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 June 30, 2000

                                       OR

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

                        Commission File Number: 001-14162


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

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

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

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

                                                  Name of Exchange
         Title of each class:                  on which registered:
     Common Stock, $.001 par value            New York Stock Exchange
  7.75% Series A Convertible Preferred
       Stock, $.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 July 31,  2000,  28,696,576  shares of Common  Stock ($.001 par value) and
10,097,800  shares of 7.75%  Series A  Convertible  Preferred  Stock  ($.001 par
value) were outstanding.

                                       1
<PAGE>


                                      INDEX
                      GLENBOROUGH REALTY TRUST INCORPORATED

                                                                        Page No.
PART I      FINANCIAL INFORMATION

Item 1.     Consolidated Financial Statements of Glenborough Realty Trust
            Incorporated (Unaudited):

                Consolidated Balance Sheets at June 30, 2000 and
                December 31, 1999                                             3

                Consolidated Statements of Income for the six months ended
                June 30, 2000 and 1999                                        4

                Consolidated Statements of Income for the three months
                ended June 30, 2000 and 1999                                  5

                Consolidated Statement of Stockholders' Equity for
                the six months ended June 30, 2000                            6

                Consolidated Statements of Cash Flows for the six
                months ended June 30, 2000 and 1999                         7-8

                Notes to Consolidated Financial Statements                 9-20

Item 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                           21-28

PART II     OTHER INFORMATION

Item 1.     Legal Proceedings                                                28

Item 4.     Submission of Matters to a Vote of Security Holders              28

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

SIGNATURES                                                                   29

EXHIBIT INDEX                                                                30




                                       2
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<CAPTION>


Part I.           FINANCIAL INFORMATION

Item 1.           Financial Statements

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

                                                                                    June 30,               December 31,
                                                                                      2000                     1999
                                                                                -----------------        -----------------
ASSETS
<S>                                                                             <C>                      <C>
     Rental properties, gross                                                   $    1,605,341           $     1,756,061
     Accumulated depreciation                                                         (129,218)                 (114,170)
                                                                                -----------------        -----------------
     Rental properties, net                                                          1,476,123                 1,641,891

     Real estate held for sale, gross                                                   25,207                         -
     Accumulated depreciation                                                           (2,556)                        -
                                                                                -----------------        -----------------
     Real estate held for sale, net                                                     22,651                         -

     Investments in Development and Joint Ventures                                      48,258                    44,452
     Investment in Associated Company                                                    9,344                     9,404
     Mortgage loans receivable                                                          37,617                    37,582
     Cash and cash equivalents                                                           3,024                     6,482
     Other assets                                                                       58,843                    54,793
                                                                                -----------------        -----------------

         TOTAL ASSETS                                                           $    1,655,860           $     1,794,604
                                                                                =================        =================

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Mortgage loans                                                             $      669,327           $       701,715
     Unsecured term debt                                                               125,000                   125,015
     Unsecured bank line                                                                39,811                    70,628
     Other liabilities                                                                  25,041                    30,625
                                                                                -----------------        -----------------
       Total liabilities                                                               859,179                   927,983
                                                                                -----------------        -----------------

Commitments and contingencies

Minority interest                                                                       79,573                    82,287

Stockholders' Equity:
     Common stock, 28,880,576 and 30,820,646  shares issued
       and outstanding at June 30, 2000 and
       December 31, 1999, respectively                                                      29                        31
     Preferred stock, 10,097,800 and 11,330,000 shares issued and
       outstanding at June 30, 2000 and December 31, 1999,
       respectively                                                                         10                        11
     Additional paid-in capital                                                        799,380                   846,693
     Deferred compensation                                                                (555)                     (613)
     Retained earnings (deficit)                                                       (81,756)                  (61,788)
                                                                                -----------------        -----------------
       Total stockholders' equity                                                      717,108                   784,334
                                                                                -----------------        -----------------

           TOTAL LIABILITIES AND STOCKHOLDERS'
              EQUITY                                                            $    1,655,860           $     1,794,604
                                                                                =================        =================

          See accompanying notes to consolidated financial statements

                                     3
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<TABLE>



                      GLENBOROUGH REALTY TRUST INCORPORATED
                        CONSOLIDATED STATEMENTS OF INCOME
                 For the six months ended June 30, 2000 and 1999
                    (in thousands, except per share amounts)
                                   (Unaudited)

                                                                                2000                       1999
                                                                           ---------------            ----------------
REVENUE
<S>                                                                        <C>                        <C>
     Rental revenue                                                        $     123,978              $     129,193
     Fees and reimbursements from affiliates                                       2,362                      1,874
     Interest and other income                                                     4,643                      3,380
     Equity in earnings (loss) of Associated Company                                 622                       (565)
     Equity in (loss) earnings of unconsolidated joint
       ventures                                                                     (171)                        57
     Net (loss) gain on sales of real estate assets                               (3,042)                     7,093
                                                                           ---------------            ----------------
       Total revenue                                                             128,392                    141,032
                                                                           ---------------            ----------------

EXPENSES
     Property operating expenses                                                  41,847                     43,861
     General and administrative                                                    6,373                      4,773
     Depreciation and amortization                                                30,213                     29,312
     Interest expense                                                             32,370                     32,958
                                                                           ---------------            ----------------
       Total expenses                                                            110,803                    110,904
                                                                           ---------------            ----------------

Income from operations before minority interest and
     extraordinary item                                                           17,589                     30,128
 Minority interest                                                                  (656)                    (2,196)
                                                                           ---------------            ----------------
 Net income before extraordinary item                                             16,933                     27,932
Extraordinary item:
Net loss on early extinguishment of debt                                            (550)                      (303)
                                                                           ---------------            ----------------
Net income                                                                        16,383                     27,629
Preferred dividends                                                              (10,931)                   (11,140)
                                                                           ---------------            ----------------
Net income available to Common Stockholders                                $       5,452              $      16,489
                                                                           ===============            ================

Basic Per Share Data:
Net income before extraordinary item                                       $        0.20              $        0.53
Extraordinary item                                                                 (0.02)                     (0.01)
                                                                           ---------------            ----------------
Net income available to Common Stockholders                                $        0.18              $        0.52
                                                                           ===============            ================
Basic weighted average shares outstanding                                     29,842,924                 31,714,274
                                                                           ===============            ================

Diluted Per Share Data:
Net income before extraordinary item                                       $        0.20              $        0.53
Extraordinary item                                                                 (0.02)                     (0.01)
                                                                           ---------------            ----------------
Net income available to Common Stockholders                                $        0.18              $        0.52
                                                                           ===============            ================
Diluted weighted average shares outstanding                                   33,602,425                 36,040,578
                                                                           ===============            ================

          See accompanying notes to consolidated financial statements

                                     4
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<CAPTION>


                      GLENBOROUGH REALTY TRUST INCORPORATED
                        CONSOLIDATED STATEMENTS OF INCOME
                For the three months ended June 30, 2000 and 1999
                    (in thousands, except per share amounts)
                                   (Unaudited)

                                                                                2000                       1999
                                                                           ---------------            ----------------
REVENUE
<S>                                                                        <C>                        <C>
     Rental revenue                                                        $      60,817              $      64,552
     Fees and reimbursements from affiliates                                       1,894                        743
     Interest and other income                                                     3,427                      1,721
     Equity in earnings (loss) of Associated Company                                 576                       (874)
     Equity in (loss) earnings of unconsolidated joint
       ventures                                                                     (140)                        57
     Net (loss) gain on sales of real estate assets                               (2,347)                     5,742
                                                                           ---------------            ----------------
       Total revenue                                                              64,227                     71,941
                                                                           ---------------            ----------------

EXPENSES
     Property operating expenses                                                  20,290                     21,860
     General and administrative                                                    4,064                      2,551
     Depreciation and amortization                                                15,084                     14,220
     Interest expense                                                             16,023                     16,418
                                                                           ---------------            ----------------
       Total expenses                                                             55,461                     55,049
                                                                           ---------------            ----------------

Income from operations before minority interest and
     extraordinary item                                                            8,766                     16,892
 Minority interest                                                                  (350)                    (1,529)
                                                                           ---------------            ----------------
 Net income before extraordinary item                                              8,416                     15,363
Extraordinary item:
Net (loss) gain on early extinguishment of debt                                      (84)                     1,688
                                                                           ---------------            ----------------
Net income                                                                         8,332                     17,051
Preferred dividends                                                               (5,443)                    (5,570)
                                                                           ---------------            ----------------
Net income available to Common Stockholders                                $       2,889              $      11,481
                                                                           ===============            ================


