisitions and 1999 Acquisitions.

Loss on Early  Extinguishment  of Debt. 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 the early payoff of
debt.  Two loans were  paid-off  early when more  favorable  terms were obtained
through  new  financing  (discussed  below) and upon the sale of an  office/flex
property.

Liquidity and Capital Resources

Cash Flows
For the three months ended March 31, 1999, cash provided by operating activities
increased by $6,660,000 to $21,987,000  as compared to $16,772,000  for the same
period in 1998.  The  increase  is  primarily  due to an  increase in net income
(before depreciation and amortization,  minority interest,  net gain on sales of
real estate assets and loss on early  extinguishment  of debt) of $5,590,000 due
to the  1998  Acquisitions  and  1999  Acquisitions.  Cash  used  for  investing
activities  decreased by  $382,315,000  to $1,211,000 for the three months ended
March 31, 1999,  as compared to  $383,526,000  for the same period in 1998.  The
decrease is  primarily  due to a decrease in  property  acquisitions  in 1999 as
compared to the same  period in 1998.  During the three  months  ended March 31,
1998, the Company  acquired 23 properties as compared to two  properties  during
the three months ended March 31, 1999. Cash from financing  activities decreased
by  $389,675,000  to $21,325,000  of cash used for financing  activities for the
three months ended March 31, 1999, as compared to  $368,350,000 of cash provided
by financing  activities for the same period in 1998.  This change was primarily
due to a decrease in net proceeds  from the issuance of stock and proceeds  from
new debt. In 1998, the Company  completed an offering of Preferred Stock;  there
have been no  offerings  in 1999.  In  addition,  in 1998,  the  Company  issued
$150,000,000 of unsecured Series A Senior Notes.

The Company  expects to meets its short-term  liquidity  requirements  generally
through its working  capital,  its Credit  Facility (as defined  below) and cash
generated  by  operations.  The  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  include the 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  increased from  $42,420,000 at December 31, 1998, to
$43,413,000  at March 31,  1999.  This  increase  was  primarily  due to accrued
interest on a loan made by the Company under a development alliance.

                                       21
<PAGE>

Secured and Unsecured Financing
Mortgage  loans payable  increased  from  $708,578,000  at December 31, 1998, to
$730,376,000 at March 31, 1999. This increase  resulted from the assumption of a
$14.1  million  mortgage  loan in  connection  with a 1999  Acquisition  and new
financing of $26 million (as discussed  below).  These  increases were partially
offset  by the  payoff of  approximately  $16.1  million  of  mortgage  loans in
connection  with 1999 sales of  properties,  refinancing  of debt and  scheduled
principal payments of approximately $2.2 million.

In March 1999,  the Company  obtained a $26 million loan from a commercial  bank
which bears  interest at a variable rate of LIBOR plus 2.25% (7.25% at March 31,
1999).  The loan is  non-recourse  and is secured by seven  properties and has a
maturity date of December 22, 1999, with an option to extend for six months. The
proceeds were used to pay off a loan which was previously  secured by these same
properties  and to reduce other debt.  Five of the seven secured  properties are
currently being sold and the new loan provides  flexibility for partial releases
of collateral upon the sale of a property.

The Company has an unsecured line of credit  provided by a commercial  bank (the
"Credit Facility").  Outstanding  borrowings under the Credit Facility decreased
from  $63,519,000 at December 31, 1998, to $54,307,000 at March 31, 1999, due to
pay downs  from  proceeds  from the sales of  properties  and  refinancing  of a
mortgage loan.

At March 31, 1999, the Company's total indebtedness  included fixed-rate debt of
$716,043,000 and floating-rate  indebtedness of $218,640,000.  Approximately 64%
of the Company's total assets,  comprising 110 properties, is encumbered by debt
at March 31, 1999.

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, 1999,  approximately  23% 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
speculative purposes. At March 31, 1999, the Company was not a party to any open
interest rate protection agreements.

