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, 1997

                                       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
           (415) 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

        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 August 14, 1997,  20,174,692 shares of Common Stock ($.001 par value) were
outstanding.


                                 Page 1 of 199
<PAGE>



                                      INDEX
                      GLENBOROUGH REALTY TRUST INCORPORATED

                                                                        Page No.
PART I    FINANCIAL INFORMATION

Item 1.   Consolidated Financial Statements of Glenborough
          Realty Trust Incorporated  (Unaudited  except  for
          the  Consolidated Balance Sheet at December 31, 1996):

             Consolidated Balance Sheets at June 30, 1997 and 
             December 31, 1996                                                 4

             Consolidated Statements of Operations for the six months
             ended June 30, 1997 and 1996                                      5

             Consolidated Statements of Operations for the three months
             ended June 30, 1997 and 1996                                      6

             Consolidated Statements of Stockholders' Equity for the
             six months ended June 30, 1997 and 1996                           7

             Consolidated Statements of Cash Flows for the six months
             ended June 30, 1997 and 1996                                    8-9

             Notes to Consolidated Financial Statements                    10-18

          Consolidated Financial Statements of Glenborough Hotel Group
          (Unaudited except for the Consolidated Balance Sheet at
          December 31, 1996):                 

             Consolidated Balance Sheets at June 30, 1997 and
             December 31, 1996                                                19

             Consolidated Statements of Income for the six months ended
             June 30, 1997 and 1996                                           20

             Consolidated Statements of Income for the three months ended
             June 30, 1997 and 1996                                           21

             Consolidated Statements of Stockholders' Equity for the six
             months ended June 30, 1997 and 1996                              22

             Consolidated Statements of Cash Flows for the six months
             ended June 30, 1997 and 1996                                     23

             Notes to Consolidated Financial Statements                    24-26


                                 Page 2 of 199
<PAGE>

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

             Glenborough Realty Trust Incorporated                         27-33

             Glenborough Hotel Group                                       34-35

PART II   OTHER INFORMATION

Item 1.   Legal Proceedings                                                36-37

Item 2.   Changes in Securities                                               37

Item 4.   Submission of Matters to a Vote of Security Holders              37-38

Item 6.   Exhibits and Reports on Form 8-K                                    39

SIGNATURES                                                                    40

EXHIBIT INDEX                                                                 41


                                 Page 3 of 199
<PAGE>

Part I.   FINANCIAL INFORMATION

Item 1.   Financial Statements
<TABLE>
<CAPTION>

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

                                                                               June 30,            December 31,
                                                                                 1997                  1996
                                                                             (Unaudited)            (Audited)
                                                                            --------------         -------------
<S>                                                                         <C>                    <C>
ASSETS
     Rental property, net of accumulated depreciation of
       $30,450 and $28,784 in 1997 and 1996, respectively                   $    315,837           $    161,945
     Investments in Associated Companies and Glenborough
       Partners                                                                    6,775                  7,350
     Mortgage loans receivable, net of provision for loss of
       $863 in 1996                                                                3,547                  9,905
     Cash and cash equivalents                                                     3,352                  1,355
     Other assets                                                                  7,659                  4,965
                                                                            -------------          -------------

         TOTAL ASSETS                                                       $    337,170           $    185,520
                                                                            =============          =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Mortgage loans                                                         $    116,563           $     54,584
     Secured bank line                                                            36,118                 21,307
     Other liabilities                                                             5,180                  3,198
                                                                            -------------          -------------
       Total liabilities                                                         157,861                 79,089
                                                                            -------------          -------------

Minority interest                                                                 15,652                  8,831

Stockholders' Equity:
     Common stock, 13,194,692 and 9,661,553 shares issued
       and outstanding at June 30, 1997, and
       December 31, 1996, respectively                                                13                     10
     Additional paid-in capital                                                  172,621                105,952
     Deferred compensation                                                          (304)                  (399)
     Retained earnings (deficit)                                                  (8,673))               (7,963)
                                                                            -------------          -------------
       Total stockholders' equity                                                163,657                 97,600
                                                                            -------------          -------------

           TOTAL LIABILITIES AND STOCKHOLDERS'
              EQUITY                                                        $    337,170           $    185,520
                                                                            =============          =============



                           See accompanying notes to consolidated financial statements
</TABLE>

                                 Page 4 of 199
<PAGE>


<TABLE>
<CAPTION>

                                      GLENBOROUGH REALTY TRUST INCORPORATED
                                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 For the six months ended June 30, 1997 and 1996
                                     (in thousands, except per share amounts)
                                                   (Unaudited)

                                                                               1997                        1996
                                                                           --------------              -------------
<S>                                                                        <C>                         <C>
REVENUE
     Rental revenue                                                        $      19,691               $      7,039
     Fees and reimbursements from affiliate                                          367                        133
     Interest and other income                                                       613                        370
     Equity in earnings of Associated Companies                                      603                        969
     Gain on collection of mortgage loan receivable                                  652                        ---
     Net gain on sales of rental properties                                          570                        321
                                                                           --------------              -------------
       Total revenue                                                              22,496                      8,832
                                                                           --------------              -------------

EXPENSES
     Property operating expenses                                                   6,045                      1,909
     General and administrative                                                    1,374                        675
     Depreciation and amortization                                                 4,044                      1,759
     Interest expense                                                              3,800                      1,421
     Consolidation costs                                                             ---                      6,082
     Litigation costs                                                                ---                      1,155
                                                                           --------------              -------------
       Total expenses                                                             15,263                     13,001
                                                                           --------------              -------------

Income (loss) from operations before minority interest
                                                                                   7,233                     (4,169)

Minority interest                                                                   (629)                      (243)
                                                                           --------------              -------------



Net income (loss)                                                          $       6,604               $     (4,412)
                                                                           ==============              =============

Primary earnings per share                                                 $        0.55               $      (0.77)
                                                                           ==============              =============

Primary weighted average shares outstanding                                   11,852,810                  5,757,995
                                                                           ==============              =============


                           See accompanying notes to consolidated financial statements
</TABLE>

                                 Page 5 of 199
<PAGE>


<TABLE>
<CAPTION>

                                      GLENBOROUGH REALTY TRUST INCORPORATED
                                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                For the three months ended June 30, 1997 and 1996
                                     (in thousands, except per share amounts)
                                                   (Unaudited)

                                                                                1997                        1996
                                                                           --------------              -------------
<S>                                                                        <C>                         <C>
REVENUE
     Rental revenue                                                        $      11,784               $      3,450
     Fees and reimbursements from affiliate                                          180                         67
     Interest and other income                                                       269                        179
     Equity in earnings of Associated Companies                                      458                        544
     Gain on collection of mortgage loan receivable                                  498                        ---
     Net gain on sales of rental properties                                          570                        321
                                                                           --------------              -------------
       Total revenue                                                              13,759                      4,561
                                                                           --------------              -------------

EXPENSES
     Property operating expenses                                                   3,663                        892
     General and administrative                                                      723                        394
     Depreciation and amortization                                                 2,507                        862
     Interest expense                                                              2,227                        699
                                                                           --------------              -------------
       Total expenses                                                              9,120                      2,847
                                                                           --------------              -------------

Income from operations before minority interest                                    4,639                      1,714
    
Minority interest                                                                   (398)                      (142)
                                                                           --------------              -------------



Net income                                                                 $       4,241               $      1,572
                                                                           ==============              =============

Primary earnings per share                                                 $        0.32               $       0.27
                                                                           ==============              =============

Primary weighted average shares outstanding                                   13,432,442                  5,761,209
                                                                           ==============              =============

                           See accompanying notes to consolidated financial statements
</TABLE>

                                 Page 6 of 199
<PAGE>


<TABLE>
<CAPTION>

                                      GLENBOROUGH REALTY TRUST INCORPORATED
                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 For the six months ended June 30, 1997 and 1996
                                                  (in thousands)
                                                   (Unaudited)




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

<S>                                               <C>      <C>          <C>            <C>             <C>          <C>        
Balance at December 31, 1996                       9,662   $       10   $    105,952   $       (399)   $   (7,963)  $    97,600

Issuance of common stock, net of offering
    costs of $4,836                                3,500            3         66,036            ---           ---        66,039

Issuance of common stock related to
    acquisition of E&L Properties                     33          ---            633            ---           ---           633

Amortization of deferred compensation                ---          ---            ---             95           ---            95

Distributions                                        ---          ---            ---            ---        (7,314)       (7,314)

Net income                                           ---          ---            ---            ---         6,604         6,604
                                              -----------------------------------------------------------------------------------

Balance at June 30, 1997                          13,195   $       13   $    172,621   $       (304)   $   (8,673)  $   163,657
                                              ===================================================================================

</TABLE>
<TABLE>
<CAPTION>


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

<S>                                               <C>     <C>          <C>            <C>             <C>          <C>        
Balance at December 31, 1995                      5,754   $        6   $     55,622   $        ---    $       ---  $    55,628

Issuance of stock to directors                       15          ---            225           (193)           ---           32

Distributions                                       ---          ---            ---            ---         (1,726)      (1,726)

Net loss                                            ---          ---            ---            ---         (4,412)      (4,412)
                                              -----------------------------------------------------------------------------------

Balance at June 30, 1996                          5,769   $        6   $     55,847   $       (193)   $    (6,138) $    49,522
                                              ===================================================================================

                           See accompanying notes to consolidated financial statements
</TABLE>


                                 Page 7 of 199
<PAGE>

<TABLE>
<CAPTION>


                                      GLENBOROUGH REALTY TRUST INCORPORATED
                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 For the six months ended June 30, 1997 and 1996
                                                  (in thousands)
                                                   (Unaudited)



                                                                             1997                        1996
                                                                       ---------------             ---------------
<S>                                                                    <C>                         <C>
Cash flows from operating activities:
     Net income (loss)                                                 $        6,604              $       (4,412)
     Adjustments to reconcile net income (loss)
       to net cash provided by (used for) operating
       activities:
         Depreciation and amortization                                          4,044                       1,759
         Amortization of loan fees, included in
           interest expense                                                       128                          72
         Minority interest in income from operations                              629                         243
         Equity in earnings of Associated
           Companies                                                             (603)                       (969)
         Gain on collection of mortgage loan receivable                          (652)                        ---
         Net gain on sales of rental properties                                  (570)                      (321)
         Amortization of deferred compensation                                     95                         ---
         Consolidation costs                                                      ---                       6,082
         Litigation costs                                                         ---                       1,155
         Changes in certain assets and liabilities, net                        (1,102)                     (4,057)
                                                                       ---------------             ---------------

           Net cash provided by (used for) operating
                activities                                                      8,573                        (448)
                                                                       ---------------             ---------------

Cash flows from investing activities:
     Proceeds from sales of rental properties                                  11,889                       2,882
     Additions to rental property                                            (144,157)                       (293)
     Proceeds from collection of mortgage loan receivable
                                                                                  652                         ---
     Additions to mortgage loans receivable                                    (2,344)                        ---
     Principal receipts on mortgage loans receivable                            8,702                         252
     Investments in Associated Companies                                          ---                        (389)
     Distributions from Associated Companies and
         Glenborough Partners                                                   1,178                         655
     Deposits on pending acquisitions included
         in other assets                                                          ---                        (230)
                                                                       ---------------             ---------------

           Net cash used for investing activities                            (124,080)                     (2,877)
                                                                       ---------------             ---------------



                                                    continued

                           See accompanying notes to consolidated financial statements

</TABLE>


                                 Page 8 of 199
<PAGE>

<TABLE>
<CAPTION>


                                      GLENBOROUGH REALTY TRUST INCORPORATED
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
                                 For the six months ended June 30, 1997 and 1996
                                                  (in thousands)
                                                   (Unaudited)


                                                                             1997                      1996
                                                                       ---------------            --------------
<S>                                                                    <C>                        <C>
Cash flows from financing activities:
     Proceeds from borrowings                                          $     166,675              $         ---
     Repayment of borrowings                                                (107,371)                      (955)
     Payment of investor notes                                                   ---                     (2,483)
     Distributions to minority interest holders                                 (525)                      (162)
     Distributions                                                            (7,314)                    (1,726)
     Proceeds from issuance of stock, net of offering costs                   66,039                        ---
                                                                       ---------------            --------------

         Net cash provided by (used for) financing
           activities                                                        117,504                     (5,326)
                                                                       ---------------            --------------

Net increase (decrease) in cash and cash equivalents                           1,997                     (2,897)

Cash and cash equivalents at beginning of period                               1,355                      4,587
                                                                       ---------------            --------------

Cash and cash equivalents at end of period                             $       3,352              $       1,690
                                                                       ===============            ==============

Supplemental disclosure of cash flow information:

     Cash paid for interest                                            $       3,539              $       1,349
                                                                       ===============            ==============

Supplemental disclosure of Non-Cash Investing and Financing
     Activities:

     Acquisition of real estate through assumption of first
         trust deed notes payable                                      $      17,486              $         ---
                                                                       ===============            ==============

     Acquisition of real estate through issuance of shares
         of common stock and Operating Partnership units               $       7,351              $         ---
                                                                       ===============            ==============

                           See accompanying notes to consolidated financial statements
</TABLE>

                                 Page 9 of 199
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                  June 30, 1997


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, 1997,
the following Common Stock  transactions  occurred:  (i) 35,000 shares of Common
Stock  were  issued  to  officers  and  directors  as stock  compensation;  (ii)
3,666,000  shares were issued in a public equity offering in October 1996; (iii)
206,844  shares were issued in connection  with the  acquisition  of the TRP and
Carlsberg  Properties;  (iv)  3,500,000  shares were  issued in a public  equity
offering in March 1997;  (v) 33,198  shares were issued in  connection  with the
acquisition of the E&L Properties; and (vi) 59 shares were retired, resulting in
total  shares of Common  Stock  issued  and  outstanding  at June 30,  1997,  of
13,194,692.   In  addition,   fully  converted  shares  issued  and  outstanding
(including  996,317  partnership  units in the  Operating  Partnership)  totaled
14,191,009 at June 30, 1997.

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

The  Company,  through  several  subsidiaries,   is  engaged  primarily  in  the
ownership,   operation,   management,   leasing,   acquisition,   expansion  and
development  of  various  income-producing   properties.   The  Company's  major
consolidated  subsidiary,  in which it holds a 1% general partner interest and a
90.51% limited  partner  interest at June 30, 1997, is  Glenborough  Properties,
L.P.  (the  "Operating  Partnership").  As  of  June  30,  1997,  the  Operating
Partnership,  directly  and  through  various  subsidiaries  in which it and the
Company own 100% of the ownership interests,  controls a total of 64 real estate
projects and 2 mortgage loans receivable.

As of June 30,  1997,  the Company also holds 100% of the  non-voting  preferred
stock of the following two Associated Companies (the "Associated Companies"):

     Glenborough  Corporation (formerly known as Glenborough Realty Corporation)
     ("GC") is the general partner of eight  partnerships and provides asset and
     property  management services for these eight partnerships (the "Controlled
     Partnerships").   It  also  provides  partnership   administration,   asset
     management,  property management and development services under a long term
     contract to a group of unaffiliated  partnerships  which include six 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").  The services to
     the Rancon  Partnerships  were  previously  provided by Glenborough  Inland
     Realty Corporation ("GIRC"), a California corporation, which merged with GC
     effective June 30, 1997. GC also provides property  management services for
     a limited portfolio of property owned by other  unaffiliated third parties.
     In the merger between GC and GIRC, the Company received  preferred stock of
     GC in exchange for its preferred  stock of GIRC,  on a  one-for-one  basis.
     Following the merger,  the Company holds the same  preferences with respect
     to dividends and liquidation distributions paid by GC as it previously held
     with respect to GC and GIRC combined.

     Glenborough  Hotel Group ("GHG")  leases the five Country Suites by Carlson
     hotels owned by the Company and operates them for its own account.  It also
     operates  two  Country  Suites By Carlson  hotels  owned by the  Controlled
     Partnerships, and two resort condominium hotels.

                                 Page 10 of 199
<PAGE>

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, 1997,  and  December  31,  1996,  and the
consolidated results of operations and cash flows of the Company for the six and
three  months  ended  June 30,  1997 and 1996.  All  intercompany  transactions,
receivables and payables have been eliminated in consolidation.

In the opinion of management,  the accompanying  unaudited financial  statements
contain all  adjustments  (consisting  of only  normal  accruals)  necessary  to
present  fairly the financial  position and results of operations of the Company
as of June 30, 1997, and for the period then ended.

Reclassification
Certain 1996  balances have been  reclassified  to conform with 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.

Investments in Real Estate
Investments in real estate are stated at cost unless circumstances indicate that
cost cannot be recovered,  in which case,  the carrying value of the property is
reduced to estimated  fair value.  Estimated  fair value:  (i) is based upon the
Company's plans for the continued  operation of each property;  (ii) is computed
using  estimated  sales price,  as determined  by  prevailing  market values for
comparable  properties  and/or the use of  capitalization  rates  multiplied  by
annualized  rental  income  based  upon  the  age,  construction  and use of the
building,  and (iii) does not purport, for a specific property, to represent the
current  sales price that the Company  could obtain from third  parties for such
property.  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

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

Investment in Management Contract
Investment  in  management  contract  is  recorded  at cost and  amortized  on a
straight-line  basis over the term of the  contract,  and is  included  in other
assets.


                                 Page 11 of 199
<PAGE>

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

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

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.
Cash and cash equivalents  consist of demand  deposits,  certificates of deposit
and short-term investments with financial  institutions.  The carrying amount of
cash and cash  equivalents  as well as the mortgage notes  receivable  described
above, approximates fair value.

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  8.49%  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 leases.

For the six months ended June 30, 1997,  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 leasing and  construction
supervision of real estate.

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

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.

                                 Page 12 of 199
<PAGE>

Earnings Per Share
In March 1997,  the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No. 128 (SFAS No. 128),  "Earnings Per Share."
SFAS No. 128 requires the  disclosure  of basic  earnings per share and modifies
existing guidance for computing fully diluted earnings per share.  Under the new
standard,  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.  The effective date of SFAS No. 128 is December
15, 1997, and early adoption is not permitted. The Company intends to adopt SFAS
No. 128 during the quarter and year ended  December 31, 1997. Had the provisions
of SFAS No. 128 been  applied to the  Company's  results of  operations  for the
three and six months ended June 30, 1997 and 1996, the Company's  basic earnings
per  share  would  not have  been  materially  different  than  amounts  already
reported.

Reference to 1996 Audited Financial Statements
These  unaudited  financial  statements  should be read in conjunction  with the
Notes  to  Consolidated  Financial  Statements  included  in  the  1996  audited
financial statements.

Note 3.      RENTAL PROPERTY

On February 28,  1997,  the Company  acquired a 163-suite  hotel  Property  (the
"Scottsdale  Hotel"),  which began  operations in January 1996 and is located in
Scottsdale,  Arizona. The total acquisition cost,  including  capitalized costs,
was approximately  $12.1 million,  which consisted of approximately $4.6 million
of mortgage debt assumed, and the balance in cash. The cash portion was financed
through  advances  under the Company's  Line of Credit (as defined  below).  The
Scottsdale Hotel is marketed as a Country Inns and Suites by Carlson.

On April 8, 1997,  the Company  acquired from two limited  partnerships  and one
limited liability company managed by affiliates of Lennar Partners,  a portfolio
of three properties,  aggregating approximately 282,000 square feet (the "Lennar
Properties").  The total  acquisition  cost,  including  capitalized  costs, was
approximately  $23.2  million,  which was paid in cash from the  proceeds of the
Company's   March  1997  public  offering  of  Common  Stock  (the  "March  1997
Offering").  The Lennar  Properties  consist of one office  property  located in
Virginia and two industrial properties located in Massachusetts.

On April 14, 1997,  the Company  acquired from a private seller a 227,129 square
foot, 15-story office building located in Bloomington, Minnesota (the "Riverview
Property").  The  total  acquisition  cost,  including  capitalized  costs,  was
approximately  $20.5 million,  of which  approximately $16.3 million was paid in
cash from the proceeds of the Company's March 1997 Offering, and the balance was
paid in cash from  borrowings  under the Company's  existing line of credit (the
"Line of Credit").

On April 18,  1997,  the  Company  acquired  from seven  partnerships  and their
general  partner,  a  Southern  California  syndicator,  a  portfolio  of eleven
properties,   aggregating  approximately  522,000  square  feet,  together  with
associated management interests (the "E & L Properties").  The total acquisition
cost,  including  capitalized  costs,  was  approximately  $22.2 million,  which
consisted of (i)  approximately  $12.8 million of mortgage  debt  assumed,  (ii)
approximately  $6.7  million  in the form of  352,197  partnership  units in the
Operating  Partnership  (based on an agreed  per unit value of  $19.075),  (iii)
approximately  $633,000  in the form of 33,198  shares  of  Common  Stock of the
Company (based on an agreed per share value of $19.075), and (iv) the balance in
cash. The cash portion was paid from borrowings under the Line of Credit. Of the
$12.8 million of mortgage debt assumed in the  acquisition,  approximately  $8.9
million was paid off on May 1, 1997, through a draw on the Line of Credit. The E
& L Properties consist of one office and ten industrial properties,  all located
in Southern California.