Basic Per Share Data:
Net income before extraordinary item                                       $        0.10              $        0.31
Extraordinary item                                                                    -                        0.05
                                                                           ---------------            ----------------
Net income available to Common Stockholders                                $        0.10              $        0.36
                                                                           ===============            ================
Basic weighted average shares outstanding                                     29,330,163                 31,664,269
                                                                           ===============            ================

Diluted Per Share Data:
Net income before extraordinary item                                       $        0.10              $        0.31
Extraordinary item                                                                    -                        0.05
                                                                           ---------------            ----------------
Net income available to Common Stockholders                                $        0.10              $        0.36
                                                                           ===============            ================
Diluted weighted average shares outstanding                                   33,111,493                 35,984,107
                                                                           ===============            ================

          See accompanying notes to consolidated financial statements

                                     5
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<PAGE>
<TABLE>
<CAPTION>



                      GLENBOROUGH REALTY TRUST INCORPORATED
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                     For the six months ended June 30, 2000
                                 (in thousands)
                                   (Unaudited)

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

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

Exercise of stock options              13         -           -         -           203            -             -           203

Conversion of Operating
   Partnership units into
   common stock                        13         -           -         -           196            -             -           196

Common and preferred stock
   repurchases                     (1,967)       (2)     (1,232)       (1)      (47,712)           -             -       (47,715)

Amortization of deferred
   compensation                         -         -           -         -             -           58             -            58

Distributions                           -         -           -         -             -            -       (36,351)      (36,351)

Net income                              -         -           -         -             -            -        16,383        16,383
                                -----------  --------  ---------  --------  ------------  -----------  ------------  ------------
Balance at June 30, 2000           28,880     $  29      10,098     $  10   $   799,380    $    (555)   $  (81,756)  $   717,108
                                ===========  ========  =========  ========  ============  ===========  ============  ============


          See accompanying notes to consolidated financial statements

                                     6
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<CAPTION>

                      GLENBOROUGH REALTY TRUST INCORPORATED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the six months ended June 30, 2000 and 1999
                                 (in thousands)
                                   (Unaudited)


                                                                            2000                        1999
-------------------------------------------------------------          ---------------             ----------------
Cash flows from operating activities:
<S>                                                                    <C>                         <C>
     Net income                                                        $       16,383              $       27,629
     Adjustments to reconcile net income to net cash
       provided by operating activities:
         Depreciation and amortization                                         30,213                      29,312
         Amortization of loan fees, included in
           interest expense                                                     1,249                         993
         Minority interest in income from operations                              656                       2,196
         Equity in (earnings) loss of Associated Company                         (622)                        565
         Net loss (gain) on sales of real estate assets                         3,042                      (7,093)
         Net loss on early extinguishment of debt                                 550                         303
         Amortization of deferred compensation                                     58                           46
         Changes in certain assets and liabilities, net                        (6,205)                     (1,654)
                                                                       ---------------             ----------------

           Net cash provided by operating activities                           45,324                      52,297
                                                                       ---------------             ----------------

Cash flows from investing activities:
     Net proceeds from sales of real estate assets                            108,782                     111,027
     Additions to rental properties                                           (26,012)                    (22,833)
     Investments in Development                                                  (382)                     (4,162)
     Investments in Joint Ventures                                             (3,424)                     (3,176)
     Additions to mortgage loans receivable                                    (1,176)                     (1,562)
     Principal receipts on mortgage loans receivable                            1,141                           -
     Repayments of notes receivable                                             1,025                           -
     Payments from affiliates                                                     200                         400
     Distributions from Associated Company                                        682                         282
                                                                       ---------------             ----------------

           Net cash provided by investing activities                           80,836                      79,976
                                                                       ---------------             ----------------

Cash flows from financing activities:
     Proceeds from borrowings                                                 191,832                      83,480
     Repayment of borrowings                                                 (142,855)                   (156,046)
     Retirement of Series A Senior Notes (plus loss on
         retirement of $512 in 2000)                                          (91,662)                    (15,282)
     Prepayment penalties on loan payoffs                                         (38)                     (2,026)
     Distributions to minority interest holders                                (3,032)                     (3,546)
     Distributions to stockholders                                            (36,351)                    (37,790)
     Exercise of stock options                                                    203                         920
     Repurchases of common stock                                              (29,196)                     (4,339)
     Repurchases of preferred stock                                           (18,519)                          -
                                                                       ---------------             ----------------

         Net cash used for financing activities                              (129,618)                   (134,629)
                                                                       ---------------             ----------------


                                    continued

          See accompanying notes to consolidated financial statements

                                     7
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<CAPTION>


                      GLENBOROUGH REALTY TRUST INCORPORATED
                CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
                 For the six months ended June 30, 2000 and 1999
                                 (in thousands)
                                   (Unaudited)


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

<S>                                                                    <C>                         <C>
Net decrease in cash and cash equivalents                                     (3,458)                     (2,356)

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

Cash and cash equivalents at end of period                             $       3,024               $       2,001
                                                                       ===============             ================

Supplemental disclosure of cash flow information:

     Cash paid for interest (net of capitalized interest of
         $1,559 and $1,330 in 2000 and 1999, respectively)             $      32,443               $      30,262
                                                                       ===============             ================

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

     Disposition of real estate involving buyer's
         assumption of first trust deed notes payable                  $      25,347               $           -
                                                                       ===============             ================

     Conversion of Operating Partnership units into common
         stock, at current market value of common stock
                                                                       $         196               $           -
                                                                       ===============             ================



          See accompanying notes to consolidated financial statements

                                     8

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<PAGE>
                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 2000

Note 1.      ORGANIZATION

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

Subsequent to the Consolidation on December 31, 1995, and through June 30, 2000,
the following Common Stock  transactions  occurred:  (i) 25,446,000  shares were
issued in four separate public equity offerings; (ii) 453,507 shares were issued
in connection  with various  acquisitions;  (iii) 120,914  shares were issued in
connection with the exercise of employee stock options; (iv) 663,371 shares were
issued in  connection  with the exchange of  Operating  Partnership  units;  (v)
70,250  shares of Common  Stock were issued to officers  and  directors as stock
compensation;  (vi)  3,627,116  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 June 30, 2000, of  28,880,576.  Assuming
the issuance of 3,520,979  shares of Common Stock  issuable  upon  redemption of
3,520,979  partnership  units  in the  Operating  Partnership,  there  would  be
32,401,555 shares of Common Stock outstanding as of June 30, 2000.

In January 1998, the Company completed a public offering of 11,500,000 shares of
7-3/4% Series A  Convertible  Preferred  Stock (the  "January  1998  Convertible
Preferred Stock Offering"). The shares are convertible at any time at the option
of the holder thereof into shares of Common Stock at an initial conversion price
of $32.83 per share of Common Stock  (equivalent to a conversion  rate of 0.7615
shares of Common Stock for each share of Series A Convertible  Preferred Stock),
subject to  adjustment  in certain  circumstances.  Except in certain  instances
relating  to the  preservation  of the  Company's  status as a REIT,  the 7-3/4%
Series A  Convertible  Preferred  Stock is not  redeemable  prior to January 16,
2003.  On and after  January  16,  2003,  the  Series A  Preferred  Stock may be
redeemed at the option of the Company, in whole or in part, initially at 103.88%
of the liquidation  preference per share,  and thereafter at prices declining to
100% of the  liquidation  preference on and after January 16, 2008, plus in each
case accumulated,  accrued and unpaid dividends, if any, to the redemption date.
Shares of Preferred  Stock  issued and  outstanding  at June 30,  2000,  totaled
10,097,800.  As of June 30, 2000, 1,402,200 shares,  representing  approximately
81% of the preferred stock repurchase  program (see discussion  below) have been
repurchased.

In February  1999,  the Company's  Board of Directors  authorized the Company to
repurchase  up to 3.1  million  shares of its  outstanding  Common  Stock.  This
represented approximately 10% of the Company's total outstanding Common Stock at
the time of  authorization.  In November  1999,  the Company  announced that its
Board of Directors had doubled the size of the  repurchase  authorization  under
the Company's common stock repurchase plan. The repurchase plan was increased to
6.2 million shares,  or  approximately  20% of the Company's  total  outstanding
common stock.  Such  purchases will be made from time to time in the open market
or otherwise and the timing will depend on market  conditions and other factors.
As of June 30, 2000,  3,627,116  shares,  representing  approximately 59% of the
expanded repurchase  authorization,  have been repurchased.  In addition, during
the third quarter of 1999, the Company announced that its Board of Directors had
approved an expansion of the stock repurchase program to include preferred stock
as well as common  stock.  The Company is  authorized to repurchase up to 15% of
its preferred stock, or 1,725,000 shares.