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 has formed 4 development alliances to which it has committed a total
of approximately $43 million for the development of approximately 713,000 square
feet of office,  office/flex and distribution  properties and 1,710  multifamily
units in North Carolina, Colorado, Texas, New Jersey, Kansas and Michigan. As of
March 31, 1999, the Company has advanced  approximately  $34 million under these
commitments.  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 $36 million (including
accrued interest) under another  development  alliance to continue the build-out
of a 1,200 acre master-planned development in Denver, Colorado.

Inflation

Substantially  all of the  leases  at the  office/flex,  industrial  and  retail
Properties  provide  for  pass-through  to tenants of certain  operating  costs,
including real estate taxes,  common area maintenance  expenses,  and insurance.
Leases at the multifamily  properties  generally  provide for an initial term of

                                       22
<PAGE>

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 an  important  and 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.

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
(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.

The following table sets forth the Company's  calculation of FFO and CAD for the
three months ended March 31, 1999 (in thousands,  except weighted average shares
and per share amounts):
                                               March
                                                 31,
                                                1999
                                             ---------
Net income before minority interest          $ 13,236
Preferred dividend requirement                 (5,570)
Net gain on sales of rental properties         (1,351)
Depreciation and amortization (1)              14,947
Adjustment to reflect FFO of
   Associated Companies (2)                       253
                                             ---------
FFO                                          $ 21,515
                                             =========

Amortization of deferred financing fees           485
Capital reserve                                (1,465)
Capital expenditures                           (2,573)
                                             ---------
CAD                                          $ 17,962
                                             =========
Distributions per share (3)                  $   0.42
                                             =========
Diluted   weighted   average  shares
    outstanding                            36,098,374
                                           ===========

(1)Excludes depreciation of corporate office fixed assets.

                                       23
<PAGE>

(2)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.
(3)The  distributions  for the three months  ended March 31, 1999,  were paid on
   April 15, 1999.

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.

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, 1998, 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.

Impact of Year 2000 Compliance Costs on Operations

State of Readiness.  The Company uses a number of computer software programs and
operating  systems  across the entire  organization.  These programs and systems
primarily  comprise (i)  information  technology  systems ("IT Systems")  (i.e.,
software  programs  and  computer   operating  systems)  that  serve  management
operations,  and (ii) embedded systems such as devices used to control,  monitor
or assist the operation of equipment and machinery  systems  (e.g.,  HVAC,  fire
safety and security) at the Company's properties  ("Property  Systems").  To the
extent that the  Company's  software  applications  contain  source code that is
unable to appropriately  interpret the upcoming calendar year "2000" and beyond,
some  level  of  modification  or  replacement  of  these  applications  will be
necessary.

   IT Systems.  Employing a team made up of internal  personnel and  third-party
   consultants,  the Company has  completed  its  identification  of IT Systems,
   including hardware components,  that are not yet Year 2000 compliant.  To the
   best  of the  Company's  knowledge,  based  on  available  information  and a
   reasonable level of inquiry and investigation, the Company has completed such
   upgrading  of  such  systems  that it  believes  are  called  for  under  the
   circumstances,  and in accordance  with  prevailing  industry  practice.  The
   Company  has  commenced  a  testing  program  which  it  anticipates  will be
   completed  during 1999. In addition,  the Company is currently  communicating

                                       24
<PAGE>

   with third parties with whom it does significant business,  such as financial
   institutions, tenants and vendors, to determine their readiness for Year 2000
   compliance.

   Property  Systems.  Employing  a  team  made  up of  internal  personnel  and
   third-party consultants, the Company has also completed its identification of
   Property Systems,  including hardware components,  that are not yet Year 2000
   compliant.  The Company has commenced  such upgrading of such systems that it
   believes  are  called  for  under  the  circumstances,   based  on  available
   information  and a  reasonable  level of inquiry  and  investigation,  and in
   accordance  with  prevailing  industry  practice.  Upon  completion  of  such
   upgrading,  the Company will initiate a testing  program which it anticipates
   will be completed during 1999. To the best of the Company's knowledge,  there
   are no Property Systems, the failure of which would have a material effect on
   operations.