On April 29, 1997, the Company acquired from two partnerships formed and managed
by affiliates of CIGNA, a portfolio of six properties, aggregating approximately
616,000 square feet and 224  multi-family  units (the "CIGNA  Properties").  The
total acquisition cost,  including  capitalized  costs, was approximately  $45.4
million,  which was paid entirely in cash from the proceeds of a new $40 million
unsecured loan from Wells Fargo Bank (see Note 6)

                                 Page 13 of 199
<PAGE>

and a draw under the Line of Credit.  The CIGNA  Properties  are located in four
states and  consist of two  office  properties,  two  industrial  properties,  a
shopping center and a multi-family property.

On June 18, 1997, the Company acquired from Carlsberg  Realty,  Inc. a portfolio
of three  properties,  aggregating  approximately  245,600 square feet (the "CRI
Properties").  The total  acquisition  cost,  including  capitalized  costs, was
approximately  $14.8  million,  which was paid entirely in cash from  borrowings
under the Line of Credit.  The CRI Properties  consist of one office property in
California and two  industrial  properties in Arizona.  The CRI Properties  have
been managed by GC since November 1996.

In June 1997,  the Company sold from its retail  portfolio six Atlanta Auto Care
Center properties and nine of the ten QuikTrip properties for an aggregate sales
price of  approximately  $12.1  million.  These  sales  generated  a net gain of
$570,000.  The Company expects to sell its remaining QuikTrip property by August
31, 1997, for a sales price of approximately $1.1 million. The proceeds from the
sale  of the  QuikTrip  properties  were  used to fund  the  acquisition  of the
Centerstone  Property  (see Note 10) and the proceeds  from the sale of the Auto
Care Center properties will be used to fund future acquisitions of properties.

As of June  30,  1997,  approximately  $29.3  million  of  escrow  deposits  for
acquisitions of properties are included in rental property. The $29.3 million is
comprised  of $24.9  million for the  acquisition  of the  Centerstone  Property
(discussed  below) and $4.4  million  for the  acquisition  of the T. Rowe Price
Properties (discussed below).

Note 4.      INVESTMENTS IN ASSOCIATED COMPANIES AND GLENBOROUGH PARTNERS

The Company's  investments in the  Associated  Companies are accounted for using
the equity method as the Company has significant ownership interests through its
100%  preferred  stock  ownership  but does not own any  voting  interests.  The
Company records earnings on its investments in the Associated Companies equal to
its cash flow preference,  to the extent of earnings, plus its pro rata share of
remaining  earnings,  based on cash flow allocation  percentages.  Distributions
received  from the  Associated  Companies  are  recorded as a  reduction  of the
Company's investments.

The Company's  investment in Glenborough  Partners ("GP") is accounted for using
the cost method as the Company holds only a 3.97% limited partner interest.

As of June 30 1997, the Company had the following  investments in the Associated
Companies and GP (in thousands):
<TABLE>
<CAPTION>

                                            GC(1)          GHG             GP             Total
                                        ----------     ----------      ----------      ----------
<S>                                     <C>            <C>             <C>             <C>
Investment at December 31, 1996         $   5,261      $   1,504       $     585       $   7,350

Distributions                              (1,111)           (55)            (12)         (1,178)

Equity in earnings (loss)                     436            167             ---             603
                                        ----------     ----------      ----------      ----------
Investment at June 30, 1997             $   4,586      $   1,616       $     573       $   6,775
                                        ==========     ==========      ==========      ==========

(1) All amounts presented for GC represent  combined amounts for GC and GIRC due
    to the June 30, 1997 merger, as previously discussed in Note 1.
</TABLE>


                                 Page 14 of 199
<PAGE>

Note 5.      MORTGAGE LOANS RECEIVABLE

The Company held a first  mortgage  loan with a principal  balance of $7,563,000
and a carrying  value of $6,700,000  at December 31, 1996,  secured by an office
and research complex in Eatontown, New Jersey. The loan had an original maturity
date of November 1, 1996 with interest only payable monthly at the fixed rate of
eight percent (8%) per annum.  In 1995, due to the  uncertainty  surrounding the
borrower's  ability  to  payoff  the  note  receivable  upon its  November  1996
maturity,  the Company  recorded a $863,000 loss provision on this mortgage loan
receivable  to reduce  its  carrying  value to the  estimated  fair value of the
underlying  property.  The terms of the note were  renegotiated in December 1996
with the maturity date extended to February 1, 1997. The interest rate continued
at 8% per  annum.  The  borrower  had the right to payoff the loan at a discount
between January 10 and January 31, 1997. The discounted payoff was i) $6,863,000
in cash and ii) a note for  $500,000  payable over a term of twelve years at six
percent (6%) interest amortized over twenty-five years. On January 28, 1997, the
borrower paid off the note at the above discounted terms, resulting in a gain to
the Company of $152,000 ($163,000 net of $11,000 in legal costs) and recognition
of $2,000 of the related  $500,000  deferred  gain.  In June 1997, in connection
with the acquisition of the CRI Properties,  the note receivable was assigned to
a third party. Therefore, the remaining balance of the deferred gain of $498,000
has been  recognized in the Company's  Consolidated  Statement of Operations for
the six months ended June 30, 1997.

At June 30,  1997,  the  Company  held a first  mortgage  loan in the  amount of
$509,000 secured by an industrial property in Los Angeles, California. The terms
of the note include  interest  accruing at eight  percent (8%) per annum for the
first  twenty-four  months  (ended June 1996) and at nine percent (9%) per annum
for the next sixty months until the note matures in June 2001.  Monthly payments
of  principal  and  interest,  computed  based  on a  thirty  year  amortization
schedule, commenced January 1995 and continue until maturity.

In 1996,  the  Operating  Partnership  entered into a Loan  Agreement and Option
Agreement  (the  "Option  Agreement")  with  Carlsberg  Properties,  LTD.  ("the
Borrower").  The loan amount was $3,600,000,  of which  $2,694,000 was initially
disbursed to the Borrower and $906,000 was held by the Operating  Partnership as
leasing and interest reserves.  On June 18, 1997, the Loan Agreement was amended
to include an additional  advance to the borrower of $250,000  which was applied
in its entirety to the interest reserve,  resulting in an amended loan amount of
$3,850,000 and an increase in the interest  reserve of $250,000.  During the six
months ended June 30, 1997,  $344,000 of reserves were disbursed to the borrower
which  resulted in an outstanding  balance at June 30, 1997, of $3,038,000.  The
loan is secured by a 48,000  square foot  medical  building in Phoenix,  Arizona
(the "Grunow  Building"),  and matures on November 19, 1999,  with interest only
payable  monthly at the fixed rate of eleven percent (11%) per annum  calculated
on the full amount of the loan.  The Option  Agreement  provides  the  Operating
Partnership  the option to purchase the Grunow  Building on either the second or
third  anniversary  of the closing date of November 19, 1996, for the greater of
i) the then  outstanding  loan  balance  plus  $50,000  or ii) the  value of the
Secured Property as defined in the Option Agreement.

Note 6.      SECURED AND UNSECURED LIABILITIES

The Company had the  following  mortgage  loans,  bank lines,  and notes payable
outstanding as of June 30, 1997, and December 31, 1996 (in thousands):
                                                           1997           1996
                                                        ---------        -------
Secured  $50,000  line of credit with a bank
with variable  interest  rates of LIBOR plus
1.75%  and  prime  rate  (7.44%  and  8.50%,
respectively  at  June  30,  1997),  monthly
interest  only  payments and a maturity date
of July 14,  1998,  with an option to extend
for  10  years.   The  line  is  secured  by
nineteen  properties  with an aggregate  net
carrying  value of  $60,389  and  $67,118 at
June  30,  1997,   and  December  31,  1996,
respectively.                                           $ 36,118        $ 21,307


                                 Page 15 of 199
<PAGE>

                                                           1997           1996
                                                        ---------       --------
Secured  loan  with  a  bank  with  variable
interest  rates of  LIBOR  plus  2.375%  and
prime rate plus 0.50%, monthly interest only
payments  and a  maturity  date of July  14,
1998.  The loan was  paid-off  in June  1997
upon the sale of the properties securing the
loan.                                                   $    ---        $  6,120

Secured loan with an investment  bank with a
fixed   interest  rate  of  7.57%,   monthly
principal    (based    upon   a   25    year
amortization)  and interest payments of $149
and a maturity date of January 1, 2006.  The
loan is secured by nine  properties  with an
aggregate net carrying  value of $38,527 and
$39,298 at June 30,  1997 and  December  31,
1996, respectively.                                       19,597          19,744

Secured loans with various lenders,  bearing
interest  at fixed rates  between  7.75% and
9.25%,  with monthly  principal and interest
payments  ranging  between  $9 and  $62  and
maturing at various  dates  through April 1,
2012.  These loans are secured by properties
with an  aggregate  net  carrying  value  of
$34,476  and $30,441 at June 30,  1997,  and
December  31,  1996,  respectively.                       20,086          17,581

Secured  loans with various  banks,  bearing
interest at variable rates (ranging  between
7.32% and 8.18% at June 30,  1997),  monthly
principal  and  interest   payments  ranging
between $4 and $46 and  maturing  at various
dates  through May 1, 2017.  These loans are
secured by properties  with an aggregate net
carrying value of $20,857 and $6,975 at June
30,    1997,    and   December   31,   1996,
respectively.                                              9,603           3,807

Secured loan with an investment company with
a  fixed  interest  rate of  7.50%,  monthly
principal and interest payments of $55 and a
maturity date of March 1, 2021.  The loan is
secured by a multifamily property with a net
carrying  value of $9,393 and $9,491 at June
30,    1997,    and   December   31,   1996,
respectively.                                              7,277           7,332

Unsecured  Bridge  Loan  with a bank  with a
fixed   interest  rate  of  7.44%,   monthly
interest  only  payments and a maturity date
of July 31,  1997,  with an option to extend
for  90  days.   See   below   for   further
discussion.                                               60,000             ---
                                                      -----------      ---------
Total                                                 $  152,681       $  75,891
                                                      ===========      =========

In April 1997, the Operating  Partnership  entered into a $40 million  unsecured
loan with Wells Fargo Bank to fund the acquisition of the CIGNA  Properties (the
"CIGNA Acquisition  Financing").  The CIGNA Acquisition  Financing had a term of
three months (extendible to six months at the Company's  option),  interest at a
variable annual rate equal to 175 basis points above 30-day LIBOR, was unsecured
and was guaranteed by the Company. Required payments under the CIGNA Acquisition
Financing were monthly, interest only.

As of June 30, 1997, Wells Fargo had  substantially  completed  underwriting and
due diligence  for a $60 million  mortgage loan to the Company (the "$60 Million
Mortgage") to be secured by the Lennar Properties,  the Riverview Property,  the
Centerstone  Property  (see  Note 10) and five of the CIGNA  Properties.  In the
interim,  Wells Fargo funded on June 19, 1997, a $60 million unsecured  "bridge"
loan (the "$60 Million Unsecured Bridge Loan"),  which was used to (i) repay all
principal  and  accrued  interest  under  the  $40  million  CIGNA   Acquisition
Financing,  and (ii) reduce the outstanding  balance under the Line of Credit by
approximately $20 million.

                                 Page 16 of 199
<PAGE>

The required  principal  payments on the Company's  debt for the next five years
and thereafter, as of June 30, 1997, are as follows (in thousands):

                 Year Ending
                December 31,
               --------------
                     1997                   $  60,536
                     1998                      44,673
                     1999                       2,508
                     2000                       3,244
                     2001                       1,299
                     Thereafter                40,421
                                            ----------
                     Total                  $ 152,681
                                            ==========

Note 7.      RELATED PARTY TRANSACTIONS

Fee and  reimbursement  income  earned by the Company from related  partnerships
totaled  $367,000 and $133,000 for the six months ended June 30, 1997, and 1996,
respectively,  and consisted of property  management  fees and asset  management
fees for the six months ended June 30, 1997, and asset  management  fees for the
six months ended June 30, 1996.

Note 8.      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,  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, DERs,
Performance  Units or  Preference  Shares.  The total number of shares of Common
Stock  available  for grant under the Plan is equal to the greater of  1,140,000
shares  or 8% of the  number  of  shares  outstanding  determined  as of the day
immediately  following  the most recent  issuance  of shares of Common  Stock or
securities  convertible  into shares of Common Stock;  provided that the maximum
aggregate number of shares of Common Stock available for issuance under the Plan
may not be reduced. For purposes of calculating the number of outstanding shares
of Common  Stock,  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  may be
granted under the Plan may not exceed 1,140,000 shares. The Company accounts for
the fair value of the options and bonus  grants in  accordance  with APB Opinion
No. 25.  As of June 30,  1997,  35,000  shares of bonus  grants have been issued
under the Plan.  The fair  value of the shares  granted  have been  recorded  as
deferred  compensation  in the  accompanying  financial  statements  and will be
charged to earnings ratably over the respective vesting periods which range from
2 to 5 years. As of June 30,  1997, 915,000 options to purchase shares of Common
Stock have been granted.  The exercise  price of each option granted is equal to
the  per-share  fair market  value of the Common Stock on the date the option is
granted.  To date, all options  granted have been at higher than the fair market
value of the shares on the grant date, and as such, no compensation  expense has
been recognized as accounted for under APB Opinion No. 25. The options vest over
periods between 1 and 6 years, and have a maximum term of 10 years.

                                 Page 17 of 199
<PAGE>

Note 9.      DECLARATION OF DIVIDENDS

On April 22, 1997, the Company's Board of Directors  declared a dividend for the
first  quarter  of $0.32 per share or  $4,222,301  payable on May 13,  1997,  to
stockholders  of record at the close of business on May 2, 1997.  Such  dividend
will be made from the Company's  cash reserves at March 31, 1997,  combined with
the dividends received from the Associated Companies.

On July 22, 1997, the Company's  Board of Directors  declared a dividend for the
second  quarter of $0.32 per share or $6,455,901  payable on August 12, 1997, to
stockholders of record at the close of business on August 1, 1997. Such dividend
will be made from the Company's  cash  reserves at June 30, 1997,  combined with
the dividends received from the Associated Companies.

Note 10.     SUBSEQUENT EVENTS

In July 1997, the Company acquired an office property  containing 157,579 square
feet (the  "Centerstone  Property")  located  in Irvine,  California.  The total
acquisition cost, including  capitalized costs, was approximately $30.4 million,
which  consisted  of (i)  approximately  $5.5  million  in the  form of  275,000
partnership  units in the  Operating  Partnership  (based on an agreed  per unit
value of $20.00),  and (ii) the balance in cash from a combination of borrowings
under the Line of Credit  and the net  proceeds  of the sale of  certain  retail
properties (see Note 3).

In July 1997,  the Company  completed a public  offering of 6,980,000  shares of
Common Stock (the "July 1997 Offering"). The 6,980,000 shares were sold at a per
share price of $22.625 for total proceeds of  $149,965,300  (net of underwriting
fees of $7,957,200).  This additional  capital was used to temporarily repay the
$60  Million  Unsecured  Bridge  Loan  and the  outstanding  balance  under  the
Company's Line of Credit with Wells Fargo. In addition,  it is anticipated  that
the remaining proceeds will be used to fund the acquisition of the T. Rowe Price
Properties as discussed  below.  As of June 30, 1997,  approximately  $48,000 in
other costs had been incurred in connection with the July 1997 Offering.

Note 11.     PENDING ACQUISITION

In April 1997, the Company entered into definitive  agreements with five limited
partnerships,  two general  partnerships and one private REIT, each organized by
affiliates  of  T.  Rowe  Price,  to  acquire  a  portfolio  of  27  properties,
aggregating   approximately   2,888,000   square   feet  (the  "T.   Rowe  Price
Properties").  The total  acquisition  cost,  including  capitalized  costs,  is
expected to be  approximately  $146.8 million,  which it is anticipated  will be
paid  entirely  in cash  from a  combination  of the  proceeds  of the July 1997
Offering and mortgage debt. The T. Rowe Price Properties  consist of five office
properties,  nineteen industrial properties  (including eight  office/industrial
complexes) and three retail properties located in 12 states. This acquisition is
subject to a number of contingencies,  including  approval of the acquisition by
the limited  partners,  general partners or stockholders of the sellers,  as the
case may be, satisfactory  completion of title and customary closing conditions.
Accordingly,  there can be no  assurance  that any or all of the T.  Rowe  Price
Properties will be acquired.

                                 Page 18 of 199
<PAGE>

<TABLE>
<CAPTION>

                                             GLENBOROUGH HOTEL GROUP
                                           CONSOLIDATED BALANCE SHEETS
                                       (in thousands, except share amounts)

                                                                              June 30,              December 31,
                                                                                1997                    1996
                                                                             (Unaudited)              (Audited) 
ASSETS
<S>                                                                        <C>                      <C>      
Cash                                                                       $      925               $     461
Accounts receivable                                                               455                     247
Investments in management contracts, net                                          392                     430
Rental property and equipment, net of
   accumulated depreciation of $120 and $111
   in 1997 and 1996, respectively                                                 163                     170
Investment in Atlantic Pacific Assurance Company, Limited                         755                     755
Prepaid expenses                                                                  121                     156
Other assets                                                                        7                      36

     TOTAL ASSETS                                                          $    2,818              $    2,255

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Accrued lease expense                                                   $      691              $      285
   Mortgage loan                                                                   49                      61
   Other liabilities                                                              427                     407

     Total liabilities                                                          1,167                     753


Stockholders' Equity:
   Common stock (1,000 shares authorized,
     issued and outstanding)                                                       20                      20
   Non-voting preferred stock (50 shares
     authorized, issued and outstanding)                                          ---                     ---
   Additional paid-in capital                                                   1,568                   1,568
   Retained earnings                                                               63                     (86)

     Total stockholders' equity                                                 1,651                   1,502

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $    2,818              $    2,255




                           See accompanying notes to consolidated financial statements
</TABLE>

                                 Page 19 of 199
<PAGE>

<TABLE>
<CAPTION>

                                             GLENBOROUGH HOTEL GROUP
                                        CONSOLIDATED STATEMENTS OF INCOME
                                 For the six months ended June 30, 1997 and 1996
                                                  (in thousands)
                                                   (Unaudited)

                                                                                   1997                   1996
REVENUE
<S>                                                                         <C>                     <C>       
     Hotel revenue                                                          $      6,137            $    3,584
     Fees and reimbursements                                                       1,113                 1,183
     Other revenue                                                                   ---                   239
 
             Total revenue                                                         7,250                 5,006
 
EXPENSES
     Leased Hotel Properties:
        Room expenses                                                              1,473                   992
        Lease payments to an affiliate                                             2,207                 1,268
        Sales and marketing                                                          619                   381
        Property general and administrative                                          578                   369
        Other operating expenses                                                     675                   448

     Managed Hotel Properties:
        Salaries and benefits                                                        743                   837

     Other Expenses:
        General and administrative                                                   525                   466
        Depreciation and amortization                                                 49                    49
        Interest expense                                                               2                     3
 
             Total expenses                                                        6,871                 4,813
 
Income from operations before provision
     for income taxes                                                                379                   193
 
Provision for income taxes                                                          (162)                  (76)
 
Net income                                                                  $        217            $      117
 


                           See accompanying notes to consolidated financial statements

</TABLE>

                                 Page 20 of 199
<PAGE>

<TABLE>
<CAPTION>


                                             GLENBOROUGH HOTEL GROUP
                                        CONSOLIDATED STATEMENTS OF INCOME
                                For the three months ended June 30, 1997 and 1996
                                                  (in thousands)
                                                   (Unaudited)

                                                                                   1997                   1996  
REVENUE
<S>                                                                         <C>                     <C>       
     Hotel revenue                                                          $      3,219            $    1,669
     Fees and reimbursements                                                         546                   633
     Other revenue                                                                   ---                   160
 
             Total revenue                                                         3,765                 2,462
 
EXPENSES
     Leased Hotel Properties:
        Room expenses                                                                836                   416
        Lease payments to an affiliate                                             1,159                   585
        Sales and marketing                                                          347                   196
        Property general and administrative                                          346                   206
        Other operating expenses                                                     389                   258

     Managed Hotel Properties:
        Salaries and benefits                                                        343                   436

     Other Expenses:
        General and administrative                                                   255                   235
        Depreciation and amortization                                                 25                    24
        Interest expense                                                               1                     2
 