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

The Company,  through its majority owned  subsidiaries,  is engaged primarily in
the  ownership,  operation,  management,  leasing,  acquisition,  expansion  and


                                       9
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 2000


development  of  various  income-producing   properties.   The  Company's  major
consolidated  subsidiary,  in which it holds a 1% general partner interest and a
88.16% limited  partner  interest at June 30, 2000, is  Glenborough  Properties,
L.P.  (the  "Operating  Partnership").  Each  of the  holders  of the  remaining
interests in the Operating Partnership ("OP Units") has the option to redeem its
OP Units and to receive,  at the option of the Company,  in exchange for each OP
Unit, either (i) one share of common stock of the Company, or (ii) cash equal to
the fair market value of one share of common  stock of the  Company.  As of June
30, 2000, the Operating  Partnership,  directly and through the  subsidiaries in
which  it and the  Company  own  100% of the  ownership  interests,  controls  a
portfolio of 136 real estate projects.

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

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

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

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

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

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

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

Note 2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
The  accompanying   financial  statements  present  the  consolidated  financial
position of the Company as of June 30, 2000,  and  December  31,  1999,  and the
consolidated  results of  operations  and cash flows of the  Company for the six
months ended June 30, 2000 and 1999. All intercompany transactions,  receivables
and payables have been eliminated in consolidation.



                                       10
<PAGE>
                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 2000

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 June 30, 2000, and for the period then ended.

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

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

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

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

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

The useful lives are as follows:

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

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

Investments in Development and Joint Ventures
The  Company,  through  mezzanine  loans and  equity  contributions,  invests in
various  development  alliances with projects currently under  development.  The
interest on advances and other direct  project costs incurred by the Company are
capitalized to the investment  during the period in which the projects are under


                                       11
<PAGE>
                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 2000

development. The Company's investments in joint ventures are accounted for using
the equity method. See Note 6 for further discussion.

Investment in Associated Company
The Company's Investment in Associated Company is accounted for using the equity
method, as discussed further in Note 4.

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

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

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

Derivative Financial Instruments
The  Company  may use  derivative  financial  instruments  in the event  that it
believes such  instruments  will be an effective  hedge against  fluctuations in
interest  rates  on  a  specific  anticipated  borrowing.  Derivative  financial
instruments  such as forward rate  agreements or interest rate swaps may be used
in this capacity.  To the extent such instruments do not qualify as hedges, they
will be accounted  for on a  mark-to-market  basis and recorded in earnings each
period as  appropriate.  The cost of terminated  instruments  not  qualifying as
hedges  will  be  recorded  in  earnings  in the  period  they  are  terminated.
Instruments  which  qualify as hedges upon  obtaining  the related  debt will be
recorded as a premium or discount on the related debt  principal  and  amortized
into earnings over the life of the debt instrument.  If the hedged instrument is
retired  early,  the  unamortized  discount  or premium  will be  included  as a
component of the calculation of gain or loss on retirement.

At June 30, 2000 and December 31, 1999,  the Company was not a party to any open
interest rate  protection  agreements  other than the interest rate cap contract
entered into in August 1999 and discussed in Note 8 below.

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

Minority  Interest  Minority  interest  represents  the 10.84%  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.



                                       12
<PAGE>
                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 2000

For the six months ended June 30, 2000 and 1999, no tenants  represented  10% or
more of rental revenue of the Company.

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

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

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

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

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

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

Note 3.   RENTAL PROPERTY

Acquisitions
In the first  quarter of 2000,  through one of its  development  alliances,  the
Company acquired  Gateway 14, a 113,538 square foot industrial  property located
in Denver,  Colorado.  The total  acquisition cost of $6.2 million  consisted of
approximately  $1.9 million in cash,  which was funded with the proceeds  from a
tax deferred exchange, and the assumption of $4.3 million in debt.

Dispositions
In the second  quarter of 2000,  the Company sold eleven  properties,  including
five office,  three  industrial and three retail.  These assets were sold for an
aggregate sales price of approximately $105.6 million and generated an aggregate
net loss of approximately $2.3 million.

In the first quarter of 2000,  the Company sold an industrial  property known as
Columbia Warehouse, located in Columbia, Maryland, to an independent third party
for all cash  consideration of $1.6 million.  This resulted in a loss on sale of
approximately $420,000.

In the first quarter of 2000,  the Company  formed a limited  liability  company
with an  independent  third  party and  contributed  its  interest in the office
property  known as 2000  Corporate  Ridge,  located  in McLean,  Virginia.  This
transaction resulted in a loss on sale of approximately $211,000. See Note 6 for
further discussion.

These  transactions are reflected in the net loss on sales of real estate assets


                                       13
<PAGE>
<TABLE>
<CAPTION>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 2000

in the  accompanying  consolidated  statement of income for the six months ended
June 30, 2000.

Prospective Dispositions
The Company  entered  into  separate  definitive  agreements  to sell one office
property, six industrial  properties,  one retail property and a parcel of land.
These  properties are reflected in real estate held for sale on the accompanying
consolidated  balance sheet as of June 30, 2000.  See Note 14 for  discussion of
sales subsequent to June 30, 2000.

Note 4.   INVESTMENT IN ASSOCIATED COMPANY

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

As of  December  31,  1999 and June 30,  2000,  the  Company  had the  following
investment in the Associated Company (in thousands):

                                                       GC (1)
              Investment at December 31, 1998        $   8,807
              Distributions                               (625)
              Equity in earnings                         1,222
              Investment at December 31, 1999            9,404
              Distributions                               (682)
              Equity in earnings                           622
              Investment at June 30, 2000            $   9,344

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

Note 5.   MORTGAGE LOANS RECEIVABLE

The Company's mortgage loans receivable consist of the following as of June 30, 2000, and December 31, 1999 (dollars in thousands):

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

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

Note  secured by Gateway  Park land  located in Aurora,  CO, with a stated fixed
interest rate of 13%,  quarterly  interest-only  payments and a maturity date of
July 2005 (see below for further discussion).                                            37,617                36,441
                                                                                  --------------        ---------------

Total                                                                                $   37,617         $      37,582
                                                                                  ==============        ===============

In September  1999, the Company sold a hotel property in Arlington,  Texas, to a
third  party  for a sale  price of $2.1  million,  of which  $1.14  million  was
represented by a note receivable  secured by the hotel  property.  This note was
paid off in January 2000.

In 1998,  the  Company  entered  into a  development  alliance  with  The  Pauls
Corporation.  In  addition to this  development  alliance,  the  Company  loaned

                                       14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 2000

approximately $34 million ($37.6 million,  including  accrued interest,  at June
30, 2000),  secured by a first mortgage,  to facilitate the build-out of Gateway
Park. In this arrangement,  the Company has rights under certain  conditions and
subject to certain  contingencies  to purchase the properties upon completion of
development and, thus, through this arrangement, the Company could acquire up to
2.2 million  square feet of office and  industrial  space and 1,600  multifamily
units over the next ten years.

Note 6.   INVESTMENTS IN DEVELOPMENT AND JOINT VENTURES

The Company is currently involved in 3 development alliances for the development
of approximately  579,000 square feet of office and distribution  properties and
1,702 multifamily units in Colorado,  Texas, New Jersey,  Kansas and Florida. As
of June 30, 2000,  the Company has advanced  approximately  $39 million to these
alliances.  Under these development alliances, the Company has certain rights to
purchase the properties upon completion of development over the next five years.

In the first quarter of 2000,  the Company  formed a limited  liability  company
(the "LLC") with an independent  third party and contributed its interest in the
office property known as 2000 Corporate Ridge, located in McLean, Virginia. This
transaction resulted in a loss on sale of approximately $211,000 and is included
in net loss on sales of real  estate  assets  in the  accompanying  consolidated
statement  of income  for the six  months  ended  June 30,  2000.  Consideration
received for this contribution included $14.7 million in cash and the assumption
of a $20.6  million  mortgage by the LLC.  The Company now has a 10% interest in
the LLC and the LLC  agreement  provides for,  among other  things,  a 3% annual
management fee to the Company for property  management  services,  certain asset
management  fees and  certain  additional  distributions  in  excess  of its 10%
interest,  if available,  upon the ultimate sale of the property by the LLC. The
Company accounts for its interest in the LLC under the equity method.