Costs of Addressing the Company's Year 2000 Issues.  Given the information known
at this time about the Company's  systems that are  non-compliant,  coupled with
its ongoing,  normal  course-of-business  efforts to upgrade or replace critical
systems, as necessary, the Company does not expect Year 2000 compliance costs to
have any material  adverse impact on liquidity or ongoing results of operations.
The  costs  of such  assessment  and  remediation  will be paid as an  operating
expense.

Risks of the Company's  Year 2000 Issues.  In light of the Company's  assessment
and upgrading  efforts to date, and assuming  completion of the planned,  normal
course-of-business  upgrades and subsequent  testing,  the Company believes that
any  residual  Year  2000  risk  will  be  limited  to   non-critical   business
applications and support  hardware,  and to short-term  interruptions  affecting
Property  Systems  which,  if they occur at all, will not be material to overall
operations.  The  Company  believes  that all of its  systems  will be Year 2000
compliant and that  compliance will not materially  adversely  affect its future
liquidity or results of operations  or ability to service debt,  but the Company
cannot give absolute assurance that this is the case.

The  Company's  Contingency  Plans.  The  Company is  currently  developing  its
contingency plans for all operations to address the most reasonably likely worst
case  scenarios  regarding  Year 2000  compliance.  Such  plans,  however,  will
recognize  material  limitations  on the  Company's  ability  to plan for  major
regional or industrial  failures  such as regional  power outages or regional or
industrial communications breakdowns. The Company expects such contingency plans
to be completed during 1999.

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.


                                       25
<PAGE>

PART II.    OTHER INFORMATION

Item 1.  Legal Proceedings

Blumberg.  The Company  settled a class action  complaint  filed on February 21,
1995 in  connection  with the  Consolidation.  Certain  parties  objected to the
settlement,  but the  settlement  has been  approved  (or review  denied) by the
Superior  Court of the  State of  California  in and for San Mateo  County,  the
California state court of appeals,  and the California  Supreme Court. In August
1998 the  objecting  parties  filed a  petition  for writ of  certiorari  in the
Supreme Court of the United States.  The Company and the  co-defendants  filed a
brief in opposition to the petition.  The Supreme Court of the United States has
not yet granted or denied the petition

The plaintiff in the case is Anthony E. Blumberg,  an investor in Equitec B, one
of the Partnerships included in the Consolidation,  on behalf of himself and all
others (the  "Blumberg  Action")  similarly  situated.  The  defendants  are GC,
Glenborough Realty Corporation ("GRC"), Robert Batinovich,  the Partnerships and
the Company.

The complaint  alleged  breaches by the  defendants of their  fiduciary duty and
duty of good  faith and fair  dealing  to  investors  in the  Partnerships.  The
complaint  sought  injunctive  relief and  compensatory  damages.  The complaint
alleged that the valuation of Glenborough Corporation was excessive and was done
without appraisal of Glenborough Corporation's business or assets. The complaint
further  alleged that the interest  rate for the Notes to be issued to investors
in lieu of shares of Common  Stock,  if they so elected was too low for the risk
involved  and that the Notes would  likely  sell,  if at all,  at a  substantial
discount  from  their  face  value  (as a  matter  entirely  distinct  from  the
litigation and subsequent settlement, the Company, as it had the option to, paid
in full the amounts due plus interest in lieu of issuing Notes).

On October 9, 1995 the parties  entered  into an agreement to settle the action.
The defendants,  in entering into the settlement agreement,  did not acknowledge
any fault, liability or wrongdoing of any kind and continue to deny all material
allegations  asserted in the litigation.  Pursuant to the settlement  agreement,
the  defendants  will be released from all claims,  known or unknown,  that have
been,  could have been,  or in the future might be asserted,  relating to, among
other  things,  the  Consolidation,  the  acquisition  of the  Company's  shares
pursuant  to  the  Consolidation,  any  misrepresentation  or  omission  in  the
Registration  Statement on Form S-4,  filed by the Company on September 1, 1994,
as  amended,   or  the   prospectus   contained   therein   ("Prospectus/Consent
Solicitation  Statement"),  or the subject matter of the lawsuit. In return, the
defendants agreed to the following:  (a) the inclusion of additional or expanded
disclosure  in the  Prospectus  Consent  Solicitation  Statement,  and  (b)  the
placement of certain  restrictions on the sale of the stock by certain  insiders
and the granting of stock options to certain insiders following  consummation of
the Consolidation.  Plaintiff's counsel indicated that it would request that the
court award it $850,000 in attorneys'  fees,  costs and  expenses.  In addition,
plaintiffs'  counsel indicated it would request the court for an award of $5,000
payable to Anthony  E.  Blumberg  as the class  representative.  The  defendants
agreed not to oppose such requests.