             Total expenses                                                        3,701                 2,358
 
Income from operations before provision
     for income taxes                                                                 64                   104
 
Provision for income taxes                                                           (26)                  (36)
 
Net income                                                                  $         38            $       68
 






                           See accompanying notes to consolidated financial statements

</TABLE>

                                 Page 21 of 199
<PAGE>

<TABLE>
<CAPTION>

                                             GLENBOROUGH HOTEL GROUP
                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 For the six months ended June 30, 1997 and 1996
                                          (in thousands, except shares)
                                                   (Unaudited)


                                                                                        Addi -
                                        Preferred Stock         Common Stock            tional       Retained
                                                    Par                     Par         Paid-in      Earnings
                                      Shares       Value      Shares       Value        Capital      (Deficit)        Total
<S>                                      <C>     <C>             <C>       <C>         <C>           <C>          <C>
BALANCE at
 December 31, 1996                        50     $     ---       1,000     $    20     $   1,568     $     (86)   $   1,502

Dividends                                ---           ---         ---         ---           ---           (68)         (68)

Net income                               ---           ---         ---         ---           ---           217          217
 
BALANCE at
June 30, 1997                             50     $     ---       1,000     $    20     $   1,568     $      63    $   1,651

</TABLE>
<TABLE>
<CAPTION>



                                                                                        Addi -
                                        Preferred Stock         Common Stock            tional       Retained
                                                    Par                     Par         Paid-in      Earnings
                                      Shares       Value      Shares       Value        Capital      (Deficit)        Total
<S>                                      <C>     <C>             <C>       <C>         <C>           <C>          <C>
BALANCE at
 December 31, 1995                        50     $     ---       1,000     $    20     $   1,368     $     ---    $   1,388

Additional paid-in capital               ---           ---         ---         ---           200           ---          200

Dividends                                ---           ---         ---         ---           ---           (50)         (50)

Net income                               ---           ---         ---         ---           ---           117          117
  
BALANCE at
 June 30, 1996                            50     $     ---       1,000     $    20     $   1,568     $      67    $   1,655

</TABLE>
                                 Page 22 of 199
<PAGE>

<TABLE>
<CAPTION>

                                             GLENBOROUGH HOTEL GROUP
                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 For the six months ended June 30, 1997 and 1996
                                                 (in thousands)
                                                   (Unaudited)

                                                                                  1997                1996   
Cash flows from operating activities:
<S>                                                                         <C>                  <C>         
   Net income                                                               $        217         $        117
   Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization                                                49                   49
         Changes in certain assets and liabilities                                   280                   96
 
         Net cash provided by operating activities                                   546                  262
 
Cash flows from investing activities:
   Additions to equipment                                                             (2)                 (10)

         Net cash used for investing activities                                       (2)                 (10)
 
 
Cash flows from financing activities:
   Dividends                                                                         (68)                 (50)
   Capital contributions                                                             ---                  200
   Repayment of borrowings                                                           (12)                 (13)
 
         Net cash provided by (used for) financing activities                        (80)                 137
 
   Net increase in cash                                                              464                  389

   Cash at beginning of period                                                       461                   33
 
   Cash at end of period                                                    $        925         $        422
 
Supplemental disclosure of cash flow information:

         Cash paid for interest                                             $          2         $          3
 

                           See accompanying notes to consolidated financial statements


</TABLE>

                                 Page 23 of 199
<PAGE>

                             GLENBOROUGH HOTEL GROUP

                   Notes to Consolidated Financial Statements
                                  June 30, 1997


Note 1.      ORGANIZATION
 
Glenborough  Hotel  Group  ("GHG")  was  organized  in the  State of  Nevada  on
September 23, 1991. As of June 30, 1997, GHG operates hotel  properties owned by
Glenborough  Realty Trust  Incorporated  ("GLB") under five separate  percentage
leases and manages two hotel properties owned by two partnerships whose managing
general  partner is Glenborough  Corporation.  GLB owns 100% of the 50 shares of
non-voting  preferred  stock  of GHG  and  three  individuals,  including  Terri
Garnick,  an executive  officer of GLB,  each own 33 1/3% of the 1,000 shares of
voting common stock of GHG.

GHG also  owns  approximately  80% of the  common  stock of Resort  Group,  Inc.
("RGI"). RGI manages homeowners associations and rental pools for two beachfront
resort condominium hotel properties and owns six units at one of the properties.
GHG receives 100% of the earnings of RGI and consolidates  RGI's operations with
its own.

As of June 30,  1997,  GHG also  owned 94% of the  outstanding  common  stock of
Atlantic Pacific  Holdings,  Ltd., the sole owner of 100% of the common stock of
Atlantic Pacific  Assurance  Company,  Limited ("APAC"),  a Bermuda  corporation
formed to underwrite  certain  insurable  risks of certain of GLB's  predecessor
partnerships  and  related  entities.  As  anticipated,  in July 1997,  APAC was
liquidated  and  GHG  received  a  liquidating   distribution  of  approximately
$2,194,000.  GHG will  recognize  a gain of  approximately  $1,389,000  over its
investment basis and costs of liquidation.  GHG had accounted for its investment
in APAC using the cost method due to its anticipated liquidation.

In the opinion of management,  the accompanying  unaudited financial  statements
contain  all  adjustments  (consisting  only of normal  accruals)  necessary  to
present  fairly,  the financial  position and results of operations of GHG as of
June 30, 1997, and for the period then ended.

Note 2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of  Presentation  - The  accompanying  financial  statements  present  the
consolidated financial position of GHG and RGI as of June 30, 1997, and December
31, 1996 and the  consolidated  results of operations  and cash flows of GHG and
RGI for the six and three months ended June 30, 1997 and 1996. All  intercompany
transactions,   receivables   and   payables   have  been   eliminated   in  the
consolidation.

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.

Rental  Property - Rental  properties  are stated at cost  unless  circumstances
indicate that cost cannot be recovered, in which case, the carrying value of the
property is reduced to estimated fair value.

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

Investments in Management  Contracts - Investments  in management  contracts are
recorded at cost and are amortized on a straight-line basis over the term of the
contracts.

Cash Equivalents - GHG 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.

Income  Taxes -  Provision  for income  taxes is based on  financial  accounting
income.

                                 Page 24 of 199
<PAGE>

                             GLENBOROUGH HOTEL GROUP

                   Notes to Consolidated Financial Statements
                                  June 30, 1997


Note 3.      INVESTMENTS IN MANAGEMENT CONTRACTS, NET
 
Investments  in management  contracts  reflects the  unamortized  portion of the
management  contracts RGI holds with the two beachfront resort condominium hotel
properties  for both  management of the homeowners  associations  and the rental
pool programs.

Note 4.      RENTAL PROPERTY

Rental property and equipment  represents the six condominium  hotel units owned
by RGI as well as furniture  and fixtures in GHG's  corporate  offices.  The six
units owned by RGI participate in a resort rental program on an "at will" basis,
whereby there is no fixed term of participation.  Such  participation  generated
approximately  $11,000  and $9,000 of cash flow  after  deductions  for  capital
reserves for the six months ended June 30, 1997 and 1996, respectively.

Note 5.      MORTGAGE LOAN
 
Mortgage  loan of $49,000 at June 30, 1997,  represents  the debt secured by the
six  condominium  hotel  units  owned by RGI.  Such debt bears  interest  at 7%,
payable in monthly  installments of principal and interest totaling $2,304,  and
matures June 30, 1999.

Note 6.      THE PERCENTAGE LEASES
 
GHG is leasing the five hotels owned by GLB for a term of five years pursuant to
individual  percentage leases ("Percentage Leases") which provide for rent equal
to the  greater  of the Base  Rent (as  defined  in the  lease)  or a  specified
percentage of room revenues (the  "Percentage  Rent").  Each hotel is separately
leased to GHG (the "lessee").  The lessee's  ability to make rent payments will,
to a large  degree,  depend  on its  ability  to  generate  cash  flow  from the
operations  of  the  hotels.  Each  Percentage  Lease  contains  the  provisions
described below.

Each  Percentage  Lease has a  non-cancelable  term of five  years,  subject  to
earlier  termination upon the occurrence of certain  contingencies  described in
the Percentage  Lease.  The lessee under the Percentage  Lease has one five-year
renewal option at the then current fair market rent.

During the term of each  Percentage  Lease,  the lessee is  obligated to pay the
greater  of Base  Rent or  Percentage  Rent.  Base Rent is  required  to be paid
monthly  in  advance.   Percentage  Rent  is  calculated  by  multiplying  fixed
percentages  by room  revenues  for  each of the  five  hotels;  the  applicable
percentage changes when revenue exceeds a specified threshold, and the threshold
may be adjusted  annually in accordance with changes in the applicable  Consumer
Price Index. Percentage Rent is due quarterly.

The table below sets forth the annual Base Rent and the Percentage Rent formulas
for each of the five hotels.

<TABLE>
<CAPTION>
                           Hotel Lease Rent Provisions
 
                                            Percentage Rent
                                         incurred for the six
                       Initial Annual        months ended                        Annual Percentage
Hotel                     Base Rent          June 30, 1997                         Rent Formulas
 
<S>                     <C>                 <C>                <C>
Ontario, CA             $   240,000         $   184,000        24% of the first  $1,575,000 of room revenue plus 40%
                                                               of room revenue above $1,575,000 and 5% of other revenue


                                    continued
</TABLE>

                                 Page 25 of 199
<PAGE>

                             GLENBOROUGH HOTEL GROUP

                   Notes to Consolidated Financial Statements
                                  June 30, 1997

<TABLE>
<CAPTION>

                     Hotel Lease Rent Provisions - continued
 
                                            Percentage Rent
                                         incurred for the six
                       Initial Annual        months ended                        Annual Percentage
Hotel                     Base Rent          June 30, 1997                         Rent Formulas

<S>                     <C>                 <C>                <C>
Arlington, TX           $   360,000         $   180,000        27% of the first  $1,600,000 of room revenue plus
                                                               42% of room revenue above $1,600,000 and 5% of other revenue

Tucson, AZ              $   600,000         $   479,000        40% of the first  $1,350,000 of room revenue plus
                                                               46% of room revenue above $1,350,000 and 5% of other revenue

San Antonio, TX         $   312,000         $     1,000        33% of the first  $1,200,000 of room revenue plus
                                                               40% of room revenue above $1,200,000 and 5% of other revenue

Scottsdale, AZ          $   360,000         $   487,000        45% of the first $3,200,000 of room revenue plus
                                                               60% of room revenue above $3,200,000 and 5% of other revenue
</TABLE>

Other than real estate and personal property taxes, casualty insurance,  a fixed
capital  improvement  allowance and  maintenance  of  underground  utilities and
structural elements,  which are the responsibility of GLB, the Percentage Leases
require the lessees to pay rent,  insurance,  salaries,  utilities and all other
operating costs incurred in the operation of the Hotels.

Note 7.      DECLARATION OF DIVIDENDS
 
The board of directors of GHG declared and paid the following  dividends for the
first and second quarters of 1997:
<TABLE>
<CAPTION>

                                             Preferred Stock       Common Stock           Total

<S>                                         <C>                  <C>                 <C>         
April, 1997                                 $       38,438       $     10,312        $     48,750

July, 1997                                          38,438             10,312              48,750

Total paid from 1997 earnings               $       76,876       $     20,624        $     97,500
</TABLE>


                                 Page 26 of 199
<PAGE>


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

GLENBOROUGH REALTY TRUST INCORPORATED

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 and acquisition of various types of
income-producing properties. As of June 30, 1997, the Company owned and operated
64  income-producing  properties (the  "Properties,"  and each a "Property") and
held  two  mortgage  loans  receivable.  The  Properties  are  comprised  of  30
industrial Properties,  7 retail Properties,  4 multifamily Properties,  6 hotel
Properties   and  17  office   Properties,   located  in  19   states.   The  64
income-producing  Properties include three Properties in which the Company holds
a participating  first mortgage interest,  not fee title. These three Properties
consist of one retail Property,  one industrial  Property and one hotel Property
which are each owned by AFP  Partners.  In  accordance  with GAAP,  the  Company
accounts for these properties as though it holds fee title as substantially  all
risks and rewards of ownership have been  transferred to the Company as a result
of the terms of the mortgages.

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  ("GC"), and eight
public limited partnerships (the "Partnerships,"  collectively with GC, the "GRT
Predecessor Entities"), merged with and into the Company. The Company (i) issued
5,753,709  shares  (the  "Shares")  of the $.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 the  associated  companies  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
90.51% limited  partner  interest as of June 30, 1997. The Company  operates the
assets acquired in the Consolidation and in subsequent  acquisitions and intends
to invest in income-producing  property directly and through joint ventures.  In
addition,  the Associated  Companies may acquire  general  partner  interests in
other real estate limited partnerships. The Company elected to qualify as a REIT
under the Internal Revenue Code of 1986, as amended.

The  Company  seeks to  achieve  sustainable  long-term  growth  in  Funds  from
Operations primarily through the following strategies:  (i) acquiring portfolios
or  individual  properties  on  attractive  terms  often from public and private
partnerships;   (ii)  acquiring  properties  from  entities  controlled  by  the
Associated  Companies;  (iii)  improving  the  performance  of Properties in the
Company's  portfolio;  and  (iv)  constantly  reviewing  the  Company's  current
portfolio for opportunities to redeploy capital from certain existing Properties
into other  properties  which the Company  believes  have  characteristics  more
suited to its overall growth strategy and operating goals.

Consistent  with the  Company's  strategy  for growth,  the Company  acquired 20
properties  in the third and fourth  quarters of 1996 and, as of August 4, 1997,
had acquired 26 properties during 1997. Such acquired  Properties  consist of an
aggregate of  approximately  3.5 million  rentable square feet, 762 multi-family
units  and 227 hotel  suites  and had  aggregate  acquisition  costs,  including
capitalized costs, of approximately $262 million.  In addition,  the Company has
entered into a definitive  agreement,  subject to a number of contingencies,  to
acquire  27  properties  in 12 states,  aggregating  approximately  2.9  million
rentable  square  feet.  There can be no  assurance  that any or all of these 27
properties will be acquired.

Results of Operations

Comparison  of the six months  ended June 30, 1997 to the six months  ended June
30, 1996.

Rental Revenues. Rental revenues increased $12,652,000,  or 180%, to $19,691,000
for the six months ended June 30, 1997, from $7,039,000 for the six months ended
June 30,  1996.  The  increase  included  growth in  revenues  from the  office,
industrial, retail, multi-family and hotel Properties of $5,893,000, $2,271,000,
$1,387,000,  $2,162,000 and $936,000, respectively. Of this increase, $8,158,000
represents rental revenues  generated from the acquisition of 20 properties (the
"1996  Acquisitions")  in the third and fourth  quarters of 1996, and $4,320,000
represents rental

                                 Page 27 of 199
<PAGE>

revenues  generated from the acquisition of 25 properties  during the six months
ended June 30, 1997 (the "1997 Acquisitions").

Fees and Reimbursements.  Fees and reimbursements  revenue consists primarily of
property  management  fees and asset  management  fees paid to the  Company by a
controlled  partnership.  This revenue increased $234,000,  or 176%, to $367,000
for the six months ended June 30, 1997,  from  $133,000 for the six months ended
June  30,  1996.  The  increase  primarily  consisted  of an  increase  in asset
management fees of $89,000 and property  management  fees of $144,000.  In 1996,
such fees were paid to GC, an  associated  company,  and  during  the six months
ended June 30, 1997, they were paid to the Company.

Interest  and Other  Income.  Interest and other  income  consists  primarily of
interest  on  mortgage  loans  receivable  and  increased  $243,000,  or 66%, to
$613,000  for the six months  ended June 30,  1997,  from  $370,000  for the six
months ended June 30, 1996. The increase was primarily due to a $50,000 loan fee
received for the extension of the Hovpark  mortgage loan receivable and $198,000
of interest income on the Carlsberg  Properties,  Ltd. mortgage loan receivable,
both of which  were  received  during the six months  ended June 30,  1997.  The
Carlsberg  Properties,  Ltd. mortgage loan receivable originated on November 19,
1996.  In 1997,  interest and other  income also  included the net effect of the
reduction  in income  caused by the payoff of the Hovpark  note  receivable,  as
offset by an increase  in income as a result of higher  invested  cash  balances
following  the March 1997  Offering  (as defined  below) and prior to the second
quarter acquisitions.

Equity in Earnings of Associated  Companies.  Equity in earnings from Associated
Companies decreased $366,000,  or 38%, to $603,000 for the six months ended June
30, 1997,  from  $969,000 for the six months ended June 30, 1996.  This decrease
resulted  from an increase  in  salaries,  benefits  and other  operating  costs
associated  with  the  growth  of  the  companies  and  the  write-off  of  GC's
unamortized  balance of its investment in a management  contract;  however,  the
increase in these  expenses  resulted in lower income tax expense.  In addition,
the  net  operating  income  of GHG  increased  due to  the  acquisition  of the
Scottsdale Hotel.

Gain on  Collection  of Mortgage  Loan  Receivable.  The gain on  collection  of
mortgage loan  receivable of $652,000 during the six months ended June 30, 1997,
resulted from the collection of the Hovpark mortgage loan receivable which had a
net carrying value of $6,700,000.  The payoff amount totaled $6,863,000,  plus a
$500,000  note  receivable,  which,  net of legal  costs,  resulted in a gain of
$652,000.

Net Gain on  Sales  of  Rental  Properties.  The net  gain on  sales  of  rental
properties of $570,000 during the six months ended June 30, 1997,  resulted from
the sale of nine of the ten QuikTrips and six Atlanta Auto Care Centers from the
Company's  retail  portfolio.  The net  gain on sales of  rental  properties  of
$321,000  during the six months ended June 30, 1996,  resulted  from the sale of
the two self-storage facilities from the Company's industrial portfolio.

Property Operating Expenses.  Property operating expenses increased  $4,136,000,
or 217%, to $6,045,000 for the six months ended June 30, 1997,  from  $1,909,000
for the six months ended June 30, 1996. Of this increase,  $4,201,000 represents
property operating  expenses  attributable to the 1996 Acquisitions and the 1997
Acquisitions,  which was slightly offset by the reduction in expenses  resulting
from the June 1996 sale of the All American Self Storage industrial properties.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased  $699,000,  or 104%, to  $1,374,000  for the six months ended June 30,
1997,  from  $675,000 for the six months  ended June 30,  1996.  The increase is
primarily due to increased  costs resulting from the 1996  Acquisitions  and the
1997 Acquisitions.

Depreciation  and   Amortization.   Depreciation   and  amortization   increased
$2,285,000,  or 130%, to $4,044,000 for the six months ended June 30, 1997, from
$1,759,000 for the six months ended June 30, 1996. The increase is primarily due
to depreciation and amortization  associated with the 1996  Acquisitions and the
1997 Acquisitions.

Interest Expense.  Interest expense increased $2,379,000, or 167%, to $3,800,000
for the six months ended June 30, 1997, from $1,421,000 for the six months ended
June 30,  1996.  Substantially  all of the  increase  was the  result  of higher
average borrowings during the six months ended June 30, 1997, as compared to the
six  months  ended June 30,  1996,  due to new debt and the  assumption  of debt
related to the 1996 Acquisitions and the 1997 Acquisitions.

                                 Page 28 of 199
<PAGE>

Consolidation  Costs.  Consolidation  costs during the six months ended June 30,
1996, consisted of the costs associated with preparing, printing and mailing the
Prospectus/Consent  Solicitation  Statement and other  documents  related to the
Consolidation,   and  all  other  costs   incurred  in  the  forwarding  of  the
Prospectus/Solicitation Statement to investors.

Litigation  Costs.  Litigation  costs during the six months ended June 30, 1996,
consisted of the legal fees  incurred in  connection  with  defending  two class
action  complaints  filed by investors in certain of the  Company's  predecessor
entities, as well as an accrual for the proposed settlement in one case.

Comparison  of the three  months  ended June 30, 1997 to the three  months ended
June 30, 1996.

Rental Revenues.  Rental revenues increased $8,334,000,  or 242%, to $11,784,000
for the three months ended June 30, 1997,  from  $3,450,000 for the three months
ended June 30, 1996. The increase  included  growth in revenues from the office,
industrial, retail, multi-family and hotel Properties of $3,908,000, $1,841,000,
$747,000,  $1,226,000 and $610,000,  respectively.  Of this increase, $4,089,000
represents rental revenues  generated from the acquisition of 20 properties (the
"1996  Acquisitions")  in the third and fourth  quarters of 1996, and $4,083,000
represents  rental  revenues  generated  from the  acquisition  of 25 properties
during the six months ended June 30, 1997 (the "1997 Acquisitions").