Note 7.   OTHER ASSETS

As of June 30, 2000 and  December 31,  1999,  other  assets on the  consolidated
balance sheets consist of the following (in thousands):

                                                    2000              1999
                                                 ------------      ------------
<S>                                              <C>               <C>
   Accounts receivable, net                      $    6,171        $    3,856
   Prepaid expenses                                   6,074             8,164
   Section 1031 exchange accounts                     9,499                 -
   Impound accounts                                   8,261            12,970
   Lease commissions and deferred financing
     fees, net                                       20,539            20,867
   Corporate office fixed assets, net                 5,116             4,726
   Related party receivable (Note 10)                 1,815             1,847
   Other                                              1,368             2,363
                                                 ------------      ------------

   Total other assets                            $   58,843        $   54,793
                                                 ============      ============

Note 8.   SECURED AND UNSECURED LIABILITIES

The Company had the following  mortgage loans,  bank lines,  unsecured notes and
notes payable outstanding as of June 30, 2000, and December 31, 1999 (dollars in
thousands):

                                       15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 2000

                                                                                                 2000          1999
<S>                                                                                          <C>           <C>
Secured loans with various  lenders,  net of unamortized  discount of $5,203 and $5,515 at
June 30, 2000 and December 31, 1999,  respectively.  All loans have a fixed  interest rate
of 6.125% and a November 10, 2008 maturity date.  Monthly  principal and interest payments
range between $343 and $458.  These loans are secured by 30  properties  with an aggregate
net  carrying  value of $405,056  and  $409,130 at June 30, 2000 and  December  31,  1999,
respectively.                                                                                $231,567      $232,735

Secured  loans with various  lenders,  bearing  interest at fixed rates  between 6.95% and
9.25%   (approximately   $52,146  of  these  loans  include  an  unamortized   premium  of
approximately  $121 which reduces the  effective  interest  rate on those  instruments  to
6.75%),  with monthly  principal  and interest  payments  ranging  between $5 and $443 and
maturing  at  various  dates  through  December  1,  2030.  These  loans  are  secured  by
properties  with an  aggregate  net  carrying  value of $445,537  and $547,264 at June 30,
2000 and December 31, 1999, respectively.                                                     272,917       322,878

Secured  loans with various  banks  bearing  interest at variable  rates  ranging  between
7.613% and 9.50% at June 30, 2000 and 6.53% and 8.52% at December 31,  1999,  and maturing
at various dates through  August 30, 2004.  These loans are secured by properties  with an
aggregate  net  carrying  value of $243,403 and $224,526 at June 30, 2000 and December 31,
1999, respectively.                                                                           164,843       146,102

Unsecured  $142,500  line  of  credit  with a bank  ("Credit  Facility")  with a  variable
interest  rate of LIBOR plus 1.75% at June 30, 2000 and LIBOR plus 1.625% at December  31,
1999 (8.392% and 7.753%,  respectively),  monthly  interest  only  payments and a maturity
date of June 10, 2002, with one option to extend for 10 years.                                 39,811        70,628

Unsecured  $125,000  term loan with a bank with a  variable  interest  rate of LIBOR  plus
1.75%  (8.392% and 8.25% at June 30, 2000 and December 31,  1999,  respectively),  monthly
interest only payments and a maturity date of June 10, 2002.                                  125,000        33,865

Unsecured  Series A Senior Notes with a fixed  interest rate of 7.625%,  interest  payable
semiannually  on March 15 and September 15, and a maturity date of March 15, 2005.  All of
the notes were retired in the first six months of 2000, as discussed below.                         -        91,150

Total                                                                                        $834,138      $897,358

In the second quarter of 2000, the Company obtained an $18 million  construction
loan  to  refinance  a  264,000  square  foot  industrial  property  located  in
Indianapolis,  Indiana,  and to  provide  funds to build an  approximate  83,000
square  foot  expansion  to  this  property.   Approximately  $9.4  million  was
outstanding  at June 30, 2000. The loan has a maturity date of June 15, 2002 and
bears  interest at the floating  rate of LIBOR plus 2.50%.  The interest rate on
this loan at June 30, 2000 was 9.14%.

In the first quarter of 2000, the Company obtained a $10.5 million  construction
loan to build an 80,000 square foot office  property in Bedminster,  New Jersey.
Approximately  $5  million  was  outstanding  at June 30,  2000.  The loan has a
maturity  date of November 12, 2001 and bears  interest at the floating  rate of
LIBOR plus 2.25%. The interest rate on this loan at June 30, 2000 was 8.89%.

                                       16
</TABLE>
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 2000

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

In the first  quarter  of 2000,  related  to the  acquisition  of an  industrial
property from one of the Company's development alliances (as discussed in Note 3
above),  the  Company  assumed  a $4.3  million  secured  loan.  This loan has a
maturity date of October 1, 2000 (with options for two 6-month  extensions)  and
bears  interest at the floating  rate of LIBOR plus 1.55%.  The interest rate on
this loan at June 30, 2000 was 7.61%.

During the six months ended June 30,  2000,  the Company  retired the  remaining
$91.2 million of unsecured  Series A Senior Notes at a discount.  As a result of
these  transactions and the related  write-off of capitalized  original issuance
costs,  a net loss on early  extinguishment  of debt of $550,000 was recorded in
the accompanying  consolidated statement of income for the six months ended June
30, 2000, as discussed in Note 9 below.

In August 1999,  the Company  closed a $97.6 million  secured  financing  with a
commercial bank ("Secured Financing"). In connection with the Secured Financing,
the Company  entered into an interest rate cap  agreement to hedge  increases in
interest  rates above a specified  level of 11.21%.  The agreement is for a term
concurrent with the Secured Financing instrument, is indexed to the 90-day LIBOR
rate, and is for a notional amount equal to the maximum amount  available on the
Secured  Financing  loan. As of June 30, 2000,  the 90-day LIBOR rate was 6.77%.
The Company paid a premium of approximately $434,000 at the inception of the cap
agreement, which is being amortized as additional interest expense over the life
of the agreement.

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

The required  principal  payments on the Company's  debt for the next five years
and thereafter, as of June 30, 2000, are as follows (in thousands):

                Year Ending
               December 31,
                 2000                  $   76,742
                 2001                      49,131
                 2002                     187,510
                 2003                      36,745
                 2004                     107,845
                 Thereafter               376,165
                 Total                 $  834,138

Note 9.   NET LOSS ON EARLY EXTINGUISHMENT OF DEBT

In connection  with the unsecured  Series A Senior Notes  repurchases  discussed
above,  the  Company  recorded  a net  loss on early  extinguishment  of debt of
$550,000 for the six months ended June 30, 2000.  This loss consists of $931,000
of discounts on retirement offset by $1,481,000 of losses due to the writeoff of
unamortized original issuance costs.

Note 10.  RELATED PARTY TRANSACTIONS

Fee and reimbursement  income earned by the Company from related parties totaled
$2,362,000  and  $1,874,000  for the six months  ended  June 30,  2000 and 1999,
respectively,  and consisted of property  management fees, asset management fees
and other fee income. In addition,  the Company paid GC property management fees
and salary  reimbursements  totaling  $505,000  and  $734,000 for the six months
ended June 30, 2000 and 1999,  respectively,  for  management  of a portfolio of
residential  properties  owned by the  Company,  which is  included  in property
operating expenses and general and  administrative  expenses on the accompanying
consolidated statements of income.

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

                   Notes to Consolidated Financial Statements
                                  June 30, 2000

In 1998, the Company  acquired from a Managed  Partnership an option to purchase
all of its rights under a Lease with Option to Purchase  Agreement,  for certain
undeveloped  and  unentitled  land  located  in  Burlingame,   California.  Upon
expiration of the option period, the independent  members of the Company's Board
of Directors  concluded  that  proceeding  with the  development of the property
would have  required  that the Company incur  substantial  debt and  entitlement
risk. Accordingly,  on February 1, 1999, the Company elected not to proceed with
the  development  and not to  exercise  the  option  in return  for the  Managed
Partnership's   agreement   to   reimburse   the  Company  for   $2,309,000   of
predevelopment  costs,  $462,000  to be paid  in  cash  with  the  balance  in a
promissory  note  bearing  interest  at 10%  and  due on the  earlier  of  sale,
refinance or March 31, 2002. The note also contains a  participation  in profits
realized by the Managed  Partnership  from the sale of the property if such sale
occurs within 3 years. As of June 30, 2000,  principal payments of approximately
$32,000 have been  received  resulting in an  outstanding  principal  balance of
$1,815,000.   This  note  is  included  in  other  assets  on  the  accompanying
consolidated balance sheets.