On October 11, 1995,  the court  certified the class for purposes of settlement,
and scheduled a hearing to determine  whether it should  approve the  settlement
and class counsel's  application  for fees. A notice of the proposed  settlement
was  distributed  to the members of the class on November 15,  1995.  The notice
specified that, in order to be heard at the hearing,  any class member objecting
to the proposed  settlement  must, by December 15, 1995, file a notice of intent
to appear, and a detailed statement of the grounds for their objection.

Objections  were received from a small number of class  members.  The objections
reiterated the claims in the original Blumberg complaint,  and asserted that the
settlement agreement did not adequately compensate the class for releasing those
claims.  One of the  objections  was filed by the same law firm that brought the
BEJ Action described below.

At a hearing on January 17, 1996, the court heard the arguments of the objectors
seeking to overturn the  settlement,  as well as the arguments of the plaintiffs
and the defendants in defense of the settlement. The court granted all parties a
period of time in which to file additional pleadings. On June 4, 1996, the court
granted approval of the settlement,  finding it fundamentally fair, adequate and
reasonable to the respective parties to the settlement.  However,  the objectors
gave  notice of their  intent to appeal the June 4 decision.  All parties  filed

                                       26
<PAGE>

their  briefs and a hearing was held on February 3, 1998.  On February 17, 1998,
the  Court of  Appeals  rejected  the  objectors'  contentions  and  upheld  the
settlement. The objectors filed with the California Supreme Court a petition for
review,  which was denied on May 21,  1998.  On August 18, 1998,  the  objectors
filed a  petition  for writ of  certiorari  in the  Supreme  Court of the United
States. On September 18, 1998, the Company and the  co-defendants  filed a brief
in opposition to the petition.
The Supreme Court has not yet granted or denied the petition.

BEJ Equity  Partners.  On  December 1, 1995,  a second  class  action  complaint
relating  to the  Consolidation  was  filed in  Federal  District  Court for the
Northern  District of California  (the "BEJ Action").  The plaintiffs in the BEJ
Action have  voluntarily  stayed the action  pending  resolution of the Blumberg
Action.

The  plaintiffs  in the BEJ  Action  are BEJ  Equity  Partners,  J/B  Investment
Partners,  Jesse B.  Small  and Sean  O'Reilly  as  custodian  f/b/o  Jordan  K.
O'Reilly,  who as a group  held  limited  partner  interests  in  certain of the
Partnerships  included in the Consolidation known as Outlook Properties Fund IV,
Glenborough All Suites Hotels,  L.P.,  Glenborough  Pension  Investors,  Equitec
Income Real Estate Investors-Equity Fund 4, Equitec Income Real Estate Investors
C and Equitec Mortgage Investors Fund IV, on behalf of themselves and all others
similarly situated.  The defendants are GRC, GC, the Company,  GPA, Ltd., Robert
Batinovich  and  Andrew  Batinovich.  The  Partnerships  are  named  as  nominal
defendants.

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

It is  management's  position  that the BEJ Action,  and the  objections  to the
settlement of the Blumberg Action,  are without merit, and management intends to
pursue  a  vigorous  defense  in both  matters.  In view  of the  denial  of the
objector's  petition for review in the Blumberg Action,  among other things, the
Company believes that it is very unlikely that this litigation would result in a
liability that would exceed the accrued liability by a material amount. However,
given the inherent  uncertainties of litigation,  there can be no assurance that
the ultimate  outcome in these two legal  proceedings  will be in the  Company's
favor.