Fees and Reimbursements.  Fees and reimbursements  revenue consists primarily of
property  management  fees and asset  management  fees paid to the  Company by a
controlled  partnership.  This revenue increased $113,000,  or 169%, to $180,000
for the three  months  ended June 30,  1997,  from  $67,000 for the three months
ended June 30, 1996.  The increase  primarily  consisted of an increase in asset
management  fees of $44,000 and property  management  fees of $69,000.  In 1996,
such fees were paid to GC, an  associated  company,  and during the three months
ended June 30, 1997, they were paid to the Company.

Interest  and Other  Income.  Interest and other  income  consists  primarily of
interest on mortgage loans receivable and increased $90,000, or 50%, to $269,000
for the three  months ended June 30,  1997,  from  $179,000 for the three months
ended June 30,  1996.  The  increase  was  primarily  due to $99,000 of interest
income on the Carlsberg  Properties,  Ltd.  mortgage loan  receivable  which was
received during the three months ended June 30, 1997. The Carlsberg  Properties,
Ltd. mortgage loan receivable originated on November 19, 1996. In 1997, interest
and other income also  included the net effect of the reduction in income caused
by the payoff of the Hovpark note receivable, as offset by an increase in income
as a result of higher  invested cash balances  following the March 1997 Offering
(as defined below) and prior to the second quarter acquisitions.

Equity in Earnings of Associated  Companies.  Equity in earnings from Associated
Companies decreased $86,000, or 16%, to $458,000 for the three months ended June
30, 1997,  from $544,000 for the three months ended June 30, 1996. This decrease
resulted  from an increase  in  salaries,  benefits  and other  operating  costs
associated  with the growth of the  companies;  however,  the  increase in these
expenses  resulted in lower income tax expense.  In addition,  the net operating
income of GHG increased due to the acquisition of the Scottsdale Hotel.

Gain on  Collection  of Mortgage  Loan  Receivable.  The gain on  collection  of
mortgage  loan  receivable  of $498,000  during the three  months ended June 30,
1997, resulted from the collection of the Hovpark mortgage loan receivable.  The
payoff  amount  included a  $500,000  note  receivable,  which was  recorded  as
deferred income to be recognized as cash was received.  Payments received in the
three months ended March 31, 1997,  totaled $2,000. The remaining balance of the
note  receivable  was assigned to a third party in June 1997 which resulted in a
gain of $498,000 during the three months ended June 30, 1997.

Net Gain on  Sales  of  Rental  Properties.  The net  gain on  sales  of  rental
properties  of $570,000  during the three months  ended June 30, 1997,  resulted
from the sale of nine of the ten  QuikTrips  and six Atlanta  Auto Care  Centers
from the Company's retail portfolio.  The net gain on sales of rental properties
of $321,000 during the three months ended June 30, 1996,  resulted from the sale
of the two self-storage facilities from the Company's industrial portfolio.

Property Operating Expenses.  Property operating expenses increased  $2,771,000,
or 311%, to $3,663,000  for the three months ended June 30, 1997,  from $892,000
for  the  three  months  ended  June  30,  1996.  Of this  increase,  $2,726,000
represents property operating expenses attributable to the 1996 Acquisitions and
the 1997 Acquisitions.

                                 Page 29 of 199
<PAGE>

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased  $329,000,  or 84%, to $723,000  for the three  months  ended June 30,
1997,  from  $394,000 for the three months ended June 30, 1996.  The increase is
primarily due to increased  costs resulting from the 1996  Acquisitions  and the
1997 Acquisitions.

Depreciation  and   Amortization.   Depreciation   and  amortization   increased
$1,645,000,  or 191%,  to  $2,507,000  for the three months ended June 30, 1997,
from  $862,000  for the three  months  ended  June 30,  1996.  The  increase  is
primarily  due  to  depreciation  and  amortization  associated  with  the  1996
Acquisitions and the 1997 Acquisitions.

Interest Expense.  Interest expense increased $1,528,000, or 219%, to $2,227,000
for the three  months ended June 30,  1997,  from  $699,000 for the three months
ended June 30, 1996.  Substantially all of the increase was the result of higher
average  borrowings  during the three months ended June 30, 1997, as compared to
the three months ended June 30, 1996, due to new debt and the assumption of debt
related to the 1996 Acquisitions and the 1997 Acquisitions.

Liquidity and Capital Resources

For the six months ended June 30, 1997,  cash  provided by operating  activities
increased by $9,021,000 to $8,573,000 as compared to $448,000 used for operating
activities  for the same period in 1996.  The increase is  primarily  due to the
one-time  payment in 1996 of  consolidation  costs and  litigation  costs in the
aggregate amount of $7,237,000.  Cash used for investing activities increased by
$121,203,000 to $124,080,000 for the six months ended June 30, 1997, as compared
to $2,877,000  for the same period in 1996. The increase is primarily due to the
1997  Acquisitions.  This increase was partially offset by the collection of the
Hovpark  mortgage  loan  receivable.   Cash  provided  by  financing  activities
increased  by  $122,830,000  to  $117,504,000  for the six months ended June 30,
1997,  as compared to  $5,326,000  used for  financing  activities  for the same
period in 1996.  This  increase was  primarily  due to the net proceeds from the
March 1997  Offering  (as  defined  below) and the  proceeds  from a $60 million
unsecured "bridge" loan from Wells Fargo Bank (the "$60 Million Unsecured Bridge
Loan).

The Company  expects to meet its  short-term  liquidity  requirements  generally
through its  working  capital,  its Line of Credit (as  defined  below) and cash
generated  by  operations.  As of June 30,  1997,  the  Company  had no material
commitments  for  capital  improvements  other than  certain  expansion  related
improvements  estimated at  approximately  $1,750,000  at its existing  shopping
center in Tampa,  Florida.  Other planned capital improvements consist of tenant
improvements,  expenditures  necessary to lease and maintain the  Properties and
expenditures  for furniture and fixtures and building  improvements at the hotel
Properties.

The  Company's  principal  sources of  funding  for  acquisitions,  development,
expansion and  renovation of properties are a secured Line of Credit (as defined
below),  permanent  secured debt financing,  public equity and privately  placed
financing,  the issuance of partnership  units in the Operating  Partnership and
cash flow provided by operations.

Mortgage loans  receivable  decreased  from  $9,905,000 at December 31, 1996, to
$3,547,000  at June 30, 1997.  This  decrease was primarily due to the payoff of
the  Hovpark  mortgage  loan  receivable  which  had a  net  carrying  value  of
$6,700,000.  This decrease was partially offset by $344,000 of draws made by the
borrower on the leasing and  interest  reserves  related to the Grunow  mortgage
loan receivable.

Mortgage  loans  payable  increased  from  $54,584,000  at December 31, 1996, to
$116,563,000  at June  30,  1997.  This  increase  primarily  resulted  from the
assumption of a $4,612,000  mortgage loan in connection  with the acquisition of
the Scottsdale  Hotel in February 1997, the assumption of $3,936,000 of mortgage
loans in connection  with the  acquisition of the E&L Properties and the funding
of the $60 Million  Unsecured Bridge Loan. These increases were partially offset
by the payoff of the $6,120,000 Term Loan which was secured by the QuikTrips and
scheduled principal payments on other mortgage debt.

The Company has a  $50,000,000  secured  line of credit  provided by Wells Fargo
Bank (the "Line of  Credit").  Outstanding  borrowings  under the Line of Credit
increased  from  $21,307,000  at December 31, 1996, to  $36,118,000  at June 30,
1997, due to draws for 1997  Acquisitions.  Borrowings  under the Line of Credit
currently bear interest at an annual rate of LIBOR plus 1.75%.

                                 Page 30 of 199
<PAGE>

In March 1997,  the  Company  completed a public  equity  offering of  3,500,000
shares of Common Stock at an offering price of $20.25 per share (the "March 1997
Offering").  The net proceeds from the offering of  approximately  $66.3 million
were  used  to  fund  certain  1997   acquisitions  and  to  repay   outstanding
indebtedness.

In July 1997, the Company completed a public equity offering of 6,980,000 shares
of Common  Stock at an  offering  price of  $22.625  per share  (the  "July 1997
Offering").  The net proceeds  from the offering of  approximately  $150 million
were used to repay the $60 Million  Unsecured  Bridge  Loan and the  outstanding
balance under the Company's Line of Credit. It is anticipated that the remaining
proceeds will be used to fund future acquisitions of properties.

In January 1997, the Company filed a shelf registration  statement (the "January
1997 Shelf Registration  Statement") with the Securities and Exchange Commission
to  register  $250.0  million  of equity  securities.  The  January  1997  Shelf
Registration  Statement was declared  effective by the  Securities  and Exchange
Commission  on  February  25,  1997.  In May  1997,  the  Company  filed a shelf
registration  statement  to  register  an  additional  $350.0  million of equity
securities of the Company (the "May 1997 Shelf Registration Statement).  The May
1997 Shelf  Registration  Statement was declared effective by the Securities and
Exchange  Commission on May 21, 1997. After the completion of the March 1997 and
July 1997 Offerings, the Company has the capacity pursuant to the May 1997 Shelf
Registration  Statement to issue up to  approximately  $371.2  million in equity
securities.

At June 30, 1997, the Company's total indebtedness  included  fixed-rate debt of
$106,960,000, or 70% of the Company's aggregate indebtedness,  and floating-rate
indebtedness of $45,721,000, or 30% of the Company's aggregate indebtedness.

Inflation

Substantially  all  of  the  leases  at  the  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  multi-family
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 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

The Company  believes  that funds from  operations  ("FFO") is a measure of cash
flow which,  when  considered in  conjunction  with other  measures of operating
performance,  affects the value of equity REITs such as the  Company.  FFO means
income (loss) from operations before minority interests and extraordinary  items
plus depreciation and amortization,  except  amortization of deferred  financing
costs and loss provisions.

FFO is not necessarily  indicative of cash flow available to fund cash needs and
is not the same as cash flow from  operations as defined by GAAP, and should not
be  considered  as an  alternative  to net income  (loss) as an indicator of the
Company's  operating  performance,  or as an  alternative  to  cash  flows  from
operating,  investing  and  financing  activities  as a measure of  liquidity or
ability to make distributions. Management generally considers FFO to be a useful
financial  performance  measure of the operating  performance  of an equity REIT
because, 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 and other capital expenditures.  FFO does not represent net
income or cash flows from operations as defined by GAAP and 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.  FFO  also  does  not  represent  cash  flows  generated  from
operating,  investing  or  financing  activities  as  defined  by  GAAP.  FFO as
disclosed by other REITs may not be comparable to the Company's  calculation  of
FFO.

Cash available for distribution  ("CAD")  represents net income (loss) (computed
in  accordance  with  GAAP),  excluding  extraordinary  gains or  losses or loss
provisions,   plus  depreciation  and  amortization  including  amortization  of
deferred   financing  costs,   less  lease  commissions  and  recurring  capital
expenditures.  CAD should not be  considered an  alternative  to net income as a
measure of the Company's financial performance or to cash flow from

                                 Page 31 of 199
<PAGE>

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.


The following table sets forth the Company's  calculation of FFO and CAD for the
three months ended March 31 and June 30, 1997 (dollars in thousands):
<TABLE>
<CAPTION>

                                                          March 31,            June 30,            Year to Date
                                                            1997                 1997                 Total
                                                      ----------------     ----------------     ----------------
<S>                                                   <C>                  <C>                  <C>          
Net income (loss) before minority interest            $       2,594        $       4,639        $       7,233
Gain on collection of mortgage loan receivable                 (154)                (498)                (652)
Net gain on sales of rental properties                          ---                 (570)                (570)
Depreciation and amortization                                 1,537                2,507                4,044
Adjustment to reflect FFO of Associated Companies(1)            623                  248                  871
                                                      ----------------     ----------------     ----------------

FFO                                                   $       4,600        $       6,326        $      10,926
                                                      ================     ================     ================

Amortization of deferred financing fees                          64                   64                  128
Capital reserve                                                (110)                (220)                (330)
Capital expenditures                                           (421)                (541)                (962)
                                                      ----------------     ----------------     ----------------

CAD                                                   $       4,133        $       5,629        $       9,762
                                                      ================     ================     ================
                                                      ================     ================     ================

Distributions per share (2)                           $        0.32        $        0.32        $        0.64
                                                      ================     ================     ================

Fully diluted weighted average shares outstanding        10,935,951           14,466,852           12,783,418
                                                      ================     ================     =================
</TABLE>

(1)  Reflects  the  adjustments  to  FFO  required  to  reflect  the  FFO of the
     Associated Companies allocable to the Company. The Company's  investments
     in the Associated Companies are accounted for using the equity method of
     accounting.

(2)  The  distributions for the three months ended June 30, 1997, will be paid
     on August 12, 1997.

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.
Forward looking statements include statements regarding potential  acquisitions,
the  anticipated   performance  of  future   acquisitions,   recently  completed
acquisitions  and existing  properties,  including the T. Rowe Price  Properties
acquisition,  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,  and the  Company  assumes  no
obligation  to update any such forward  looking  statements.  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  operation  costs,  failure  to obtain  necessary
outside  financing,  difficulties  in  identifying  properties to acquire and in
effecting  acquisitions,  failure to qualify as a real estate  investment  trust
under the Internal  Revenue  Code of 1986,  environmental  uncertainties,  risks
related to natural  disasters,  financial market  fluctuations,  changes in real
estate and zoning laws,  increases in real  property tax rates and other factors
discussed under the caption "Forward Looking Statements; Factors That May Affect
Operating  Results" in the  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations"  section of the Company's  Annual Report on
Form 10-K for the year ended December 31, 1996, 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

                                 Page 32 of 199
<PAGE>

quarterly  distributions,  however, there can be no assurance that distributions
will continue or be paid at any specific level.

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.

                                 Page 33 of 199
<PAGE>

GLENBOROUGH HOTEL GROUP

Background

Glenborough  Hotel  Group  ("GHG")  was  organized  in the  state of  Nevada  on
September 23, 1991. As of June 30, 1997, GHG operates hotel  properties owned by
the  Company  under  five  separate  percentage  leases  and  manages  two hotel
properties  owned  by  two  partnerships   whose  managing  general  partner  is
Glenborough  Corporation.  The Company owns 100% of the 50 shares of  non-voting
preferred  stock of GHG and  three  individuals,  including  Terri  Garnick,  an
executive officer of the Company, each own 33 1/3% of the 1,000 shares of voting
common stock of GHG.

In January 1997, due to the  insufficient  cash flow of one of the managed hotel
properties  in  relation  to the debt  service  requirements,  the  owner of the
property, a California limited partnership owned by an affiliate, stopped making
debt service payments.  As a result, in April 1997, the lender foreclosed on the
property, and GHG is no longer managing this hotel.

GHG also  owns  approximately  80% of the  common  stock of Resort  Group,  Inc.
("RGI"). RGI manages homeowners associations and rental pools for two beachfront
resort  condominium  hotel  properties  and owns six rental  units at one of the
properties.  GHG  receives  100% of the earnings of RGI and  consolidates  their
operations with its own.

As of June 30,  1997,  GHG also  owned 94% of the  outstanding  common  stock of
Atlantic Pacific  Holdings,  Ltd., the sole owner of 100% of the common stock of
Atlantic Pacific  Assurance  Company,  Limited ("APAC"),  a Bermuda  corporation
formed to underwrite  certain  insurable  risks of certain of GLB's  predecessor
partnerships  and  related  entities.  As  anticipated,  in July 1997,  APAC was
liquidated  and  GHG  received  a  liquidating   distribution  of  approximately
$2,194,000.  GHG will  recognize  a gain of  approximately  $1,389,000  over its
investment basis and costs of liquidation.  GHG had accounted for its investment
in APAC using the cost method due to its anticipated liquidation.

Liquidity and Capital Resources

GHG's primary  source of funding is the cash  generated by the operations of the
five  hotels  leased from the Company and fees  received  for (i)  managing  two
hotels owned by two partnerships  and (ii) managing the homeowners  associations
and rental pools for the resort condominium hotel properties as discussed above.

The  board  of  directors  of GHG  declared  and paid  the  following  quarterly
dividends for the three months ended March 31 and June 30, 1997:
<TABLE>
<CAPTION>

                                                         1st Quarter          2nd Quarter         Year to Date
                                                      ----------------     ----------------     ----------------
<S>                                                      <C>                  <C>                  <C>     
Preferred dividends to the Company                       $  7,500             $  7,500             $ 15,000
Additional dividends to the Company                        30,938               30,938               61,876
                                                      ----------------     ----------------     ----------------
Total dividends to the Company                             38,438               38,438               76,876
Dividends to others                                        10,312               10,312               20,624
                                                      ----------------     ----------------     ----------------
Total dividends                                          $ 48,750             $ 48,750             $ 97,500
                                                      ================     ================     ================
</TABLE>

Results of Operations

Hotel  revenue,  which  represents  the revenue earned on the five hotels leased
from the Company, increased $2,553,000, or 71%, to $6,137,000 for the six months
ended June 30,  1997,  from  $3,584,000  for the six months ended June 30, 1996.
This  increase is primarily due to the  acquisition  of the San Antonio Hotel in
August 1996 and the acquisition of the Scottsdale Hotel in February 1997.

Fee revenue and salary  reimbursements of $1,113,000  represents the fees earned
for managing two hotels and two resort condominium hotels. The decrease from the
six  months  ended June 30,  1996,  to the six months  ended June 30,  1997,  is
primarily due to the change in ownership of one of the managed hotel  properties
(see discussion above) which resulted in GHG no longer managing this hotel as of
April 1997.

                                 Page 34 of 199
<PAGE>

The primary expenses associated with the leased hotels are room expenses,  lease
payments, sales and marketing and other operating expenses, including utilities,
maintenance  and  insurance.  All leased hotel  expenses  increased from the six
months  ended June 30, 1996,  to the six months ended June 30, 1997,  due to the
acquisition of two hotels as discussed above.

The only direct  expenses  incurred in connection with the management of the two
hotels and two resort  condominium  hotel  properties  are salaries and benefits
which  decreased  $94,000 from the six months  ended June 30,  1996,  to the six
months ended June 30,  1997.  This  decrease is  primarily  due to the change in
ownership of one of the managed hotel  properties (see  discussion  above) which
resulted in GHG no longer managing this hotel as of April 1997.

General and  administrative  costs represent the overhead costs  associated with
administering   the   business  of  GHG.   Such  costs   primarily   consist  of
administrative  salaries and benefits,  rent,  legal fees and  accounting  fees.
These costs increased $59,000, or 13%, to $525,000 for the six months ended June
30, 1997,  from $466,000 for the six months ended June 30, 1996. The increase is
primarily due to higher salaries and benefits related to the growth of GHG.

                                 Page 35 of 199
<PAGE>

PART II.     OTHER INFORMATION

Item 1.      Legal Proceedings

Blumberg.  On February  21,  1995,  a class  action  complaint  was filed in the
Superior  Court of the  State  of  California  in and for San  Mateo  County  in
connection  with the  Consolidation.  The plaintiff is Anthony E.  Blumberg,  an
Investor  in  Equitec  B, on behalf of himself  and all  others  (the  "Blumberg
Action")  similarly   situated.   The  defendants  are  GC  (formerly  known  as
Glenborough Realty Corporation),  Glenborough Realty Corporation ("GRC"), Robert
Batinovich, the Partnerships and the Company.

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

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

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

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

At a hearing on January 17, 1996, the court heard the arguments of the objectors
seeking to overturn the  settlement,  as well as the arguments of the plaintiffs
and the defendants in defense of the settlement. The court granted all parties a
period of time in which to file additional pleadings. On June 4, 1996, the court
granted approval of the settlement,  finding it fundamentally fair, adequate and
reasonable to the respective parties to the settlement.  However,  the objectors
gave  notice of their  intent to appeal  the June 4  decision,  and filed  their
opening  brief with the court of appeals on November 15,  1996.  The Company and
the other defendants filed their answering brief on January 17, 1997.

BEJ Equity  Partners.  On  December 1, 1995,  a second  class  action  complaint
relating  to the  Consolidation  was  filed in  Federal  District  Court for the
Northern  District of California  (the "BEJ  Action").  The  plaintiffs  are BEJ
Equity Partners,  J/B Investment  Partners,  Jesse B. Small and Sean O'Reilly as
custodian  f/b/o  Jordan  K.  O'Reilly,  who as a  group  held  limited  partner
interests in the California  limited  partnerships  known as Outlook  Properties
Fund IV,  Glenborough All Suites Hotels,  L.P.,  Glenborough  Pension Investors,
Equitec Income Real Estate  Investors-Equity  Fund 4, Equitec Income Real Estate
Investors C and Equitec Mortgage  Investors Fund IV, on behalf of themselves and
all others  similarly  situated.  The defendants are GRC, GC, the Company,  GPA,
Ltd.,  Robert  Batinovich and Andrew  Batinovich.  The Partnerships are named as
nominal defendants.