Note 11.  EARNINGS PER SHARE

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

                                                             Three months ended                      Six months ended
                                                                  June 30,                               June 30,
                                                       -------------------------------      ------------------------------------
                                                           2000              1999                2000                1999
                                                       --------------    -------------      ----------------    ----------------
<S>                                                    <C>               <C>                <C>                 <C>
Net income available to Common
     Stockholders - Basic                              $       2,889     $     11,481       $       5,452       $     16,489
Minority interest                                                350            1,529                 656              2,196
                                                       --------------    -------------      ----------------    ----------------
Net income available to Common
     Stockholders - Diluted                            $       3,239     $     13,010       $       6,108       $     18,685
                                                       --------------    -------------      ----------------    ----------------

Weighted average shares:
Basic                                                     29,330,163       31,664,269          29,842,924         31,714,274
Stock options                                                226,745          109,092             178,346            111,759
Convertible Operating Partnership Units                    3,554,585        4,210,746           3,581,155          4,214,545
                                                       --------------    --------------     ----------------    ----------------
Diluted                                                   33,111,493       35,984,107          33,602,425         36,040,578
                                                       --------------    --------------     ----------------    ----------------

Basic earnings per share                               $        0.10     $       0.36       $        0.18       $       0.52
Diluted earnings per share                             $        0.10     $       0.36       $        0.18       $       0.52

Note 12.  STOCK COMPENSATION PLAN

In May 1996, the Company  adopted an employee stock  incentive plan (the "Plan")
to provide  incentives to attract and retain high quality executive officers and
key employees.  Certain amendments to the Plan were ratified and approved by the
stockholders   of  the  Company  at  the  Company's   1997  Annual   Meeting  of
Stockholders.  The Plan,  as  amended,  provides  for the grant of (i) shares of
Common Stock of the Company, (ii) options, stock appreciation rights ("SARs") or
similar  rights with an exercise or conversion  privilege at a fixed or variable
price related to the Common Stock and/or the passage of time,  the occurrence of
one or more  events,  or the  satisfaction  of  performance  criteria  or  other
conditions, or (iii) any other security with the value derived from the value of
the Common Stock of the Company or other securities  issued by a related entity.
Such awards include,  without  limitation,  options,  SARs,  sales or bonuses of
restricted  stock,  dividend  equivalent  rights ("DERs"),  Performance Units or
Preference  Shares.  The total number of shares of Common Stock  available under
the Plan is equal to the  greater  of  1,140,000  shares or 8% of the  number of
shares  outstanding  determined  as of the day  immediately  following  the most
recent issuance of shares of Common Stock or securities  convertible into shares
of Common Stock;  provided that the maximum aggregate number of shares of Common

                                       18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 2000


Stock available for issuance under the Plan may not be reduced.  For purposes of
calculating  the number of shares of Common Stock  available under the Plan, all
classes  of  securities  of the  Company  and  its  related  entities  that  are
convertible  presently  or in the future by the  security  holder into shares of
Common Stock or which may  presently or in the future be exchanged for shares of
Common Stock pursuant to redemption  rights or otherwise,  shall be deemed to be
outstanding shares of Common Stock. Notwithstanding the foregoing, the aggregate
number of shares  as to which  incentive  stock  options,  one type of  security
available under the Plan, may be granted under the Plan may not exceed 1,140,000
shares.  In May 1999, the Company's  stockholders  approved the grant of 700,000
non-qualified stock options to Robert Batinovich and 300,000 non-qualified stock
options to Andrew  Batinovich,  outside the Plan.  The Company  accounts for the
fair value of the options and bonus  grants in  accordance  with APB Opinion No.
25. As of June 30,  2000,  70,250  shares of bonus grants have been issued under
the Plan.  The fair value of the shares  granted  has been  recorded as deferred
compensation  in the  accompanying  financial  statements and will be charged to
earnings  ratably  over the  respective  vesting  periods that range from 2 to 5
years. As of June 30, 2000, 2,662,086 options to purchase shares of Common Stock
were outstanding  under the Plan,  excluding the 1,000,000 stock options granted
to Robert  Batinovich  and Andrew  Batinovich as described  above.  The exercise
price of each  incentive  stock  option  granted is greater than or equal to the
per-share  fair  market  value of the  Common  Stock on the date the  option  is
granted and, as such, no compensation  expense has been recognized.  The options
vest over periods between 1 and 6 years, and have a maximum term of 10 years.

Note 13.  SEGMENT INFORMATION

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

The accounting  policies of the segments are the same as those  described in the
summary of significant accounting policies. The Company evaluates performance of
its property types based on net operating  income derived by subtracting  rental
expenses  and real estate  taxes  (operating  expenses)  from  rental  revenues.
Significant  information  used by the Company for its reportable  segments as of
and  for the six  months  ended  June  30,  2000  and  1999  is as  follows  (in
thousands):

                                                                       Multifamily
2000                             Office      Industrial     Retail                    Hotel         Total
                               ------------  -----------  -----------  -----------  -----------  -------------
<S>                            <C>            <C>          <C>          <C>           <C>         <C>
Rental revenue                 $   64,199     $  19,890    $   5,203    $  34,136     $    550    $   123,978
Property operating expenses        23,714         5,060        1,677       15,083          115         45,649
                               ------------  -----------  -----------  -----------  -----------  -------------
Net operating income (NOI)     $   40,485     $  14,830    $   3,526    $  19,053     $    435    $    78,329
                               ============  ===========  ===========  ===========  ===========  =============

1999
Rental revenue                 $   65,527     $  22,665    $   6,043    $  33,970     $    988    $   129,193
Property operating expenses        24,822         6,186        2,057       14,654          205         47,924
                               ------------  -----------  -----------  -----------  -----------  -------------
Net operating income (NOI)     $   40,705     $  16,479    $   3,986    $  19,316     $    783    $    81,269
                               ============  ===========  ===========  ===========  ===========  =============

                                       19
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 2000


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

                                                             2000                 1999
                                                       -----------------    -----------------
Revenues
<S>                                                      <C>                  <C>
Total revenue for reportable segments                    $    123,978         $    129,193
Other revenue (1)                                               4,414               11,839
                                                       -----------------    -----------------
Total consolidated revenues                              $    128,392         $    141,032
                                                       =================    =================

Net Income
NOI for reportable segments                              $     78,329         $     81,269
Elimination of internal property management fees                3,802                4,063
Unallocated amounts:
   Other revenue (1)                                            4,414               11,839
   General and administrative expenses                         (6,373)              (4,773)
   Depreciation and amortization                              (30,213)             (29,312)
   Interest expense                                           (32,370)             (32,958)
                                                       -----------------    -----------------
Income from operations  before minority  interest and
   extraordinary items                                   $     17,589         $     30,128
                                                       =================    =================

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

Note 14.  SUBSEQUENT EVENTS

Subsequent to June 30, 2000, the Company sold five industrial properties and one
retail  property.  These  properties  were sold for an aggregate  sales price of
approximately $22.2 million and generated an aggregate net gain of approximately
$1.5 million.

                                       20
</TABLE>
<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 June 30,
2000,  the Company  owned and  operated  136  income-producing  properties  (the
"Properties," and each a "Property").  The Properties are comprised of 55 office
Properties,  34  industrial  Properties,  6 retail  Properties,  37  multifamily
Properties,  1 hotel Property and 3 joint  ventures,  located in 27 metropolitan
markets.

The Company was  incorporated  in the State of Maryland on August 26,  1994.  On
December 31, 1995, the Company completed a consolidation  (the  "Consolidation")
in which Glenborough  Corporation,  a California  corporation,  and eight public
limited  partnerships (the  "Partnerships")  collectively,  the "GRT Predecessor
Entities",  merged with and into the Company.  The Company (i) issued  5,753,709
shares  (the  "Shares")  of $.001 par value  Common  Stock of the Company to the
Partnerships  in exchange  for the net assets of the  Partnerships;  (ii) merged
with Glenborough Corporation, with the Company being the surviving entity; (iii)
acquired an interest in three  companies,  two of which merged on June 30, 1997,
and the  remaining  two of which merged on September  30, 1999 (the  "Associated
Company"), that provide asset and property management services, as well as other
services;  and (iv)  through a  subsidiary  operating  partnership,  Glenborough
Properties,  L.P. (the "Operating  Partnership"),  acquired interests in certain
warehouse   distribution   facilities  from  GPA,  Ltd.,  a  California  limited
partnership ("GPA"). A portion of the Company's operations are conducted through
the Operating Partnership, of which the Company is the sole general partner, and
in which the Company holds a 88.16% limited  partner  interest at June 30, 2000.
The Company operates the assets acquired in the  Consolidation and in subsequent
acquisitions  and  intends to continue  to invest in  income-producing  property
directly and through joint  ventures.  In addition,  the Associated  Company may
acquire general partner interests in other real estate limited partnerships. The
Company  has  elected to qualify as a REIT under the  Internal  Revenue  Code of
1986,  as amended.  The common and  preferred  stock of the Company (the "Common
Stock" and the "Preferred Stock", respectively) are listed on the New York Stock
Exchange ("NYSE") under the trading symbols "GLB" and "GLB Pr A", respectively.