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, 1999.

Item 5: Other Information

Any  stockholder  proposal  submitted  with respect to the Company's 1999 Annual
Meeting of Stockholders, which proposal is submitted outside the requirements of
Rule  14a-8  under  the  Securities  Exchange  Act of 1934,  will be  considered
untimely for  purposes of Rule 14a-4 and 14a-5 if notice  thereof is received by
the Company after March 1, 1999.

                                       27
<PAGE>

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 27,  1999,  the  Company  filed a report on Form 8-K with
            respect to  Supplemental  Information for the quarter ended December
            31, 1998.

            On April  22,  1999,  the  Company  filed a report  on Form 8-K with
            respect to Supplemental  Information for the quarter ended March 31,
            1999.


                                       28
<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 14, 1999          /s/ Andrew Batinovich
                                ---------------------
                                Andrew Batinovich
                                Director, President
                                and Chief Operating Officer
                                (Principal Operating Officer)





    Date: May 14, 1999          /s/ Stephen Saul
                                ----------------
                                Stephen Saul
                                Executive Vice President
                                and Chief Financial Officer
                                (Principal Financial Officer)





    Date: May 14, 1999          /s/ Terri Garnick
                                -----------------
                                Terri Garnick
                                Senior Vice President,
                                Chief Accounting Officer,
                                Treasurer
                                (Principal Accounting Officer)



                                       29
<PAGE>

                                  EXHIBIT INDEX



Exhibit No.                             Exhibit Title
----------   -------------------------------------------------------------------
11.1         Statement re: Computation of Per Share Earnings is shown in Note 9
             of the Consolidated Financial Statements of the Company in Item 1.

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

27.1         Financial Data Schedule.


                                       30
<PAGE>

Exhibit 12.1

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, 1998
and the three months ended March 31, 1999
<TABLE>
<CAPTION>

                                                GRT Predecessor
                                                   Entities,
                                                    Combined                                 The Company
                                             -----------------------   ------------------------------------------------------
                                                                                                                    Three
                                                                                                                    Months
                                                                                                                    Ended
                                                                 Year Ended December 31,                           March 31
                                             -----------------------------------------------------------------   ------------
                                                1994         1995         1996          1997          1998           1999
                                             ----------   ----------   ----------    ----------   ------------   ------------
EARNINGS, AS DEFINED
<S>                                          <C>          <C>          <C>            <C>         <C>             <C>      
Net Income (Loss) before Preferred
   Dividends (2)                             $  1,580     $     524    $  (1,609)     $ 19,368    $    44,602     $  10,578
Extraordinary items                                --            --          186           843          1,400         1,991
Federal & State income taxes                      176           357           --            --             --            --
Minority Interest                                  43            --          292         1,119          2,550           667
Fixed Charges                                   1,140         2,129        3,913         9,668         53,289        16,540
                                             ----------   ----------   ----------    ----------   ------------   ------------
                                             $  2,939     $   3,010    $   2,782      $ 30,998    $   101,841     $  29,776
                                             ----------   ----------   ----------    ----------   ------------   ------------

FIXED CHARGES AND PREFERRED
   DIVIDENDS, AS DEFINED

Interest Expense                             $  1,140     $   2,129    $   3,913      $  9,668    $    53,289     $  16,540
Capitalized Interest                               --            --           --            --          1,108           643
Preferred Dividends                                --            --           --            --         20,620         5,570
                                             ----------   ----------   ----------    ----------   ------------   ------------
                                             $  1,140     $   2,129    $   3,913      $  9,668    $    75,017     $  22,753

RATIO OF EARNINGS TO FIXED CHARGES               2.58          1.41         0.71 (1)      3.21           1.87          1.73
                                             ----------   ----------   ----------    ----------   ------------   ------------

RATIO OF EARNINGS TO FIXED CHARGES AND
   PREFERRED DIVIDENDS                           2.58          1.41         0.71 (1)      3.21           1.36          1.31
                                             ----------   ----------   ----------    ----------   ------------   ------------
</TABLE>

(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.

                                       31