                                 Page 36 of 199
<PAGE>

This action  alleges the same  disclosure  violations  and breaches of fiduciary
duty as were alleged in the Blumberg  Action.  The complaint  sought  injunctive
relief, which was denied at a hearing on December 22, 1995. At that hearing, the
court  also  deferred  all  further  proceedings  in this case  until  after the
scheduled  January 17, 1996 hearing in the Blumberg  Action.  Following  several
stipulated  extensions of time for the Company to respond to the complaint,  the
Company filed a motion to dismiss the case. The Company has since  withdrawn its
motion to dismiss the case, and the court has entered a stipulated order staying
the case pending final resolution of the Blumberg action.

It is  management's  position  that the BEJ Action,  and the  objections  to the
settlement of the Blumberg Action,  are without merit, and management intends to
pursue  a  vigorous  defense  in  both  matters.  However,  given  the  inherent
uncertainties of litigation, there can be no assurance that the ultimate outcome
in these two legal proceedings will be in the Company's favor.

Item 2.      Changes in Securities

(c)  Sales of Unregistered Securities

In  July  1997,  the  Company  acquired  the  Centerstone  Property  for a total
acquisition cost,  including  capitalized costs, of approximately $30.4 million.
In connection with this acquisition,  Glenborough Properties, L.P., a California
limited partnership (the "Operating Partnership"), issued to CT Realty Corp. and
RESCO,  the sellers of the  Centerstone  Property,  275,000  units  ("Units") of
partnership  interest in Glenborough  Properties,  L.P. (with an agreed per Unit
value of $20.00,  or an aggregate  value of $5.5 million) as partial payment for
the Centerstone Property.  The balance of the acquisition cost was paid in cash.
The Units are  redeemable  for cash,  or, at the  election of the  Company,  for
shares of Common  Stock of the Company on a  one-for-one  basis.  The Units were
issued by the Operating  Partnership  in reliance on the  exemption  provided by
Section 4(2) of the Securities Act of 1933, as amended.

In April 1997, the Company  acquired the E&L Properties for a total  acquisition
cost, including capitalized costs, of approximately $22.2 million. In connection
with this acquisition, the Operating Partnership issued to seven partnerships as
sellers of the E&L  Properties,  352,197 Units (with an agreed per Unit value of
$19.075,  or an aggregate  value of $6,718,158)  as partial  payment for the E&L
Properties.  The  Units are  redeemable  for cash,  or, at the  election  of the
Company,  for shares of Common Stock of the Company on a one-for-one  basis.  In
addition,  the Company issued to such seven partnerships 33,198 shares of Common
Stock of the Company (with an agreed per share value of $19.075, or an aggregate
value of $633,252) as partial payment for the E&L Properties. The balance of the
acquisition cost was paid in cash. The Units and the shares of Common Stock were
issued by the Operating Partnership and the Company,  respectively,  in reliance
on the  exemption  provided by Section 4(2) of the  Securities  Act of 1933,  as
amended.

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

The  Company  held its  Annual  Meeting of  Stockholders  on May 15,  1997.  The
Stockholders  voted to (i)  elect  five  persons  to serve as  directors  of the
Company until the 1998 Annual Meeting of Stockholders and until their respective
successors  are duly  elected and  qualified,  (ii)  approve  amendments  to the
Company's 1996 Stock Incentive Plan, and (iii) to ratify the retention of Arthur
Andersen LLP as the  Company's  independent  auditors for the fiscal year ending
December 31, 1997.
 
The  stockholders'  votes with  respect to the  election  of  directors  were as
follows:

                                       FOR                WITHHELD
                                    ----------            --------
     Robert Batinovich              10,066,825             71,200
     Andrew Batinovich              10,066,810             71,215
     Patrick Foley                  10,067,649             70,376
     Richard A. Magnuson            10,069,359             68,666
     Laura Wallace                  10,069,570             68,455

                                 Page 37 of 199
<PAGE>

The  stockholders'  votes with  respect to the  approval  of  amendments  to the
Company's 1996 Stock Incentive Plan were as follows:

            FOR            AGAINST            ABSTAIN           NON-VOTE
         ---------        ---------          ---------         ----------
         8,948,640         834,532            124,823           230,030

The stockholders'  votes with respect to the ratification of retention of Arthur
Andersen LLP as the  Company's  independent  auditors for the fiscal year ending
December 31, 1997 were as follows:

            FOR                     AGAINST                ABSTAIN
         ----------                ---------              ---------
         10,053,440                 25,890                 58,695

                                 Page 38 of 199
<PAGE>

Item 6.      Exhibits and Reports on Form 8-K

         (a) Exhibits:

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

         (b) Reports on Form 8-K:

             On April  23,  1997,  the  Company  filed a report on Form 8-K with
             respect  to  the  acquisition  of the  Lennar  Properties  and  the
             Riverview Property.

             On April  24,  1997,  the  Company  filed a  report  on Form 8-K to
             announce the declaration of dividends and funds from operations for
             the  first  quarter  of  1997  and to  provide  certain  additional
             operation information concerning the Company.

             On April  25,  1997,  the  Company  filed a  report  on Form 8-K to
             provide  certain  additional  ownership and  operation  information
             concerning the Company and the properties owned or managed by it as
             of March 31, 1997.

             On May 2, 1997, the Company filed a report on Form 8-K with respect
             to the  acquisition  of the Ellis & Lane  Properties  and the CIGNA
             Properties.

             On May 14,  1997,  the  Company  filed  a  report  on  Form  8-K/A,
             Amendment  No. 1, with  respect to the  acquisitions  of the Lennar
             Properties and the Riverview Property.

             On May 14,  1997,  the  Company  filed  a  report  on  Form  8-K/A,
             Amendment  No.  1,  with  respect  to the  acquisitions  of the E&L
             Properties and the CIGNA Properties.

             On July 15,  1997,  the  Company  filed a  report  on Form 8-K with
             respect to the acquisition of the Centerstone Property.

             On July 15,  1997,  the  Company  filed a  report  on Form 8-K with
             respect to the July 1997 Offering.

             On July 28, 1997, the Company filed a report on Form 8-K to provide
             certain additional ownership and operation  information  concerning
             the  Company and the  properties  owned or managed by it as of June
             30, 1997.

             On August 8, 1997,  the  Company  filed a report on Form 8-K/A with
             respect to the acquisition of the Centerstone Property.


                                 Page 39 of 199
<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 14, 1997                   /s/ Andrew Batinovich
                                         Andrew Batinovich
                                         Director, Executive Vice President,
                                         Chief Operating Officer
                                         and Chief Financial Officer
                                         (Principal Financial Officer)





Date:  August 14, 1997                    /s/ Terri Garnick
                                          Terri Garnick
                                          Senior Vice President,
                                          Chief Accounting Officer,
                                          Treasurer
                                          (Principal Accounting Officer)


                                 Page 40 of 199
<PAGE>

                                  EXHIBIT INDEX



Exhibit No.          Exhibit Title

4.0                  Glenborough Realty Trust Incorporated 1996 Stock Incentive
                     Plan (amended and restated as of March 20, 1997)

10.1                 Purchase and Sale Agreement relating to the T. Rowe Price
                     Realty Income Fund II acquisition

10.2                 Purchase Agreement relating to the Centerstone Property
                     acquisition

10.3                 Contribution Agreement relating to the Centerstone
                     Property acquisition

10.4                 Purchase Agreement relating to the CIGNA acquisition

10.5                 Unsecured Loan Agreement with Wells Fargo Bank, N.A.

27.1                 Financial Data Schedule


                                 Page 41 of 199
<PAGE>

                      GLENBOROUGH REALTY TRUST INCORPORATED
                            1996 STOCK INCENTIVE PLAN
                   (amended and restated as of March 20, 1997)

     1. Purposes of the Plan.  The purposes of this Stock  Incentive Plan are to
attract and retain the best  available  personnel for  positions of  substantial
responsibility,  to provide  additional  incentive to  Employees,  Directors and
Consultants  of the Company and its Related  Entities and to promote the success
of the Company's and its Related Entities' business.

     2. Definitions. As used herein, the following definitions shall apply:

               (a)  "Administrator"  means  the  Board or any of the  Committees
appointed to administer the Plan. All references to the "Committee" in any Award
Agreement shall be deemed to refer to the Administrator.

               (b)  "Affiliate"  and  "Associate"   shall  have  the  respective
meanings  ascribed to such terms in  Rule 12b-2  promulgated  under the Exchange
Act. All references to "Affiliates"  in any Award Agreement  issued prior to the
date of adoption by the Board of this March 20, 1997  amendment and  restatement
of the Plan shall be deemed to refer to Parents and Subsidiaries.

               (c) "Applicable  Laws" means the legal  requirements  relating to
the administration of stock incentive plans, if any, under applicable provisions
of federal  securities  laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system,  and the rules
of any foreign jurisdiction applicable to Awards granted to residents therein.

               (d)  "Award"  means  the  grant  of  an  Option,   SAR,  Dividend
Equivalent Right,  Restricted Stock,  Performance  Unit,  Performance  Share, or
other right or benefit under the Plan. Award also includes all Options issued in
1996 notwithstanding any recital that the Option is intended to have been issued
outside the terms of the Plan.

               (e) "Award Agreement" means the written agreement  evidencing the
grant of an  Award  executed  by the  Company  and the  Grantee,  including  any
amendments thereto.

               (f) "Board" means the Board of Directors of the Company.

               (g) "Change in Control" means a change in ownership or control of
the Company effected through either of the following transactions:

                    (i) the  direct or  indirect  acquisition  by any  person or
related group of persons (other than an acquisition from or by the Company or by
a  Company-sponsored  employee  benefit  plan or by a person  that  directly  or
indirectly  controls,  is controlled  by, or is under common  control with,  the
Company)  of  beneficial  ownership  (within  the  meaning  of 

                                 Page 42 of 199
<PAGE>

Rule  13d-3 of the  Exchange  Act) of  securities  possessing  more than  twenty
percent (20%) of the total  combined  voting power of the Company's  outstanding
securities, or

                    (ii) a change in the  composition of the Board over a period
of  thirty-six  (36)  months or less such that a majority  of the Board  members
(rounded up to the next whole number) ceases, by reason of one or more contested
elections  for  Board  membership,  to  be  comprised  of  individuals  who  are
Continuing Directors.

               (h) "Code" means the Internal Revenue Code of 1986, as amended.

               (i)  "Committee"  means any  committee  appointed by the Board to
administer the Plan.

               (j) "Common Stock" means the common stock of the Company.

               (k) "Company"  means  Glenborough  Realty Trust  Incorporated,  a
Maryland corporation.

               (l)  "Consultant"  means any person who is engaged by the Company
or  any  Related  Entity  to  render  consulting  or  advisory  services  as  an
independent contractor and is compensated for such services.

               (m) "Continuing  Directors" means members of the Board who either
(i) have been Board  members  continuously  for a period of at least  thirty-six
(36) months or (ii) have been Board members for less than thirty-six (36) months
and were  elected  or  nominated  for  election  as Board  members by at least a
majority of the Board  members  described in clause (i) who were still in office
at the time such election or nomination was approved by the Board.

               (n)  "Continuous  Status as an Employee,  Director or Consultant"
means that the  provision of services to the Company or a Related  Entity in any
capacity of Employee,  Director or Consultant, is not interrupted or terminated.
Continuous Status as an Employee, Director or Consultant shall not be considered
interrupted  in the case of (i) any approved  leave of absence or (ii) transfers
between locations of the Company or among the Company, its Related Entities,  or
any successor in any capacity of Employee,  Director or Consultant.  An approved
leave of  absence  shall  include  sick  leave,  military  leave,  or any  other
authorized  personal  leave.  For purposes of Incentive  Stock Options,  no such
leave may exceed ninety (90) days,  unless  reemployment upon expiration of such
leave is guaranteed by statute or contract.

               (o)   "Corporate   Transaction"   means  any  of  the   following
stockholder-approved transactions to which the Company is a party:

                    (i) a merger or  consolidation  in which the  Company is not
the surviving entity, except for a transaction the principal purpose of which is
to change the state in which the Company is incorporated;

                                 Page 43 of 199
<PAGE>

                    (ii)  the  sale,  transfer  or other  disposition  of all or
substantially  all of the assets of the Company  (including the capital stock of
the  Company's   subsidiary   corporations)  in  connection  with  the  complete
liquidation or dissolution of the Company; or

                    (iii)  any  reverse  merger  in  which  the  Company  is the
surviving  entity but in which  securities  possessing  more than fifty  percent
(50%) of the total combined voting power of the Company's outstanding securities
are  transferred  to a person  or  persons  different  from  those who held such
securities immediately prior to such merger.

               (p)  "Covered  Employee"  means  an  Employee  who is a  "covered
employee" under Section 162(m)(3) of the Code.

               (q) "Director" means a member of the Board.

               (r)  "Dividend  Equivalent  Right"  means a right  entitling  the
Grantee to compensation measured by dividends paid with respect to Common Stock.

               (s)  "Employee"  means  any  person,   including  an  Officer  or
Director,  who is an employee of the Company or a Related Entity. The payment of
a  director's  fee  by  the  Company  shall  not  be  sufficient  to  constitute
"employment" by the Company.

               (t) "Exchange Act" means the Securities  Exchange Act of 1934, as
amended.

               (u) "Fair  Market  Value"  means,  as of any  date,  the value of
Common Stock determined as follows:

                    (i) Where there exists a public market for the Common Stock,
the Fair Market  Value  shall be (A) the closing  price for a Share for the last
market  trading  day prior to the time of the  determination  (or, if no closing
price was  reported on that date,  on the last  trading  date on which a closing
price was reported) on the stock exchange  determined by the Administrator to be
the primary market for the Common Stock or the Nasdaq National Market, whichever
is  applicable  or (B) if the Common Stock is not traded on any such exchange or
national  market  system,  the average of the closing bid and asked  prices of a
Share  on the  Nasdaq  Small  Cap  Market  for the day  prior to the time of the
determination  (or, if no such prices  were  reported on that date,  on the last
date on which such prices were reported),  in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or

                    (ii) In the  absence  of an  established  market of the type
described in (i),  above,  for the Common  Stock,  the Fair Market Value thereof
shall be determined by the Administrator in good faith.

               (v)  "Grantee"  means an  Employee,  Director or  Consultant  who
receives an Award under the Plan.

               (w) "Incentive  Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.

                                 Page 44 of 199
<PAGE>

               (x)  "Non-Employee  Director"  means  a  Director  who  is not an
Officer.

               (y) "Non-Qualified  Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

               (z)  "Officer"  means a person who is an  officer of the  Company
within  the  meaning  of  Section  16 of the  Exchange  Act  and the  rules  and
regulations promulgated thereunder.

               (aa) "Option" means a stock option granted pursuant to the Plan.

               (bb)  "Parent"  means  a  "parent  corporation,"  whether  now or
hereafter existing, as defined in Section 424(e) of the Code.

               (cc)  "Performance  -  Based   Compensation"  means  compensation
qualifying as "performance-based compensation" under Section 162(m) of the Code.

               (dd) "Performance Shares" means Shares or an award denominated in
Shares which may be earned in whole or in part upon  attainment  of  performance
criteria established by the Administrator.

               (ee)  "Performance  Units"  means an award which may be earned in
whole or in part upon  attainment of  performance  criteria  established  by the
Administrator and which may be settled for cash, Shares or other securities or a
combination  of  cash,   Shares  or  other  securities  as  established  by  the
Administrator.

               (ff) "Plan" means this 1996 Stock  Incentive Plan, as amended and
restated.

               (gg)  "Related  Entity"  means  any  Parent,  Subsidiary  and any
business, corporation, partnership, limited liability company or other entity in
which  the  Company,  a Parent  or a  Subsidiary  holds an  ownership  interest,
directly or indirectly,  including but not limited to  Glenborough  Corporation,
Glenborough Hotel Group, Glenborough Inland Realty Corporation,  and Glenborough
Properties, L.P.

               (hh) "Restricted Stock" means Shares issued under the Plan to the
Grantee for such  consideration,  if any,  and subject to such  restrictions  on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.

               (ii) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor thereto.

               (jj) "SAR" means a stock appreciation right entitling the Grantee
to Shares or cash compensation, as established by the Administrator, measured by
appreciation in the value of Common Stock.

               (kk) "Share" means a share of the Common Stock.

                                 Page 45 of 199
<PAGE>

               (ll) "Subsidiary" means a "subsidiary  corporation,"  whether now
or hereafter existing, as defined in Section 424(f) of the Code.

               (mm)  "Subsidiary  Disposition"  means  the  disposition  by  the
Company of its equity  holdings  in any  subsidiary  corporation  effected  by a
merger or consolidation involving that subsidiary  corporation,  the sale of all
or  substantially  all of the  assets  of  that  subsidiary  corporation  or the
Company's sale or distribution of substantially  all of the outstanding  capital
stock of such subsidiary corporation.

     3. Stock Subject to the Plan.

               (a) Subject to the provisions of Section 10, below, commencing on
November 15, 1996,  the maximum  aggregate  number of Shares which may be issued
pursuant to Awards  shall be the  greater of (i) one  million one hundred  forty
thousand  (1,140,000)  Shares or (ii) eight percent (8%) of the number of Shares
outstanding  determined  as of the day  immediately  following  the most  recent
issuance of Shares or  securities  convertible  into Shares;  provided  that the
maximum  aggregate  number of Shares available for issuance under the Plan shall
not be reduced.  For purposes of calculating  the number of outstanding  Shares,
all classes of  securities  of the Company and its Related  Entities  (including
partnership  units  of  Glenborough  Properties,   L.P.)  that  are  convertible
presently  or in the  future by the  security  holder  into  Shares or which may
presently or in the future be exchanged for Shares pursuant to redemption rights
or otherwise,  shall be deemed to be  outstanding  Shares equal to the number of
Shares into which the securities are  convertible or redeemable  presently or in
the future.  Notwithstanding the foregoing, subject to the provisions of Section
10,  below,  the  maximum  aggregate  number  of Shares  available  for grant of
Incentive  Stock  Options  shall  be one  million  one  hundred  forty  thousand
(1,140,000)  Shares,  and such  number  shall not be  subject to  adjustment  as
described  above.  The Shares to be issued pursuant to Awards may be authorized,
but unissued, or reacquired Common Stock.

               (b) If an Award expires or becomes  unexercisable  without having
been exercised in full, or is surrendered pursuant to an Award exchange program,
or if any unissued  Shares are retained by the Company upon exercise of an Award
in order to satisfy the exercise price for such Award or any  withholding  taxes
due with respect to such Award,  such  unissued or retained  Shares shall become
available  for  future  grant  or sale  under  the  Plan  (unless  the  Plan has
terminated). Shares that actually have been issued under the Plan pursuant to an
Award  shall not be  returned  to the Plan and shall not  become  available  for
future  distribution  under  the  Plan,  except  that  if  unvested  Shares  are
forfeited,  or repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan.

     4. Administration of the Plan.

               (a) Plan Administrator.

                    (i)  Administration  with Respect to Directors and Officers.
With respect to grants of Awards to Directors or Employees who are also Officers
or Directors of the Company,  the Plan shall be administered by (A) the Board or
(B) a Committee designated by 

                                 Page 46 of 199
<PAGE>

the Board,  which  Committee shall be constituted in such a manner as to satisfy
the Applicable Laws and to permit such grants and related transactions under the
Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule
16b-3. Once appointed,  such Committee shall continue to serve in its designated
capacity  until  otherwise  directed  by the  Board.  Subject  to Rule 16b-3 and
Applicable  Laws,  the Board may  authorize  one or more  Officers to grant such
Awards and may limit such authority as the Board determines from time to time.

                    (ii)  Administration  With Respect to Consultants  and Other
Employees.  With respect to grants of Awards to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee  designated by the Board, which Committee shall
be  constituted  in such a  manner  as to  satisfy  the  Applicable  Laws.  Once
appointed,  such Committee  shall  continue to serve in its designated  capacity
until  otherwise  directed  by the Board.  The Board may  authorize  one or more
Officers  to grant  such  Awards  and may  limit  such  authority  as the  Board
determines from time to time.

                    (iii)  Administration  With  Respect to  Covered  Employees.
Notwithstanding the foregoing, grants of Awards to any Covered Employee intended
to qualify as  Performance-Based  Compensation shall be made only by a Committee
(or  subcommittee  of a  Committee)  which is  comprised  solely  of two or more
Directors  eligible  to  serve  on  a  committee  making  Awards  qualifying  as
Performance-Based  Compensation.  In the case of such Awards  granted to Covered
Employees, references to the "Administrator" or to a "Committee" shall be deemed
to be references to such Committee or subcommittee.