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

Results of Operations

Comparison  of the six months  ended June 30, 2000 to the six months  ended June
30, 1999.

Rental Revenue. Rental revenue decreased $5,215,000,  or 4%, to $123,978,000 for
the six months  ended June 30, 2000 from  $129,193,000  for the six months ended
June 30, 1999, due to decreases in revenues from the office, industrial,  retail
and  hotel  Properties  of  $1,328,000,   $2,775,000,   $840,000  and  $438,000,
respectively.  These  decreases  are  primarily  due to the  sales of 11  office
Properties,  11 industrial  Properties,  three retail  Properties  and one hotel
since June 30, 1999.  These  decreases are offset by an increase in revenue from
the multifamily Properties of $166,000.

Fees and Reimbursements from Affiliates. Fees and reimbursements from affiliates
consist  primarily  of property  and asset  management  fees paid to the Company
under agreements with the Managed Partnerships. This revenue increased $488,000,
or 26%, to $2,362,000  for the six months ended June 30, 2000,  from  $1,874,000
for the six months  ended  June 30,  1999,  primarily  due to  transaction  fees
received from an affiliate in the second quarter of 2000.

Interest and Other Income.  Interest and other income increased  $1,263,000,  or
37%, to $4,643,000 for the six months ended June 30, 2000,  from  $3,380,000 for
the six months  ended June 30, 1999.  The increase is primarily  due to interest
income earned upon the payoff of loans made on two development  projects sold by
a  development  alliance in the second  quarter of 2000 offset by  decreases  in
interest earned on notes receivable as a result of payoffs received.

Equity in Earnings  (Loss) of Associated  Company.  Equity in earnings (loss) of
Associated Company increased $1,187,000, or 210%, to $622,000 for the six months
ended June 30, 2000, from an equity in loss of $565,000 for the six months ended
June 30, 1999. The increase is primarily due to a decrease in GC's 1999 earnings

                                       21
<PAGE>

resulting from a provision to reduce the carrying value of management  contracts
with  certain of the  Managed  Partnerships.  In  addition,  GC's 2000  earnings
increased due to transaction fees received in the second quarter of 2000.

Equity in (Loss) Earnings of  Unconsolidated  Joint  Ventures.  Equity in (loss)
earnings of  unconsolidated  joint ventures  decreased  $228,000 to an equity in
loss of  $171,000  for the six  months  ended June 30,  2000,  from an equity in
earnings of $57,000 during the six months ended June 30, 1999.  This decrease is
due to a decrease in the  capitalization of interest expense and property taxes,
recognition of depreciation  expense,  and payment of operating  expenses by the
joint ventures upon the completion of development of several projects in 2000.

Net (Loss)  Gain on Sales of Real Estate  Assets.  The net loss on sales of real
estate assets of $3,042,000 during the six months ended June 30, 2000,  resulted
from the sales of six office  Properties,  four industrial  Properties and three
retail Properties from the Company's portfolio in 2000. The net gain on sales of
real estate  assets of  $7,093,000  during the six months  ended June 30,  1999,
resulted  from the sale of six office  Properties,  ten  industrial  Properties,
three retail Properties, one multifamily Property, one hotel and a small partial
interest in a REIT.

Property Operating Expenses.  Property operating expenses decreased  $2,014,000,
or 5%, to $41,847,000 for the six months ended June 30, 2000,  from  $43,861,000
for the six months  ended June 30, 1999.  This  decrease  corresponds  to the 4%
decrease in rental revenues resulting from the sale of Properties.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased  $1,600,000,  or 34%, to $6,373,000  for the six months ended June 30,
2000,  from $4,773,000 for the six months ended June 30, 1999. This increase was
primarily due to timing  differences in incentive  compensation costs which were
recognized in the second quarter of 2000 versus the third and fourth quarters of
1999.

Depreciation  and  Amortization.  Depreciation  and  amortization did not change
significantly  with an increase of $901,000,  or 3%, to $30,213,000  for the six
months ended June 30, 2000,  from  $29,312,000 for the six months ended June 30,
1999.

Interest Expense.  Interest expense did not change significantly with a decrease
of $588,000,  or 2%, to $32,370,000 for the six months ended June 30, 2000, from
$32,958,000 for the six months ended June 30, 1999.

Net Loss on Early  Extinguishment  of Debt. Net loss on early  extinguishment of
debt of $550,000 during the six months ended June 30, 2000, consists of $931,000
of gains on  retirement  of Series A Senior  Notes at a discount,  offset by the
related write-off of unamortized loan fees in the amount of $1,481,000.  The net
loss on early  extinguishment  of debt of $303,000  during the six months  ended
June 30,  1999,  consists of gains on the  retirement  of Series A Senior  Notes
offset by prepayment  penalties and the write-off of unamortized  loan fees upon
early payoff of debt.

Comparison  of the three  months  ended June 30, 2000 to the three  months ended
June 30, 1999.

Rental Revenue.  Rental revenue decreased $3,735,000,  or 6%, to $60,817,000 for
the three months ended June 30, 2000 from $64,552,000 for the three months ended
June 30, 1999, due to decreases in revenues from the office, industrial, retail,
multifamily and hotel Properties of $1,651,000,  $1,217,000,  $465,000, $187,000
and $215,000, respectively. These decreases are primarily due to the sales of 11
office  Properties,  11 industrial  Properties,  three retail Properties and one
hotel since June 30, 1999.

Fees and Reimbursements from Affiliates. Fees and reimbursements from affiliates
consist  primarily  of property  and asset  management  fees paid to the Company
under  agreements  with  the  Managed   Partnerships.   This  revenue  increased
$1,151,000,  or 155%,  to  $1,894,000  for the three months ended June 30, 2000,
from  $743,000  for the three  months  ended  June 30,  1999,  primarily  due to
transaction fees received from an affiliate in the second quarter of 2000.

Interest and Other Income.  Interest and other income increased  $1,706,000,  or
99%, to $3,427,000 for the three months ended June 30, 2000, from $1,721,000 for
the three months ended June 30, 1999.  The increase is primarily due to interest
income earned upon the payoff of loans made on two development  projects sold by
a development alliance in the second quarter of 2000.

Equity  in  Earnings  (Loss)  of  Associated  Company.  Equity  in  earnings  of
Associated  Company  increased  $1,450,000,  or 166%,  to $576,000 for the three

                                       22
<PAGE>

months  ended June 30,  2000,  from an equity in loss of $874,000  for the three
months ended June 30, 1999.  The increase is primarily due to a decrease in GC's
1999  earnings  resulting  from a  provision  to reduce  the  carrying  value of
management contracts with certain of the Managed Partnerships. In addition, GC's
2000 earnings  increased due to transaction  fees received in the second quarter
of 2000.

Equity in (Loss) Earnings of  Unconsolidated  Joint  Ventures.  Equity in (loss)
earnings of  unconsolidated  joint ventures  decreased  $197,000 to an equity in
loss of $140,000 for the three  months  ended June 30,  2000,  from an equity in
earnings of $57,000  during the three months ended June 30, 1999.  This decrease
is due to a decrease  in the  capitalization  of interest  expense and  property
taxes, recognition of depreciation expense, and payment of operating expenses by
the joint ventures upon the  completion of  development  of several  projects in
2000.

Net (Loss)  Gain on Sales of Real Estate  Assets.  The net loss on sales of real
estate  assets of  $2,347,000  during  the three  months  ended  June 30,  2000,
primarily  resulted from the sales of five office  Properties,  three industrial
Properties and three retail Properties from the Company's portfolio in 2000. The
net gain on sales of real estate  assets of  $5,742,000  during the three months
ended  June 30,  1999,  resulted  from the sale of six office  Properties,  five
industrial  Properties,  one retail Property,  one multifamily  Property and one
hotel.

Property Operating Expenses.  Property operating expenses decreased  $1,570,000,
or 7%, to $20,290,000 for the three months ended June 30, 2000, from $21,860,000
for the three months ended June 30, 1999.  This decrease  corresponded to the 6%
decrease in rental revenues resulting from the sale of Properties.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased $1,513,000,  or 59%, to $4,064,000 for the three months ended June 30,
2000,  from  $2,551,000 for the three months ended June 30, 1999.  This increase
was primarily due to timing  differences in incentive  compensation  costs which
were  recognized  in the  second  quarter  of 2000  versus  the third and fourth
quarters of 1999.

Depreciation  and  Amortization.  Depreciation  and  amortization did not change
significantly with an increase of $864,000,  or 6%, to $15,084,000 for the three
months ended June 30, 2000, from $14,220,000 for the three months ended June 30,
1999.

Interest Expense.  Interest expense did not change significantly with a decrease
of  $395,000,  or 2%, to  $16,023,000  for the three months ended June 30, 2000,
from $16,418,000 for the three months ended June 30, 1999.

Net  (Loss)  Gain  on  Early   Extinguishment   of  Debt.   Net  loss  on  early
extinguishment  of debt of $84,000  during the three months ended June 30, 2000,
consists of the write-off of unamortized loan fees upon the retirement of Series
A  Senior  Notes.  The net gain on early  extinguishment  of debt of  $1,688,000
during the three months ended June 30, 1999, consists of gains on the retirement
of Series A Senior Notes at a discount  offset by  prepayment  penalties and the
write-off of unamortized loan fees upon early payoff of debt.

Liquidity and Capital Resources

Cash Flows
For the six months ended June 30, 2000,  cash  provided by operating  activities
decreased by $6,973,000 to $45,324,000  as compared to $52,297,000  for the same
period in 1999.  The  decrease  is  primarily  due to a  decrease  in net income
resulting from the 1999 and 2000 sales of Properties. Cash provided by investing
activities  increased by $860,000 to  $80,836,000  for the six months ended June
30, 2000, as compared to  $79,976,000  for the same period in 1999. The increase
is primarily due to a decrease in cash used for  investments in development  and
an increase in principal  receipts on mortgage loans and notes receivable offset
by an increase in capital expenditures and a decrease in net proceeds from sales
of real estate  assets.  During the six months ended June 30, 2000,  the Company
sold 13 Properties as compared to 21 Properties during the six months ended June
30,  1999.  Cash  used for  financing  activities  decreased  by  $5,011,000  to
$129,618,000 for the six months ended June 30, 2000, as compared to $134,629,000
for the same  period in 1999.  This  change was  primarily  due to a decrease in
prepayment  penalties  paid during the six months ended June 30, 2000 versus the
same period in 1999. In addition,  distributions  to  stockholders  decreased in
2000 due to the repurchases of common and preferred stock.

The Company  expects to meet its  short-term  liquidity  requirements  generally


                                       23
<PAGE>

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

The  Company's  principal  sources of  funding  for  acquisitions,  development,
expansion  and  renovation  of  properties  and stock  repurchases  include  the
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  $37,582,000 at December 31, 1999, to
$37,617,000  at June 30, 2000.  This  increase was due to accrued  interest on a
loan made by the Company under a development  alliance offset by the payoff of a
$1,141,000 loan made by the Company to the buyer of one of the hotel Properties.

Secured and Unsecured Financing
Mortgage  loans payable  decreased  from  $701,715,000  at December 31, 1999, to
$669,327,000 at June 30, 2000. This decrease resulted from the assumption by the
buyers of two of the  Company's  Properties  of mortgage  loans in the amount of
$25,346,000,  the  payoff of  approximately  $21,240,000  of  mortgage  loans in
connection  with 2000 sales of Properties  and scheduled  principal  payments of
approximately  $4,569,000.  This decrease is partially  offset by $18,767,000 of
new mortgage loans in connection  with an  acquisition,  the  construction  of a
property  in  Bedminster,  New  Jersey  and  the  expansion  of  a  property  in
Indianapolis, Indiana (see below for further discussion).

In the second quarter of 2000, the Company obtained an $18 million  construction
loan to build  an  approximate  83,000  square  foot  expansion  to an  existing
property in Indianapolis, Indiana. Approximately $9.4 million was outstanding at
June 30, 2000.  The loan has a maturity date of June 15, 2002 and bears interest
at the floating rate of LIBOR plus 2.50%. The interest rate on this loan at June
30, 2000 was 9.14%.

In the first quarter of 2000, the Company obtained a $10.5 million  construction
loan to build an 80,000 square foot office  property in Bedminster,  New Jersey.
Approximately  $5  million  was  outstanding  at June 30,  2000.  The loan has a
maturity  date of November 12, 2001 and bears  interest at the floating  rate of
LIBOR plus 2.25%. The interest rate on this loan at June 30, 2000 was 8.89%.

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

In the first  quarter  of 2000,  related  to the  acquisition  of an  industrial
property from one of the Company's development alliances,  the Company assumed a
$4.3  million  secured  loan.  This loan has a maturity  date of October 1, 2000
(with  options for two 6-month  extensions)  and bears  interest at the floating
rate of LIBOR plus 1.55%.  The  interest  rate on this loan at June 30, 2000 was
7.61%.

During the six months ended June 30,  2000,  the Company  retired the  remaining
$91.2 million of unsecured  Series A Senior Notes at a discount.  As a result of
these  transactions and the related  write-off of capitalized  original issuance
costs, a net loss on early extinguishment of debt of approximately  $550,000 was
recognized  by the Company in the  consolidated  statement of income for the six
months ended June 30, 2000.

In August 1999,  the Company  closed a $97.6 million  secured  financing  with a
commercial bank ("Secured Financing"). In connection with the Secured Financing,
the Company  entered into an interest rate cap  agreement to hedge  increases in
interest  rates above a specified  level of 11.21%.  The agreement is for a term
concurrent with the Secured Financing instrument, is indexed to the 90-day LIBOR
rate, and is for a notional amount equal to the maximum amount  available on the
Secured  Financing  loan. As of June 30, 2000,  the 90-day LIBOR rate was 6.77%.


                                       24
<PAGE>

The Company paid a premium of approximately $434,000 at the inception of the cap
agreement, which is being amortized as additional interest expense over the life
of the agreement.

The Company has an unsecured  line of credit  provided by a group of  commercial
banks (the "Credit Facility").  Outstanding borrowings under the Credit Facility
decreased  from  $70,628,000  at December 31, 1999, to  $39,811,000  at June 30,
2000.  The  decrease was due to draws of  $86,229,000  for  acquisitions,  stock
repurchases, and purchases of the Company's Series A Senior Notes, offset by pay
downs of  $117,046,000  generated from proceeds from the sales of Properties and
cash from operations. In February 2000, the maturity date on the Credit Facility
was extended from December 2000 to June 2002.

At June 30, 2000, the Company's total indebtedness  included  fixed-rate debt of
$504,484,000 and floating-rate  indebtedness of $329,654,000.  Approximately 66%
of the Company's total assets,  comprising 96 properties,  is encumbered by debt
at June 30, 2000.

It is the  Company's  policy to manage its  exposure to  fluctuations  in market
interest  rates  through  the use of fixed rate debt  instruments  to the extent
possible. At June 30, 2000, approximately 40% 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 June 30,  2000,  the Company was not a party to any open  interest
rate protection  agreements other than the interest rate cap contract associated
with the Secured Financing discussed above.

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

Development Alliances
The Company is currently involved in 3 development alliances for the development
of approximately  579,000 square feet of office and distribution  properties and
1,702 multifamily units in Colorado,  Texas, New Jersey,  Kansas and Florida. As
of June 30, 2000,  the Company has advanced  approximately  $39 million to these
alliances.  Under these development alliances, the Company has certain rights to
purchase the properties upon completion of development over the next five years.
In  addition,  the Company has loaned  approximately  $37.6  million  (including
accrued interest) under another  development  alliance to continue the build-out
of a 1,200 acre master-planned development in Denver, Colorado.