                    (iv) Administration Errors. In the event an Award is granted
in a manner  inconsistent with the provisions of this subsection (a), such Award
shall be presumptively valid as of its grant date to the extent permitted by the
Applicable Laws.

               (b) Powers of the  Administrator.  Subject to Applicable Laws and
the   provisions  of  the  Plan   (including  any  other  powers  given  to  the
Administrator  hereunder),  and except as otherwise  provided by the Board,  the
Administrator shall have the authority, in its discretion:

                    (i) to select the  Employees,  Directors and  Consultants to
whom Awards may be granted from time to time hereunder;

                    (ii) to  determine  whether  and to what  extent  Awards are
granted hereunder;

                    (iii) to  determine  the  number of Shares or the  amount of
other consideration to be covered by each Award granted hereunder;

                    (iv) to approve  forms of Award  Agreement for use under the
Plan;

                    (v) to  determine  the  terms  and  conditions  of any Award
granted hereunder;

                                 Page 47 of 199
<PAGE>

                    (vi) to amend the  terms of any  outstanding  Award  granted
under the Plan,  including a reduction in the exercise  price (or base amount on
which  appreciation is measured) of any Award to reflect a reduction in the Fair
Market  Value of the Common  Stock  since the grant date of the Award,  provided
that any amendment  that would  adversely  affect the Grantee's  rights under an
outstanding Award shall not be made without the Grantee's written consent;

                    (vii) to construe  and  interpret  the terms of the Plan and
Awards granted pursuant to the Plan;

                    (viii) to establish additional terms,  conditions,  rules or
procedures to accommodate the rules or laws of applicable foreign  jurisdictions
and to afford Grantees favorable treatment under such laws;  provided,  however,
that no Award  shall be granted  under any such  additional  terms,  conditions,
rules or procedures  with terms or conditions  which are  inconsistent  with the
provisions of the Plan; and

                    (ix) to take such other action,  not  inconsistent  with the
terms of the Plan, as the Administrator deems appropriate.

               (c)   Effect  of   Administrator's   Decision.   All   decisions,
determinations and  interpretations of the Administrator shall be conclusive and
binding on all persons.

     5. Eligibility. Awards other than Incentive Stock Options may be granted to
Employees,  Directors and  Consultants.  Incentive  Stock Options may be granted
only to  Employees  of the  Company,  a Parent  or a  Subsidiary.  An  Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees, Directors
or Consultants who are residing in foreign  jurisdictions  as the  Administrator
may determine from time to time.

     6. Terms and Conditions of Awards.

               (a) Type of Awards.  The  Administrator  is authorized  under the
Plan to award any type of  arrangement  to an Employee,  Director or  Consultant
that is not  inconsistent  with the provisions of the Plan and that by its terms
involves or might involve the issuance of (i) Shares,  (ii) an Option,  a SAR or
similar  right 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 or other  securities  issued by a Related  Entity.  Such awards
include,  without  limitation,  Options,  SARs,  sales or bonuses of  Restricted
Stock, Dividend Equivalent Rights,  Performance Units or Performance Shares, and
an Award may consist of one such security or benefit,  or two or more of them in
any combination or alternative.

               (b)  Designation of Award.  Each Award shall be designated in the
Award  Agreement.  In the case of an Option,  the Option shall be  designated as
either an  Incentive  Stock Option or a  Non-Qualified  Stock  Option.  However,
notwithstanding  such designation,  to the

                                 Page 48 of 199
<PAGE>

extent  that the  aggregate  Fair  Market  Value of Shares  subject  to  Options
designated as Incentive  Stock Options  which become  exercisable  for the first
time by a Grantee  during any  calendar  year (under all plans of the Company or
any Parent or Subsidiary)  exceeds $100,000,  such excess Options, to the extent
of the Shares covered  thereby in excess of the foregoing  limitation,  shall be
treated as  Non-Qualified  Stock  Options.  For this  purpose,  Incentive  Stock
Options shall be taken into account in the order in which they were granted, and
the Fair  Market  Value of the  Shares  shall be  determined  as of the date the
Option with respect to such Shares is granted.

               (c)  Conditions of Award.  Subject to the terms of the Plan,  the
Administrator  shall  determine the  provisions,  terms,  and conditions of each
Award  including,  but not limited to, the Award  vesting  schedule,  repurchase
provisions,  rights of first  refusal,  forfeiture  provisions,  form of payment
(cash,  Shares, or other  consideration)  upon settlement of the Award,  payment
contingencies,  and  satisfaction of any performance  criteria.  The performance
criteria  established  by the  Administrator  may be  based  on any one  of,  or
combination of, increase in share price,  earnings per share,  total stockholder
return, return on equity, return on assets, return on investment,  net operating
income,   cash  flow,  revenue,   economic  value  added,   personal  management
objectives,  or other  measure of  performance  selected  by the  Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.

               (d) Deferral of Award Payment.  The  Administrator  may establish
one or more programs under the Plan to permit selected  Grantees the opportunity
to  elect  to  defer  receipt  of  consideration  upon  exercise  of  an  Award,
satisfaction  of performance  criteria,  or other event that absent the election
would entitle the Grantee to payment or receipt of Shares or other consideration
under an Award. The  Administrator  may establish the election  procedures,  the
timing of such  elections,  the  mechanisms  for  payments  of,  and  accrual of
interest or other earnings, if any, on amounts, Shares or other consideration so
deferred,  and such  other  terms,  conditions,  rules and  procedures  that the
Administrator  deems  advisable  for the  administration  of any  such  deferral
program.

               (e) Award Exchange Programs.  The Administrator may establish one
or more programs under the Plan to permit selected Grantees to exchange an Award
under  the Plan for one or more  other  types of  Awards  under the Plan on such
terms and conditions as determined by the Administrator from time to time.

               (f) Separate  Programs.  The  Administrator  may establish one or
more  separate  programs  under the Plan for the  purpose of issuing  particular
forms of Awards to one or more classes of Grantees on such terms and  conditions
as determined by the Administrator from time to time.

               (g) Individual Option and SAR Limit. The maximum number of Shares
with  respect to which  Options  and SARs may be granted to any  Employee in any
calendar year shall be five hundred  thousand  (500,000)  Shares.  The foregoing
limitation  shall be adjusted  proportionately  in connection with any change in
the  Company's  capitalization  pursuant  to Section  10,  below.  To the extent
required  by  Section  162(m)  of the  Code or the  regulations

                                 Page 49 of 199
<PAGE>

thereunder, in applying the foregoing limitation with respect to an Employee, if
any Option or SAR is  canceled,  the  canceled  Option or SAR shall  continue to
count  against the maximum  number of Shares with  respect to which  Options and
SARs may be granted to the  Employee.  For this  purpose,  the  repricing  of an
Option (or in the case of a SAR, the base amount on which the stock appreciation
is  calculated is reduced to reflect a reduction in the Fair Market Value of the
Common Stock) shall be treated as the cancellation of the existing Option or SAR
and the grant of a new Option or SAR.

               (h) Early  Exercise.  The  Award  may,  but need  not,  include a
provision whereby the Grantee may elect at any time while an Employee,  Director
or  Consultant to exercise any part or all of the Award prior to full vesting of
the Award. Any unvested Shares received pursuant to such exercise may be subject
to a repurchase  right in favor of the Company or to any other  restriction  the
Administrator determines to be appropriate.

               (i)  Term of  Award.  The  term of each  Award  shall be the term
stated in the Award Agreement,  provided, however, that the term of an Incentive
Stock  Option  shall  be no more  than  ten  (10)  years  from the date of grant
thereof.  However, in the case of an Incentive Stock Option granted to a Grantee
who, at the time the Option is granted,  owns stock  representing  more than ten
percent  (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary,  the term of the Incentive  Stock Option shall be five (5)
years from the date of grant  thereof or such shorter term as may be provided in
the Award Agreement.

               (j) Transferability of Awards. Incentive Stock Options may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other  than  by  will  or by the  laws of  descent  or  distribution  and may be
exercised,  during the lifetime of the Grantee,  only by the Grantee;  provided,
however, that the Grantee may designate a beneficiary of the Grantee's Incentive
Stock Option in the event of the Grantee's  death on a  beneficiary  designation
form provided by the  Administrator.  Other Awards shall be  transferable to the
extent provided in the Award Agreement.

               (k) Time of Granting Awards.  The date of grant of an Award shall
for all purposes be the date on which the Administrator  makes the determination
to grant such Award,  or such other date as is determined by the  Administrator.
Notice of the grant determination  shall be given to each Employee,  Director or
Consultant  to whom an Award is so granted  within a  reasonable  time after the
date of such grant.

     7.  Award  Exercise  or  Purchase  Price,  Consideration,  Taxes and Reload
Options.

               (a) Exercise or Purchase  Price.  The exercise or purchase price,
if any, for an Award shall be as follows:

                    (i) In the case of an Incentive Stock Option:

                         (A)  granted  to an  Employee  who,  at the time of the
grant of such  Incentive  Stock  Option  owns stock  representing  more than ten
percent  (10%) of the voting

                                 Page 50 of 199
<PAGE>

power of all  classes of stock of the Company or any Parent or  Subsidiary,  the
per Share  exercise  price shall be not less than one hundred ten percent (110%)
of the Fair Market Value per Share on the date of grant.

                         (B)  granted to any  Employee  other  than an  Employee
described in the preceding paragraph,  the per Share exercise price shall be not
less than one hundred  percent  (100%) of the Fair Market Value per Share on the
date of grant.

                    (ii)  In  the  case  of  Awards   intended   to  qualify  as
Performance-Based Compensation, the exercise or purchase price, if any, shall be
not less than one hundred  percent  (100%) of the Fair Market Value per Share on
the date of grant.

                    (iii)  In  the  case  of  other  Awards,  such  price  as is
determined by the Administrator.

               (b) Consideration.  Subject to Applicable Laws, the consideration
to be paid for the Shares to be issued  upon  exercise  or  purchase of an Award
including the method of payment,  shall be determined by the Administrator (and,
in the case of an Incentive  Stock  Option,  shall be  determined at the time of
grant).  In addition to any other types of consideration  the  Administrator may
determine, the Administrator is authorized to accept as consideration for Shares
issued under the Plan the following:

                    (i) cash;

                    (ii) check;

                    (iii)  delivery  of  Grantee's  promissory  note  with  such
recourse,  interest,  security,  and redemption  provisions as the Administrator
determines as appropriate;

                    (iv) surrender of Shares or delivery of a properly  executed
form of  attestation  of  ownership of Shares as the  Administrator  may require
(including  withholding  of Shares  otherwise  deliverable  upon exercise of the
Award) which have a Fair Market  Value on the date of  surrender or  attestation
equal to the aggregate exercise price of the Shares as to which said Award shall
be exercised  (but only to the extent that such  exercise of the Award would not
result in an accounting  compensation  charge with respect to the Shares used to
pay the exercise price unless otherwise  determined by the  Administrator);  (v)
delivery  of a  properly  executed  exercise  notice  together  with such  other
documentation as the Administrator and the broker, if applicable,  shall require
to effect an  exercise  of the Award and  delivery to the Company of the sale or
loan proceeds required to pay the exercise price; or

                    (vi) any combination of the foregoing methods of payment.

               (c) Taxes.  No Shares  shall be  delivered  under the Plan to any
Grantee or other person until such Grantee or other person has made arrangements
acceptable to the

                                 Page 51 of 199
<PAGE>

Administrator  for the  satisfaction  of any foreign,  federal,  state, or local
income  and  employment  tax   withholding   obligations,   including,   without
limitation,  obligations  incident to the receipt of Shares or the disqualifying
disposition of Shares  received on exercise of an Incentive  Stock Option.  Upon
exercise of an Award,  the Company  shall  withhold or collect  from  Grantee an
amount sufficient to satisfy such tax obligations.

               (d)  Reload  Options.  In the  event  the  exercise  price or tax
withholding  of an Option is satisfied by the Company or the Grantee's  employer
withholding Shares otherwise  deliverable to the Grantee,  the Administrator may
issue the  Grantee  an  additional  Option,  with terms  identical  to the Award
Agreement  under which the Option was  exercised,  but at an  exercise  price as
determined by the Administrator in accordance with the Plan.

     8. Exercise of Award.

               (a) Procedure for Exercise; Rights as a Stockholder.

                    (i) Any Award granted hereunder shall be exercisable at such
times and under such  conditions as determined  by the  Administrator  under the
terms of the Plan and specified in the Award Agreement.

                    (ii) An Award shall be deemed to be  exercised  when written
notice of such  exercise  has been given to the Company in  accordance  with the
terms of the Award by the person entitled to exercise the Award and full payment
for the Shares with respect to which the Award is exercised has been received by
the Company.  Until the issuance (as evidenced by the  appropriate  entry on the
books of the Company or of a duly  authorized  transfer agent of the Company) of
the  stock  certificate  evidencing  such  Shares,  no right to vote or  receive
dividends  or any other  rights as a  stockholder  shall  exist with  respect to
Shares subject to an Award,  notwithstanding  the exercise of an Option or other
Award.  The Company  shall issue (or cause to be issued) such stock  certificate
promptly upon exercise of the Award.  No adjustment  will be made for a dividend
or other  right  for  which  the  record  date is  prior  to the date the  stock
certificate is issued,  except as provided in the Award Agreement or Section 10,
below.

               (b)  Exercise  of  Award  Following  Termination  of  Employment,
Director or Consulting Relationship.

                    (i) An Award may not be exercised after the termination date
of such Award set forth in the Award  Agreement  and may be exercised  following
the  termination of a Grantee's  Continuous  Status as an Employee,  Director or
Consultant only to the extent provided in the Award Agreement.

                    (ii) Where the Award Agreement permits a Grantee to exercise
an Award  following the  termination  of the Grantee's  Continuous  Status as an
Employee,  Director  or  Consultant  for a  specified  period,  the Award  shall
terminate to the extent not exercised on the last day of the specified period or
the last day of the original term of the Award, whichever occurs first.

                                 Page 52 of 199
<PAGE>

                    (iii) Any Award  designated as an Incentive  Stock Option to
the extent not  exercised  within the time  permitted by law for the exercise of
Incentive  Stock Options  following the  termination  of a Grantee's  Continuous
Status as an Employee,  Director or Consultant shall convert  automatically to a
Non-Qualified  Stock Option and  thereafter  shall be exercisable as such to the
extent exercisable by its terms for the period specified in the Award Agreement.

               (c) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Award previously  granted,  based on
such terms and conditions as the  Administrator  shall establish and communicate
to the Grantee at the time that such offer is made.

     9. Conditions Upon Issuance of Shares.

               (a) Shares  shall not be issued  pursuant  to the  exercise of an
Award  unless the  exercise of such Award and the  issuance and delivery of such
Shares  pursuant  thereto shall comply with all  Applicable  Laws,  and shall be
further  subject to the approval of counsel for the Company with respect to such
compliance.

               (b) As a condition to the  exercise of an Award,  the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being  purchased  only for  investment and
without  any  present  intention  to sell or  distribute  such Shares if, in the
opinion of counsel for the  Company,  such a  representation  is required by any
Applicable Laws.

     10.  Adjustments  Upon Changes in  Capitalization.  Subject to any required
action by the stockholders of the Company,  the number of Shares covered by each
outstanding  Award,  and the  number of Shares  which have been  authorized  for
issuance under the Plan but as to which no Awards have yet been granted or which
have been  returned to the Plan,  as well as the price per share of Common Stock
covered by each such outstanding Award,  shall be  proportionately  adjusted for
any  increase  or  decrease  in the  number  of issued  shares  of Common  Stock
resulting from a stock split,  reverse stock split, stock dividend,  combination
or reclassification of the Common Stock, or any other similar event resulting in
an increase or decrease in the number of issued shares of Common  Stock.  Except
as expressly  provided herein,  no issuance by the Company of shares of stock of
any class, or securities  convertible  into shares of stock of any class,  shall
affect,  and no  adjustment  by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award.

     11. Corporate Transactions/Changes in Control/Subsidiary Dispositions.

               (a) The  Administrator  shall  have  the  authority,  exercisable
either in advance of any actual or anticipated Corporate Transaction,  Change in
Control  or  Subsidiary  Disposition  or at  the  time  of an  actual  Corporate
Transaction,  Change in Control or Subsidiary Disposition and exercisable at the
time of the grant of an Award under the Plan or any time while an Award  remains
outstanding, to provide for the full automatic vesting and exercisability of one
or more  outstanding  unvested  Awards  under  the  Plan  and the  release  from
restrictions  on transfer and

                                 Page 53 of 199
<PAGE>

repurchase  or forfeiture  rights of such Awards in connection  with a Corporate
Transaction,  Change in Control  or  Subsidiary  Disposition,  on such terms and
conditions as the Administrator may specify.  The Administrator  also shall have
the authority to condition any such Award vesting and  exercisability or release
from such limitations upon the subsequent  termination of the Continuous  Status
as an Employee or Consultant of the Grantee within a specified  period following
the  effective  date of the  Change in Control or  Subsidiary  Disposition.  The
Administrator  may  provide  that any  Awards so vested  or  released  from such
limitations  in connection  with a Change in Control or Subsidiary  Disposition,
shall remain fully exercisable until the expiration or sooner termination of the
Award.  Effective  upon  the  consummation  of  a  Corporate  Transaction,   all
outstanding  Awards  under  the  Plan  shall  terminate  unless  assumed  by the
successor company or its Parent.

               (b) In the event of a Corporate  Transaction,  each Award granted
to Non-Employee  Directors pursuant to the formula grant provisions of Section 6
of the Plan prior to this March 20, 1997  amendment and  restatement of the Plan
which is at the time outstanding under the Plan automatically shall become fully
vested and  exercisable  and be released from any  restrictions  on transfer and
repurchase or forfeiture  rights,  immediately prior to the specified  effective
date  of  such  Corporate  Transaction,  for  all of  the  Shares  at  the  time
represented  by such Award.  Effective  upon the  consummation  of the Corporate
Transaction,  all  outstanding  Awards  under the Plan  shall  terminate  unless
assumed by the successor company or its Parent.

               (c) In the event of a Change in Control  (other  than a Change in
Control  which  also  is  a  Corporate  Transaction),   each  Award  granted  to
Non-Employee  Directors pursuant to the formula grant provisions of Section 6 of
the Plan prior to this March 20,  1997  amendment  and  restatement  of the Plan
which is at the time outstanding under the Plan automatically shall become fully
vested and  exercisable  and be released from any  restrictions  on transfer and
repurchase or forfeiture  rights,  immediately prior to the specified  effective
date of such Change in Control, for all of the Shares at the time represented by
such Award.  Each such Award shall remain so exercisable until the expiration or
sooner termination of the applicable Award term.

               (d) The portion of any Incentive Stock Option  accelerated  under
this Section 11 in connection with a Corporate Transaction, Change in Control or
Subsidiary  Disposition  shall remain  exercisable as an Incentive  Stock Option
under the Code only to the  extent the  $100,000  dollar  limitation  of Section
422(d) of the Code is not  exceeded.  To the extent  such dollar  limitation  is
exceeded,  the accelerated excess portion of such Option shall be exercisable as
a Non-Qualified Stock Option.

     12. Term of Plan.  The Plan shall  terminate  with  respect to the grant of
Incentive Stock Options on April 1, 2006 unless sooner terminated.

     13. Amendment, Suspension or Termination of the Plan.

               (a) The Board may at any time  amend,  suspend or  terminate  the
Plan. To the extent  necessary to comply with Applicable Laws, the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.

                                 Page 54 of 199
<PAGE>

               (b) No Award may be granted  during any suspension of the Plan or
after termination of the Plan.

               (c) Any  amendment,  suspension or  termination of the Plan shall
not affect Awards  already  granted,  and such Awards shall remain in full force
and effect as if the Plan had not been amended, suspended or terminated,  unless
mutually  agreed  otherwise  between the Grantee  and the  Administrator,  which
agreement must be in writing and signed by the Grantee and the Company.

     14. Reservation of Shares.

               (a) The Company,  during the term of the Plan,  will at all times
reserve  and keep  available  such  number of Shares as shall be  sufficient  to
satisfy the requirements of the Plan.

               (b) The  inability  of the Company to obtain  authority  from any
regulatory body having jurisdiction,  which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell  such  Shares  as to which  such  requisite  authority  shall not have been
obtained.

     15. No Effect on Terms of  Employment.  The Plan shall not confer  upon any
Grantee any right with  respect to  continuation  of  employment  or  consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's  right to terminate  his or her  employment or consulting
relationship at any time, with or without cause.