Inflation

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

Funds from Operations and Cash Available for Distribution

Funds from  Operations,  as defined by NAREIT,  represents  income (loss) before
minority  interests and  extraordinary  items,  adjusted for real estate related
depreciation   and   amortization  and  gains  (losses)  from  the  disposal  of

                                       25
<PAGE>

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

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

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

                                       26
<PAGE>
<TABLE>
<CAPTION>

The following table sets forth the Company's  calculation of FFO and CAD for the
three and six months ended June 30, 2000 (in thousands,  except weighted average
shares and per share amounts):

                                                        March 31,      June 30,        YTD
                                                           2000          2000          2000
                                                       ------------- ------------- -------------
<S>                                                    <C>           <C>           <C>
Income  from  operations  before  minority  interest,
   extraordinary items and preferred dividends         $     8,823   $     8,766   $    17,589
Preferred dividends                                         (5,488)       (5,443)      (10,931)
Net loss on sales of real estate assets                        695         2,347         3,042
Depreciation and amortization (1)                           14,915        14,871        29,786
Adjustment to reflect FFO of Unconsolidated
    JV's (2)                                                   190           264           454
Adjustment to reflect FFO of Associated Company(3)             164            22           186
                                                       ------------- ------------- -------------
FFO(4)                                                 $    19,299   $    20,827   $    40,126
                                                       ============= ============= =============

Amortization of deferred financing fees                        639           610         1,249
Capital reserve                                                  -             -             -
Capital expenditures                                        (4,989)       (6,319)      (11,308)
                                                       ------------- ------------- -------------
CAD                                                    $    14,949   $    15,118   $    30,067
                                                       ============= ============= =============

Distributions per share (5)                            $      0.42   $      0.42   $      0.84
                                                       ============= ============= =============

Diluted weighted average shares outstanding             34,096,464    33,111,493    33,602,425
                                                       ============= ============= =============

(1)  Excludes depreciation of corporate office fixed assets.
(2)  Consists   of  the   adjustments   required  to  reflect  the  FFO  of  the
     unconsolidated  joint  ventures  allocable  to the Company.  The  Company's
     investments in the joint ventures are accounted for using the equity method
     of accounting.
(3)  Consists of the  adjustments  required to reflect the FFO of the Associated
     Company  allocable  to  the  Company.   The  Company's  investment  in  the
     Associated Company is accounted for using the equity method of accounting.
(4)  In accordance with NAREIT's 'White Paper on FFO-October  1999' as discussed
     above,  FFO includes a $406 gain from the sale of an  incidental  parcel of
     land by the Associated Company in June 2000.
(5)  The distributions for the three months ended June 30, 2000, were paid on
     July 17, 2000.

Forward Looking Statements; Factors That May Affect Operating Results

This Report on Form 10-Q contains forward looking  statements within the meaning
of Section 27A of the  Securities  Act of 1933 and Section 21E of the Securities
and  Exchange  Act  of  1934,   including  statements  regarding  the  Company's
expectations,  hopes,  intentions,  beliefs and strategies  regarding the future
including  the  Company's  belief  that cash  generated  by  operations  will be
adequate to meet operating requirements and to make distributions, the Company's
expectations  as to the timing of the  completion  of the  development  projects
through  its  development  alliances  and  the  acquisition  by the  Company  of
properties  developed  through  its  development  alliances.  There  can  be  no
assurance  that the actual  outcomes  or results  will be  consistent  with such
expectations,   hopes,  intentions,  beliefs  and  strategies.  Forward  looking
statements include statements regarding potential acquisitions,  the anticipated
performance of future acquisitions, recently completed acquisitions and existing
properties,  and statements  regarding the Company's financing  activities.  All
forward  looking  statements  included in this document are based on information
available  to the Company on the date  hereof.  It is important to note that the
Company's actual results could differ materially from those stated or implied in
such forward-looking statements.

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

                                       27
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<PAGE>
<TABLE>
<CAPTION>

outside  financing,  difficulties  in  identifying  properties to acquire and in
effecting  acquisitions,  failure to qualify as a real estate  investment  trust
under the Internal  Revenue  Code of 1986,  environmental  uncertainties,  risks
related to natural  disasters,  financial market  fluctuations,  changes in real
estate and zoning laws,  increases in real  property tax rates and other factors
discussed under the caption "Forward Looking Statements; Factors That May Affect
Operating  Results" in the  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations"  section of the Company's  Annual Report on
Form 10-K for the year ended December 31, 1999, and other risk factors set forth
in the Company's other Securities and Exchange  Commission filings. In addition,
past performance of the Company's Common Stock is not necessarily  indicative of
results that will be obtained in the future from an  investment in the Company's
Common Stock.  Furthermore,  the Company makes distributions to stockholders if,
as and when  declared by its Board of  Directors,  and  expects to continue  its
policy of paying  quarterly  distributions,  however,  there can be no assurance
that distributions will continue or be paid at any specific level.

Risk Factors

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

PART II. OTHER INFORMATION

Item 1.       Legal Proceedings

For information  regarding litigation fully resolved during the reporting period
ended March 31, 2000,  please refer to the  Company's  quarterly  report on Form
10-Q for such period.

Certain claims and lawsuits have arisen against the Company in its normal course
of business.  The Company believes that such 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

At the Company's annual meeting, held on May 5 in Redwood City, California,  the
following persons were duly elected by the holders of the Company's Common Stock
to serve as Class II directors:


                              Votes For        Votes Against      Votes Withheld       Abstentions
                          ------------------ ------------------ ------------------- ------------------
<S>                           <C>                        <C>         <C>                 <C>
Robert Batinovich             25,648,536                 0           3,867,384           995,583
Patrick Foley                 26,250,309                 0           3,867,384           393,810


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

                  On July 25, 2000,  the Company filed a report on Form 8-K
                  with respect to  Supplemental  Information  for the quarter
                  ended June 30, 2000.

                                       28
</TABLE>
<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: August 10, 2000        /s/ Andrew Batinovich
                                   Andrew Batinovich
                                   Director, President
                                   and Chief Operating Officer
                                   (Principal Operating Officer)





      Date: August 10, 2000        /s/ Stephen Saul
                                   Stephen Saul
                                   Executive Vice President
                                   and Chief Financial Officer
                                   (Principal Financial Officer)





      Date: August 10, 2000        /s/ Terri Garnick
                                   Terri Garnick
                                   Senior Vice President,
                                   Chief Accounting Officer,
                                   Treasurer
                                   (Principal Accounting Officer)

                                       29
<PAGE>

                                  EXHIBIT INDEX



Exhibit No.                                                  Exhibit Title

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

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

27.01  Financial Data Schedule.



                                       30
<PAGE>
<TABLE>
<CAPTION>


Exhibit 12.01

GLENBOROUGH REALTY TRUST INCORPORATED
Computation of Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Fixed Charges and Preferred Dividends
For the five years ended December 31, 1999
and the three months ended March 31, 2000 and June 30, 2000
(in thousands)
                                               GRT
                                           Predecessor
                                            Entities,
                                             Combined
                                           -------------  --------------------------------------------------------

                                                                  Year Ended December 31,

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

                                               1995          1996           1997         1998           1999
                                           -------------  -----------    -----------  ------------   ------------
EARNINGS, AS DEFINED

<S>                                      <C>            <C>              <C>        <C>            <C>
Net Income (Loss) before Preferred
   Dividends (2)                           $     524      $  (1,609)       $19,368    $    44,602    $    50,286
Extraordinary items                                -            186            843          1,400           (984)
Federal & State income taxes                     357              -              -              -              -
Minority Interest                                  -            292          1,119          2,550          3,647
Fixed Charges                                  2,129          3,913          9,668         53,289         64,782
                                           -------------  -----------    -----------  ------------   ------------

                                           $   3,010      $   2,782        $30,998    $   101,841    $   117,731
                                           -------------  -----------    -----------  ------------   ------------

FIXED CHARGES AND PREFERRED DIVIDENDS, AS
   DEFINED

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

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

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

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

                                       31
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<TABLE>
<CAPTION>




                                           The Company
                                           ------------------------------------------
                                                Three        Three
                                                Months       Months
                                                Ended        Ended         Year
                                                March 31,    June 30,      To Date
                                               ----------   -----------  ------------

                                                 2000          2000         2000
                                               ----------   -----------  ------------
EARNINGS, AS DEFINED

<S>                                             <C>          <C>          <C>
Net Income (Loss) before Preferred
   Dividends (2)                                $  8,051     $   8,332    $  16,383
Extraordinary items                                   466           84          550
Federal & State income taxes                            -            -            -
Minority Interest                                     306          350          656
Fixed Charges                                      16,347       16,023       32,370
                                               ----------   -----------  ------------

                                                $ 25,170     $  24,789    $  49,959
                                               ----------   -----------  ------------

FIXED CHARGES AND PREFERRED DIVIDENDS, AS
   DEFINED

Interest Expense                                $ 16,347     $  16,023    $  32,370
Capitalized Interest                                 788           771        1,559
Preferred Dividends                                5,488         5,443       10,931
                                               ----------   -----------  ------------
                                                $ 22,623     $  22,237    $  44,860

RATIO OF EARNINGS TO FIXED CHARGES (3)              1.47          1.48         1.47
                                               ----------   -----------  ------------

RATIO OF EARNINGS TO FIXED CHARGES AND
   PREFERRED DIVIDENDS (3)                          1.11          1.11         1.11
                                               ----------   -----------  ------------

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

                                       31
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