     16.  Stockholder  Approval.  The Plan became  effective when adopted by the
Board on April 1, 1996,  and was approved by the Company's  stockholders  on May
30, 1996.  On March 20, 1997,  the Board  adopted and approved an amendment  and
restatement of the Plan to reflect the amendments  promulgated by the Securities
and Exchange  Commission  to Rule 16b-3  applicable  to the Plan,  to adjust the
formula  for  determining  the  maximum  aggregate  number of Shares that may be
issued pursuant to Awards by determining the number of Shares outstanding on the
day  immediately  following  the most recent  issuance  of Shares or  securities
convertible into Shares, to increase the aggregate maximum number of Shares that
may be available for the grant of Incentive  Stock Options,  to permit the grant
of Dividend Equivalent Rights,  SARs,  Performance Units and Performance Shares,
to  address  the rules or laws of  foreign  jurisdictions  applicable  to Awards
granted to  residents  therein,  to permit  Awards to include an early  exercise
provision,  to  increase  the  maximum  number of Shares  with  respect to which
Options  and SARs may be  granted to any  Employee  in any  calendar  year (such
increase  to  be  effective  as  of  August  2,  1996),  and  to  authorize  the
establishment  under the Plan of separate  programs for the grant of  particular
forms of Awards to one or more  classes  of  Grantees,  and  programs  to permit
selected  Grantees to elect to defer the receipt of consideration  payable under
an Award  (collectively,  the "Amendments"),  subject to stockholder approval of
the  Amendments.  Awards may be granted in reliance on the per employee  maximum
share increase and the formula increase, but no Award issued in reliance on such
increases shall become  exercisable  unless and until the Amendments  shall have
been approved by the Company's stockholders. If such stockholder approval is not

                                 Page 55 of 199
<PAGE>

obtained, then the Awards previously granted in reliance on the Amendments shall
terminate.  None of the other  Amendments shall be given effect until they shall
have been approved by the Company's stockholders.


                                 Page 56 of 199
<PAGE>

                           PURCHASE AND SALE AGREEMENT

                          AND JOINT ESCROW INSTRUCTIONS


                                       By
                                   And Between


                      T. ROWE PRICE REALTY INCOME FUND II,
        AMERICA'S SALES-COMMISSION-FREE REAL ESTATE LIMITED PARTNERSHIP,
                         a Delaware Limited Partnership

                                    As Seller


                                       And


                     GLENBOROUGH REALTY TRUST INCORPORATED,
                             a Maryland corporation

                                       And

                          GLENBOROUGH PROPERTIES, L.P.,
                        a California limited partnership

                                    As Buyer.


                                   Regarding:


                    1. Atlantic Industrial, Gwinnett Co., Georgia
                    2. Baseline Business Park, Tempe, Arizona
                    3. Bonnie Lane, Elk Grove Village, Illinois
                    4. Business Plaza, Fort Lauderdale, Florida
                    5. Coronado, Anaheim, California
                    6. Glenn Avenue, Wheeling, Illinois
                    7. Oakbrook Corner, Norcross, Georgia


                                   Dated As Of


                                 April 16, 1997


                                 Page 57 of 199
<PAGE>

                           PURCHASE AND SALE AGREEMENT
                          AND JOINT ESCROW INSTRUCTIONS


     THIS  PURCHASE  AND SALE  AGREEMENT  AND  JOINT  ESCROW  INSTRUCTIONS  (the
"Agreement") is entered into as of this ____ day of April,  1997, by and between
T. ROWE PRICE REALTY INCOME FUND II, AMERICA'S SALES-COMMISSION-FREE REAL ESTATE
LIMITED PARTNERSHIP,  a Delaware limited partnership ("Seller"), and GLENBOROUGH
REALTY TRUST INCORPORATED,  a Maryland  corporation and GLENBOROUGH  PROPERTIES,
L.P., a California limited partnership (collectively, "Buyer").

                                 R E C I T A L S

     A.  Seller  owns  those  certain  parcels  of land  described  in Exhibit A
attached  hereto  and  made a part  hereof,  each of which  is  improved  with a
building or buildings and certain other  improvements as more  particularly  set
forth in this Agreement.

     B. Seller  desires to sell,  and Buyer desires to buy, the above  described
assets upon the terms and subject to the conditions set forth in this Agreement.

                                 A G R E M E N T

     NOW,  THEREFORE,  in  consideration  of the mutual  promises and agreements
contained in this Agreement and for other good and valuable  consideration,  the
receipt and  adequacy  of which are hereby  acknowledged,  the parties  agree as
follows:


                                   SECTION 1.

                                   DEFINITIONS

     1.1 Defined Terms

         "Approved Service  Contracts" means the Service  Contracts  approved by
Buyer pursuant to Section 5.4.

         "Assignment and Assumption of Tenant Leases" shall have the meaning set
forth in Section 4.2.1.2.

         "Atlantic Property" means the portion of the Real Property described in
Exhibit A as Atlantic Gwinnett Co., Georgia, together with the Personal Property
located thereon and all Tenant Leases with respect thereto.

         "Baseline Property" means the portion of the Real Property described in
Exhibit A as Baseline,  Tempe,  Arizona,  together  with the  Personal  Property
located thereon and all Tenant Leases with respect thereto.

                                 Page 58 of 199
<PAGE>

         "Bill of Sale" shall have the meaning set forth in Section 4.2.1.4.

         "Bonnie Lane Property" means the portion of the Real Property described
in Exhibit A as Bonnie Lane,  Elk Grove  Village,  Illinois,  together  with the
Personal Property located thereon and all Tenant Leases with respect thereto.

         "Broker" shall have the meaning set forth in Section 10.

         "Building"  means a building  and related  improvements  located on the
Land and all fixtures  attached  thereto  (including but not limited to all HVAC
equipment, elevators, and electrical, plumbing and mechanical systems).

         "Business  Plaza  Property"  means  the  portion  of the Real  Property
described in Exhibit A as Business Plaza,  Fort  Lauderdale,  Florida,  together
with the Personal  Property  located  thereon and all Tenant Leases with respect
thereto.

         "Buyer's Counsel" Frank Austin and/or G.Lee Burns, Jr.

         "Buyer's Default" shall have the meaning set forth in Section 3.4.

         "Closing Agent" shall have the meaning set forth in Section 4.8.5.

         "Closing"  or "Close of  Escrow"  shall have the  meaning  set forth in
Section 4.7.2.

         "Closing Date" means the day on which the Closing occurs hereunder.

         "Coronado Property" means the portion of the Real Property described in
Exhibit A as Coronado, Anaheim, California,  together with the Personal Property
located thereon and all Tenant leases with respect thereto.

         "Decision Date" shall have the meaning set forth in Section 7.1.3.

         "Deposit" means Two Hundred Eighty-Four Thousand Nine Hundred Eight and
20/100 Dollars ($284,908.20).

         "Determination  Date" means the date upon which both:  (i) the Investor
Consent  shall have been  obtained and (ii) each of the  Financial Due Diligence
Period,  the  Environmental  Due  Diligence  Period and the Title Due  Diligence
Period shall have expired.

                                 Page 59 of 199
<PAGE>

         "Disapproved  Exceptions"  shall have the  meaning set forth in Section
7.1.1.

         "Environmental  Due Diligence  Period" means the thirty (30) day period
following the date upon which Buyer has received an ASTM Phase One environmental
report with respect to the Real Property.

         "Environmental  Reports"  shall have the  meaning  set forth in Section
7.5.1.

         "Escrow"  means an escrow  opened with the Escrow  Holder in accordance
with the provisions of this Agreement for the sale of the Properties.

         "Escrow  Holder" means the Title Company  unless Buyer and Seller shall
otherwise mutually agree.

         "Escrow Instructions" shall have the meaning set forth in Section 4.1.

         "Execution  Date"  means the date on which both Buyer and Seller  shall
have  executed this  Agreement and delivered a counterpart  thereof to the other
party.

         "Fairness Opinion" means an opinion of a recognized  investment banker,
appraiser or other qualified  organization selected by Seller as to the fairness
of the Purchase Price of the Properties as provided for under this Agreement.

         "Financial  Due Diligence  Period"  means the period  commencing on the
Execution Date and ending on the date which is twenty (20) days thereafter.

         "General  Assignment and Assumption  Agreement"  shall have the meaning
set forth in Section 4.2.1.3.

         "Glenn  Avenue  Property"  means  the  portion  of  the  Real  Property
described in Exhibit A as Glenn Avenue,  Wheeling,  Illinois,  together with the
Personal Property located thereon and all Tenant Leases with respect thereto.

         "GPLP"  means  Glenborough  Properties,   L.P.,  a  California  limited
partnership.

         "Grant Deeds" shall have the meaning set forth in Section 4.2.1.1.

         "GRT"  means  Glenborough   Realty  Trust   Incorporated,   a  Maryland
corporation.

         "Insured  Casualty  Notice" shall have the meaning set forth in Section
12.1.

                                 Page 60 of 199
<PAGE>

         "Intangible  Property"  means all of  Seller's  interest  in and to all
transferable (i) Licenses and Permits; (ii) development rights, land use rights,
trademark  rights,  if any  (but  excluding  the  name "T.  Rowe  Price"  or any
derivative thereof) and other intangible property,  rights,  titles,  interests,
privileges  and  appurtenances  and  related to or used in  connection  with the
Properties or any of them or their operation; (iii) warranties and guaranties of
architects,  engineers,  contractors,  subcontractors,  suppliers or materialmen
involved in the repair, construction, design, reconstruction or operation of the
Properties or any of them; and (iv) Service Contracts.

         "Investor  Consent" means the consent of the limited partners of Seller
to the transactions contemplated hereby.

         "Land" means the land  described on Exhibit A annexed hereto and made a
part hereof.

         "Licenses and Permits" means all licenses,  permits and entitlements of
Seller obtained in connection with the design,  construction,  rehabilitation or
operation of the Real Property and/or any portion thereof.

         "Major  Tenant" means a Tenant leasing 10,000 square feet or more under
a Tenant Lease.

         "Material  Inaccuracies"  means  aggregate loss to Buyer resulting from
inaccuracies in Seller's  representation and warranties set forth in Section 6.2
in excess of Two Hundred  Eigthy-Four  Thousand  Nine  Hundred  Eight and 20/100
Dollars ($284,908.20).

         "Non-Foreign  Person  Certificate"  shall have the meaning set forth in
Section 4.2.1.5.

         "Notice Period" shall have the meaning set forth in Section 7.3..

         "Oakbrook  Corner  Property"  means the  portion  of the Real  Property
described in Exhibit A as Oakbrook Corner, Norcross,  Georgia, together with the
Personal Property located thereon and all Tenant Leases with respect thereto.

         "Past-Due Amounts" shall have the meaning set forth in Section 5.2.3.

         "Person"   means  any   natural   person,   partnership,   corporation,
association, limited liability company or any other legal entity.

         "Personal  Property" means  collectively the Tangible Personal Property
and Intangible Property.

                                 Page 61 of 199
<PAGE>

         "Preliminary  Title Report" shall have the meaning set forth in Section
7.1.

         "Properties"  means  collectively the Atlantic  Property,  the Baseline
Property,  the Bonnie Lane Property,  the Business Plaza Property,  the Coronado
Property, the Glenn Avenue Property and the Oakbrook Corner Property.

         "Property"  means  individually  the  Atlantic  Property,  the Baseline
Property,  the Bonnie Lane Property,  the Business Plaza Property,  the Coronado
Property, the Glenn Avenue Property or the Oakbrook Corner Property.

         "Proration Time" means midnight  (Eastern Daylight Savings Time) on the
day immediately preceding the Closing Date.

         "Purchase Offer" shall have the meaning set forth in Section 9.4.

         "Purchase  Offer  Notice"  shall have the  meaning set forth in Section
9.4.1.

         "Purchase  Price"  means  Twenty-Eight   Million  Four  Hundred  Ninety
Thousand Eight Hundred Twenty Dollars ($28,490,820.00).

         "Real Property" means the Land, the Buildings and all rights, rights of
way, easements,  water or littoral rights, all rights to any minerals,  oil, gas
and other hydrocarbon substances,  development rights and air rights appurtenant
to or used in connection  with the Land or any portion thereof and the Buildings
located thereon,  and Seller's right,  title and interest in and to all streets,
alleys, strips and gores abutting the Land.

         "Records  and Plans" means all  financial  records  showing  income and
expenses of the Buildings for the prior three calendar years and for the current
year to date,  Tenant  files,  certificates  of  occupancy,  records of Building
operations (including utility bills for the prior 12 months), the standard lease
agreement  used  for the  Buildings,  all  building  plans,  specifications  and
drawings,  lists of Personal Property,  surveys, tax bills for each Property for
the last  three  years,  copies of the  Service  Contracts  (and  correspondence
related  thereto) and other  documents  prepared or used in connection  with the
construction,  maintenance,  repair, management or operation of the Buildings in
each case, to the extent in possession of Seller and/or LaSalle Advisors.

         "Released Parties" shall have the meaning set forth in Section 6.3.3.

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         "Replacement Buyer" shall have the meaning set forth in Section 9.4.

         "Replacement  Contract"  shall  have the  meaning  set forth in Section
9.4.1.

         "Schedule of Leases"  means the schedule of Tenant  Leases set forth in
Exhibit C annexed hereto and made a part hereof.

         "Scheduled Closing Date" means the first day which is a Tuesday and not
a bank holiday and which is at least five (5) days after the last of each of the
following:  (i) the  expiration  of the  Title  Review  Period  (subject  to any
extension provided for in Section 7 to cure title defects);  (ii) the expiration
of the  Environmental  Due  Diligence  Period;  (iii) the date upon which Seller
receives  the  Investor  Consent;  and (iv) the delivery to Seller of a Fairness
Opinion (if  requested by Seller in  accordance  with the  provisions of Section
8.4).

         "Schedule of Claims" shall have the meaning set forth in Section 6.2.4.

         "Seller Default" shall have the meaning set forth in Section 11.1.

         "Seller  Estoppel  Certificate"  shall  have the  meaning  set forth in
Section 9.1.1.

         "Seller's Counsel" means the law firm of Greenberg,  Traurig,  Hoffman,
Lipoff,  Rosen & Quentel,  acting  through  Robert J. Ivanhoe  and/or  Andrew E.
Zobler.

         "Service  Contracts" means any and all service  contracts,  landscaping
contracts,  equipment leases,  maintenance agreements,  open purchase orders and
other  contracts for the provision of services,  materials or supplies to or for
the  benefit  of the  Properties  and/or  any of them,  which  are  shown on the
Schedule of Service  Contracts set forth as Exhibit B annexed  hereto and made a
part hereof or which are entered into after the date of this  Agreement  and are
either  approved  by Buyer in  writing  or are  terminable  by the  owner of the
applicable Property without cause and without payment or penalty on no more than
30 days notice.

         "Survey" shall have the meaning set forth in Section 7.1.

         "Tangible Personal Property" means (i) all Records and Plans (including
a schedule of all  equipment of Seller,  if any,  identified by model and serial
number);  and  (ii) all  depreciable  personal  property  and all  other  tools,
supplies,  artwork,

                                 Page 63 of 199
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furniture,  furnishings,  machinery,  equipment,  licensed software and personal
computer based security systems,  if any, and other tangible personal  property,
in each  case,  owned or  leased by Seller  in  connection  with the  ownership,
operation or maintenance of the Properties and/or any of them.

         "Tenant"  means a tenant  leasing  space in a  Building  pursuant  to a
Tenant Lease.

         "Tenant  Estoppel  Certificate"  shall  have the  meaning  set forth in
Section 9.1.1.

         "Tenant Lease" means a lease set forth on the Schedule of Leases.

         "Tenant  Notification  Letter"  shall  have the  meaning  set  forth in
Section 4.2.1.6.

         "Tenant  Security  Deposits"  means  all  security  deposits  or  other
security of Tenants under the Tenant Leases.

         "Termination Option" shall have the meaning set forth in Section 9.4.

         "Title Company" means First American Title Insurance Company.

         "Title Policies" shall have the meaning set forth in Section 7.2.

         "Title Due Diligence Period" means the Title review period unless Buyer
notifies Seller of any Disapproved Exceptions before the expiration of the Title
Review  Period,  in which case the Title Due Diligence  Period shall be extended
until the Decision Date.

         "Title Review  Period"  means the twenty (20) day period  following the
date upon which Buyer has  received  Preliminary  Title  Reports  from the Title
Company with respect to the Real Property, together with a copy of the documents
evidencing  or creating  the  material  exceptions  to title  specified  on such
Preliminary  Title  Reports  and an  updated  Survey  with  respect to such Real
Property,  in each case, in accordance with the applicable provisions of Article
7.

         "To Seller's knowledge," means the actual knowledge of Mark B. Ruhe and
Joseph P. Croteau,  without any duty to  investigate  or inquire,  and shall not
mean  information or material which may be in the possession of Seller generally
or  incidentally.  No personal  liability  to Buyer  based upon this  Agreement,
including but not limited to the  warranties  and  representations  contained in
this  Agreement,  shall be created by this  definition or any other provision of
this Agreement.

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         "Topping Fee" shall have the meaning set forth in Section 9.4.1.

         "Uninsured Casualty Notice" shall have the meaning set forth in Section
12.2.1.

         "Uninsured  Estimate  to Repair"  shall have the  meaning  set forth in
Section 12.2.1.

         "Work-in-Progress" shall have the meaning set forth in Section 8.2.2.


                                   SECTION 2.

                         PURCHASE AND SALE OF PROPERTIES

         On the terms and subject to the  conditions of this  Agreement,  Seller
agrees to sell the  Properties  to  Buyer,  and Buyer  agrees  to  purchase  the
Properties from Seller and to assume all of Seller's  obligations arising out of
or relating to the Properties, all as hereinafter provided.


                                   SECTION 3.

          PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES

     3.1 Purchase  Price.  The purchase  price for the  Properties  shall be the
Purchase Price. Neither Buyer nor Seller shall be bound by any allocation of the
Purchase  Price among the  Properties  by the other for any purpose  unless such
party expressly agrees to be bound thereby.

     3.2 Payment. The Purchase Price shall be paid as follows:
 
         3.2.1 Upon the execution hereof,  Buyer shall deliver to Escrow Holder,
in cash or other  immediately  available funds, the Deposit to be held by Escrow
Holder  strictly in accordance  with the  provisions of this  Agreement.  If the
Close of Escrow  shall  occur,  Seller  shall be entitled to receive the Deposit
together  with any  interest  accrued  thereon as a credit  against the Purchase
Price.

         3.2.2 At least one (1) day prior to the Scheduled  Closing Date,  Buyer
shall deliver to Escrow Holder in cash or other immediately  available funds, an
amount equal to (a) the  Purchase Price plus (b) such additional  amounts as are
required  to be  paid by  Buyer  through  the  Escrow  in  accordance  with  the
provisions  hereof  less an amount  equal to (i) the  Deposit and (ii) any other
credits to which Buyer is entitled in  accordance  with the  provisions  hereof,
including proration credits.

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<PAGE>

     3.3 Investment of Escrowed  Funds.  Escrow Holder shall invest and reinvest
any funds deposited by Buyer in the Escrow only in bonds, notes,  Treasury bills
or other securities  constituting direct obligations of, or fully guaranteed by,
the  United  States  of  America  (and  provided,   further,  that  such  direct
obligations  or  guarantees,  as the case may be, are entitled to the full faith
and credit of the United States of America) or such other  investments  as Buyer
may direct and Seller may approve, until Escrow Holder is required to deliver or
use such funds or any interest  earned thereon in accordance with the provisions
of this Agreement.

     3.4 Default by Buyer; Liquidated Damages.ed Damages

         3.4.1 IF BUYER BREACHES AN OBLIGATION UNDER THIS AGREEMENT AND FAILS TO
CURE SUCH BREACH ON OR BEFORE THE EARLIER OF THE SCHEDULED CLOSING DATE OR THREE
(3) DAYS AFTER  RECEIPT OF NOTICE  FROM  SELLER OR ESCROW  HOLDER OF SUCH BREACH
(EXCEPT THAT (i) NO NOTICE SHALL BE NECESSARY OR CURE PERIOD  AVAILABLE TO BUYER
FOR A FAILURE OF BUYER TO DEPOSIT THE PURCHASE PRICE WHEN REQUIRED UNDER SECTION
3.2 AND (ii) SUCH THREE (3) DAY  PERIOD  SHALL BE  EXTENDED  (BUT NOT BEYOND THE
SCHEDULED CLOSING DATE) IF BUYER IS DILIGENTLY  ATTEMPTING TO CURE SUCH DEFAULT)
(A "BUYER  DEFAULT"),  THEN UPON  UNILATERAL  WRITTEN  NOTICE OF  TERMINATION (A
"TERMINATION   NOTICE")   FROM   SELLER  TO  BUYER  AND   ESCROW   HOLDER,   AND
NOTWITHSTANDING ANY CONTRARY DEMAND OR INSTRUCTIONS OF BUYER OR ANY THIRD PARTY,
THE  ESCROW  AND  THIS  AGREEMENT  SHALL  TERMINATE,  AND  ESCROW  HOLDER  SHALL
IMMEDIATELY  DISBURSE  FROM THE ESCROW THE DEPOSIT  TOGETHER  WITH ALL  INTEREST
ACCRUED  THEREON TO SELLER AS LIQUIDATED  DAMAGES,  WHICH SHALL BE SELLER'S SOLE
REMEDY AT LAW OR IN EQUITY FOR THE BUYER DEFAULT.

         3.4.2 THE PARTIES  ACKNOWLEDGE  AND AGREE BY  INITIALING  THIS  SECTION
3.4.2 THAT IF A BUYER DEFAULT  OCCURS AND IF, AS A RESULT OF SUCH BUYER DEFAULT,
CLOSE OF ESCROW FAILS TO OCCUR ON OR BEFORE THE SCHEDULED  CLOSING DATE,  SELLER
WILL INCUR  CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE EXTREMELY
DIFFICULT  OR  IMPRACTICAL  TO  ASCERTAIN;  AND THE DEPOSIT  BEARS A  REASONABLE
RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY SELLER
BY REASON OF SUCH  FAILURE OF THE CLOSE OF ESCROW SO TO OCCUR AND THAT  SELLER'S
RETENTION  OF THE DEPOSIT  (WITH ALL  INTEREST  THEREON) IS FAIR AND  REASONABLE
COMPENSATION  TO  SELLER BY  REASON  OF SUCH  FAILURE  OF THE CLOSE OF ESCROW TO
OCCUR.

INITIALS:           _________________________        _________________________
                       Seller                            Buyer


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<PAGE>

                                   SECTION 4.

                             ESCROW; CLOSING; COSTS

     4.1 Escrow.  The purchase and sale of the  Properties  shall be consummated
through  the Escrow.  Immediately  upon the  execution  of this  Agreement,  the
parties  shall  deposit  a copy of  this  Agreement  with  Escrow  Holder.  This
Agreement,  together with any general  provisions  agreed to in writing by Buyer
and  Seller  for the  benefit  of Escrow  Holder  shall  constitute  the  escrow
instructions for the transfer of the Properties (the "Escrow Instructions").  In
the event of any conflict  between this  Agreement and such general  provisions,
this Agreement  shall control unless  otherwise  expressly  agreed in writing by
Buyer,  Seller and Escrow Holder. If any requirements  relating to the duties or
obligations of Escrow Holder are not  acceptable to Escrow Holder,  or if Escrow
Holder requires additional instructions,  the parties shall make such deletions,
substitutions  and additions to the Escrow  Instructions  as Buyer's Counsel and
Seller's  Counsel shall mutually  approve and which do not  substantially  alter
this Agreement or its intent. Written instructions from Seller's Counsel, in the
case of Seller, or from Buyer's Counsel, in the case of Buyer, shall be accepted
by Escrow  Holder and shall be binding  upon the party whose  counsel  gave such
instructions to Escrow Holder.

     4.2 Seller's Deliveries to Escrow Holder.row Holder

         4.2.1 Seller  shall  deliver to Escrow  Holder  prior to the  Scheduled
Closing Date the  following  documents  duly  executed  and,  where  applicable,
acknowledged by Seller,  each of which shall be undated and the delivery of each
of which shall be a condition precedent to the Close of Escrow:

              4.2.1.1 Grant Deeds. A special  warranty deed or limited  warranty
deed with respect to each portion of the Real Property in the form  necessary to
conform with the laws and  practice of the states in which the Real  Property is
located (the "Grant Deeds").

              4.2.1.2  Assignment and Assumption of Tenant Leases. An Assignment
and Assumption Agreement in the form of Exhibit D annexed hereto and made a part
thereof  pursuant to which Seller  shall  assign the Tenant  Leases to Buyer and
Buyer shall assume all of Seller's obligations thereunder modified to the extent
required  to  conform to the laws and  practice  of the states in which the Real
Property is located (the "Assignment and Assumption of Tenant Leases").

              4.2.1.3 General Assignment. An Assignment and Assumption Agreement
in the form of Exhibit E annexed  hereto  and made a part  thereof  pursuant  to
which Seller shall assign to

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<PAGE>

Buyer all of Seller's right,  title and interest in and to all of the Intangible
Property  (excluding  all  Service  Contracts  other than the  Approved  Service
Contracts)  relating  to each of the  Buildings  and  Seller  shall  assume  all
obligations thereunder (the "General Assignment and Assumption Agreement").

              4.2.1.4  Bill(s) of Sale.  A Bill of Sale in the form of Exhibit F
annexed  hereto and made a part hereof  conveying  to Buyer all of the  Tangible
Personal Property located in each of the Buildings (the "Bill of Sale");

              4.2.1.5  Non-Foreign  Person  Certificate.  A  Non-Foreign  Person
Certificate  in the form of Exhibit G annexed hereto and made a part hereof (the
"Non-Foreign Person Certificate");

              4.2.1.6 Tenant  Notification  Letters. A letter from Seller to the
Tenants respecting the transfer of each Building to Buyer in the form of Exhibit
H annexed  hereto and made a part hereof  (the  "Tenant  Notification  Letter"),
which shall be duplicated for purposes of delivery to each Tenant;

              4.2.1.7 Transfer Tax Forms. Any statements,  such as a transfer or
conveyance tax forms or returns  required by applicable state or local law to be
executed by Seller in order to effect the Closing;

              4.2.1.8  Certified  Rent  Roll.  A copy of the  rent  roll for the
Properties  certified by Seller and dated as of the Closing Date together with a
delinquency  report as of a date no more than five (5) days prior to the Closing
Date;

              4.2.1.9 Certified Operating  Statement.  The most recent operating
statement for the Properties certified by Seller;

              4.2.1.10 Estoppel  Certificates.  Tenant Estoppel Certificates and
Seller  Estoppel  Certificates  to the extent  required to be  delivered  at the
Closing in accordance with Section 9.1.1;

              4.2.1.11  Closing  Certificate.  A  certification  by Seller  with
respect to the representations and warranties set forth in Section 6.2 as of the
Closing Date; and

              4.2.1.12  Other.  Any other  incidental  documents,  not otherwise
expressly provided for herein, reasonably required by Buyer or the Escrow Holder
to  consummate  the  purchase  and sale of the  Properties,  provided  that such
additional  documents shall not give rise to any additional cost or liability to
Seller  and  Seller is given  written  notice  by Buyer or Escrow  Holder of the
requirement of such incidental documents within a reasonably  sufficient time in
advance of the Scheduled Closing Date.

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<PAGE>

     4.3 Buyer's Deliveries to Escrow Holder.row Holder

         4.3.1  Buyer  shall  deliver to Escrow  Holder  prior to the  Scheduled
Closing  Date the funds as  provided  below  and the  following  documents  duly
executed  and  where  appropriate,  acknowledged  by Buyer or its  designee,  as
applicable,  each of which  shall be undated  and the  delivery of each of which
shall be a condition precedent to the Close of Escrow;

              4.3.1.1  Funds.  The  funds  required  by  Section  3.2.2  of this
Agreement to close hereunder;

              4.3.1.2 The Assignment and Assumption of Tenant Leases.

              4.3.1.3 The General Assignment and Assumption Agreement.

              4.3.1.4 Transfer Tax Forms. Any statements,  such as a transfer or
conveyance tax forms or returns  required by applicable state or local law to be
executed by Buyer in order to effect the closing; and

              4.3.1.5  Other.  Any other  incidental  documents,  not  otherwise
expressly  provided  for  herein,  reasonably  required  by Seller or the Escrow
Holder to consummate  the purchase and sale of the  Properties,  provided,  that
such  additional  documents  shall  not  give  rise  to any  additional  cost or
liability to Buyer and Buyer is given written  notice by Seller or Escrow Holder
of the requirement of such incidental  documents within a reasonably  sufficient
time in advance of the Scheduled Closing Date.

     4.4 Seller's  Deliveries to Buyer. After the Close of Escrow,  Seller shall
within two (2) business  days deliver to Buyer the following  documents,  to the
extent the same have not already been delivered:

         4.4.1 Tenant Leases/Tenant  Deposits. The original Tenant Leases (or if
not available,  the best available copies), and the originals of tenant deposits
which are evidenced by letters of credit or escrow  agreements  and if necessary
to enable Buyer to realize or draw upon same, consents of the applicable Tenants
and/or  financial  institutions  or  replacement  letters  of  credit  or escrow
agreements in favor of Buyer (Seller shall promptly following the Execution Date
provide Buyer  written  notice of any Tenant Leases with respect to which Seller
does not have an original in its possession);

         4.4.2 Service Contracts.  The originals, or, if not available, the best
available copies of the Service Contracts.

         4.4.3 Licenses and Permits.  The originals,  or, if not available,  the
best available copies of the Licenses and Permits; and

         4.4.4 Records and Plans. The originals,  or, if

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<PAGE>

not available, the best available copies of the Records and Plans.

     4.5  Possession.  Seller  shall  deliver  the  keys and  possession  to the
Properties  to  Buyer at the  Close of  Escrow  free  and  clear of all  leases,
tenancies  and  occupancies,  except for the  Tenants  under the  Tenant  Leases
(including their assignees, subtenants or licensees) and any rights of occupancy
granted in the Permitted  Exceptions  (defined in Section 7.1.3)  and subject to
the Approved Service Contracts.

     4.6  Evidence of  Authorization.  At the Close of Escrow,  each party shall
deliver to the other party evidence in form and content reasonably  satisfactory
to the other party and the Title  Company  that (a) the party is duly  organized
and validly existing under the laws of the state of its organization and has the
power and  authority to enter into this  Agreement,  (b) this  Agreement and all
documents delivered pursuant hereto have been duly executed and delivered by the
party,  and (c) the  performance  by the  party of its  obligations  under  this
Agreement have been duly authorized by all necessary  corporate,  partnership or
other action.

     4.7 Close of Escrow. of Escrow

         4.7.1 The Escrow shall close on or before the Scheduled Closing Date.

         4.7.2  Provided  that Escrow  Holder has not received from either party
written notice of the failure of any condition  precedent specified in Section 9
to the  obligations  of such  party  (or  any  previous  such  notice  has  been
withdrawn),  then when the  parties  have each  deposited  into the  Escrow  the
documents and funds  required by this  Agreement and the Title Company can issue
the Title  Policies  at the Close of Escrow,  Escrow  Holder  shall  perform the
following actions (collectively, "Close of Escrow" or "Closing"):

              4.7.2.1  Prepare an Escrow closing  statement for the  transaction
for approval by Seller and Buyer prior to the Close of Escrow;

              4.7.2.2  Insert  the  Closing  Date  as the  date  of any  undated
document to be delivered through Escrow;

              4.7.2.3  Cause  each of the  Grant  Deeds  to be  recorded  in the
respective  land records of the state and county in which the Property  which it
is conveying is located;

              4.7.2.4  Deliver  to Buyer (a) the  documents

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<PAGE>

deposited into the Escrow for delivery to Buyer at the Close of Escrow,  and (b)
any funds  deposited  by Buyer in  excess  of the  amount  required  under  this
Agreement  to be paid by Buyer  (including  amounts  payable by Buyer for Escrow
Holder's fees and expenses);

              4.7.2.5  Deliver to Seller (a) all sums to be  received  by Seller
from Buyer  through the Escrow at the Close of Escrow less (i) all amounts to be
paid by Seller for Escrow  Holder's  fees and expenses and (ii) all amounts paid
by Escrow Holder in satisfaction of liens and  encumbrances on the Real Property
pursuant to the written  instruction of Seller, and (b) the documents  deposited
into the Escrow for delivery to Seller at the Close of Escrow;

              4.7.2.6 Cause the Title Policies to be issued by the Title Company
and delivered to Buyer; and

              4.7.2.7  Mail the  Tenant  Notification  Letter to the  Tenants by
certified mail, return receipt requested.

     4.8 Costs of Escrow. Costs of the Escrow shall be allocated as follows:

         4.8.1  Buyer and Seller  shall each pay  one-half  (1/2) of the fees of
Escrow Holder.

         4.8.2 Seller shall pay for the cost of providing  the Surveys  required
to be delivered in accordance with the provisions of Section 7.1.

         4.8.3 Seller shall pay nineteen  thousand dollars  ($19,000) toward any
transfer  taxes or recording  fees payable in connection  with the conveyance of
the  Properties  and/or the  recording  of the Grand  Deeds and Buyer and Seller
shall each pay one-half  (1/2) of any such transfer  taxes and recording fees in
excess of nineteen thousand dollars ($19,000).

         4.8.4  Buyer and Seller  shall each pay  one-half  (1/2) of the cost of
obtaining the basic ALTA coverage  under the Title  Policies for the  Properties
and the cost of any additional  coverage  and/or  endorsements  shall be paid by
Buyer.

         4.8.5 If the Close of Escrow fails to occur on or before the  Scheduled
Closing  Date other  than as a result of a default  hereunder  by either  party,
including, without limitation, as a result of a failure of a condition precedent
set forth in Section 9, the Escrow fees (including,  without limitation,  Escrow
cancellation fees) shall be borne equally between Buyer and Seller.

         4.8.6 If the  Close of  Escrow  fails to occur as a result of a default
hereunder by either party, the costs incurred

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<PAGE>

through Escrow (including,  without limitation,  Escrow cancellation fees) shall
be borne by the defaulting party.

         4.8.7  Pursuant to '6045 of the  Internal  Revenue and  Taxation  Code,
Escrow Holder shall be  designated  the "Closing  Agent"  hereunder and shall be
solely  responsible for complying with the Tax Reform Act of 1986 with regard to
the reporting of all settlement information to the Internal Revenue Service.

     4.9 Other Costs. Each party shall pay all of its own legal,  accounting and
consulting  fees and other costs and expenses  incurred in connection  with this
Agreement.

     4.10  Maintenance  of  Confidentiality  by  Escrow  Holder.  Except  as may
otherwise be required by law or by this Agreement,  Escrow Holder shall maintain
in strict confidence and not disclose to anyone the existence of the Escrow, the
identity  of the  parties  thereto,  the  amount  of  the  Purchase  Price,  the
provisions of this Agreement or any other  information  concerning the Escrow or
the transactions contemplated hereby, without the prior written consent of Buyer
and Seller.


                                   SECTION 5.
                    PRORATIONS AND ASSUMPTION OF OBLIGATIONS

     5.1 General. All income, receivables, expenses and payables of the Property
hereafter described in this Section 5 shall be apportioned equitably between the
parties as of the  Proration  Time in  accordance  with the  provisions  of this
Section 5 (based upon the number of days in a 365 day year).

     5.2 General and Specific Prorations.Prorations

         5.2.1 The following items shall be apportioned:

              5.2.1.1 Rent,  additional  rent and other sums and charges payable
under the Tenant Leases,  parking fees, parking validation coupons and any other
payments actually received from Tenants;

              5.2.1.2 Transferable annual permits,  licenses,  and/or inspection
fees, if any;

              5.2.1.3  Utility  charges  with respect to the Property (or any of
them) levied  against Seller or the Properties (or any of them) and the value of
fuel stored on the Properties (or any of them) at Seller's cost therefor. Seller
shall use its best efforts to cause all utilities  furnished to the  Properties,
including, but not limited to, electricity, gas, water and sewer, along with any
fuel storage tanks to be read the day prior to the Proration Time.

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              5.2.1.4  Payments made for the period in which the Close of Escrow
occurs under the Service Contracts;

              5.2.1.5  Permitted  administrative  charges,  if  any,  on  Tenant
Security Deposits.

         5.2.2  Real  and  personal  property  taxes,  assessments  and  special
district  levies  shall be prorated for the tax fiscal year in which the Closing
Date occurs on the basis of the then most current  available  tax bills,  Seller
being  charged  through  the day prior to the  Closing  Date and Buyer  with the
Closing Date and thereafter.

         5.2.3 Except as hereinafter  provided in this Section 5,  if at Closing
there are any rents,  additional  rents,  other sums or charges  owed by Tenants
past due or other  receivables  with  respect to the  Properties  or any of them
(collectively, the Past-Due Amounts"), Seller shall receive a credit to Seller's
account in the amount  equal to ninety  percent  (90%) of all such  amounts past
due; provided,  that the maximum credit to Seller pursuant to this Section 5.2.3
shall not exceed an amount  equal to $5000 for Past -Due Amounts with respect to
any one Property.  On or before the Closing,  Seller shall certify the amount of
the Past-Due  Amounts to Buyer. If any rental payments or other Past-Due Amounts
are  received by Seller  after the Closing,  Seller  shall  promptly  remit such
rental or other payments  directly to Buyer or its designee.  Buyer shall retain
any Past-Due Amounts it collects after the Close of Escrow.

         5.2.4  Buyer  shall be  credited  and Seller  shall be debited  for the
economic  value of any "free  rent" with  respect  to any Tenant  Leases for the
period following the Closing Date.

         5.2.5  Subject to the  provisions  of Section  8.2.1,  Seller  shall be
credited  and Buyer  shall be debited  for any  amounts  paid by or  invoiced to
Seller for tenant improvement work, leasing  commissions and legal fees, in each
case,  with respect to any Tenant Lease entered into after the Execution Date in
accordance with the provisions of this Agreement.

         5.2.6 Escalation charges, additional rents, reimbursements,  percentage
rent payments or other  revenues under the Tenant Leases shall be apportioned as
of the Closing Date between Buyer and Seller based upon the  allocation  thereof
equally over the period to which they are attributable.

         5.2.7 Security Deposits, plus accrued interest, if any, payable thereon
to Tenants, and any other deposit less permitted administrative charges shall be
credited or assigned to Buyer.

         5.2.8 There shall be no post-closing  adjustments.  Any dispute between
Buyer and Seller with respect to any

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prorations  hereunder shall be resolved by KPMG/Peat  Marwick on or prior to the
Closing Date and any such determination  shall be binding upon the parties.  The
fees and charges of KPMG/Peat  Marwick in  connection  with  resolving  any such
dispute shall be paid one-half (2) by Buyer and one-half (2) by Seller.

     5.3 Tenant Leases.  At the Close of Escrow,  pursuant to the Assignment and
Assumption of Tenant Leases, Buyer shall assume all of the obligations of Seller
under the Tenant Leases as of the Proration Time, including, without limitation,
tenant improvement obligations of landlord thereunder.

     5.4  Service  Contracts  and  Other  Intangible  Property.  At the Close of
Escrow,  Seller  shall  assign to Buyer,  pursuant  to the terms of the  General
Assignment and Assumption Agreement,  all right, title and interest of Seller in
and to the Approved Service Contracts and other Intangible  Property,  and Buyer
shall  assume  all of the  obligations  of  Seller  under the  Approved  Service
Contracts arising from and after the Close of Escrow. The term "Approved Service
Contracts"  shall mean all  Service  Contracts  that  Buyer  elects to assume by
written  notice to Seller on or prior to the  Scheduled  Closing Date subject to
the  provisions  of Section  8.2.2  regarding  Service  Contracts  that Buyer is
obligated  to assume as  provided  therein.  Seller  shall  cancel  any  Service
Contracts (other than the Approved Service Contracts) on or prior to the Closing
Date. Buyer shall protect,  hold harmless,  indemnify and defend Seller from any
and all claims,  expenses (including,  without limitation,  reasonable attorneys
fees and  costs),  liabilities  and  obligations  under  the  Service  Contracts
attributable to the period from and after the Closing Date.


                                   SECTION 6.

              REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY

     6.1 Of Buyer.  As an  inducement  to Seller to enter  into this  Agreement,
Buyer hereby represents, warrants and covenants to Seller as follows:

         6.1.1 Power and  Authority.  GRT is a  corporation  duly  organized and
validly  existing  under  the laws of the State of  Maryland.  GPLP is a limited
partnership  duly organized and validly  existing under the laws of the State of
California.  Buyer has the power and authority to carry on its present business,
to  enter  into  this  Agreement  and  to  consummate  the  transactions  herein
contemplated;  neither  the  execution  and  delivery  hereof  by Buyer  nor the
performance by Buyer of Buyer's obligations hereunder will violate or constitute
an event of default  under any  material  terms or  material  provisions  of any
agreement, document,  instrument,  judgment, order or decree to which Buyer is a
party or by which Buyer is bound.

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         6.1.2 Authorization;  Valid Obligation.  All proceedings required to be
taken by or on behalf of Buyer to authorize Buyer to make, deliver and carry out
the  terms  of this  Agreement  have  been or will be duly  taken  prior  to the
Scheduled Closing Date. No consent to the execution, delivery and performance of
this  Agreement is required from any partner,  board of directors,  shareholder,
creditor,  investor,  judicial or administrative body, governmental authority or
other person, other than any such consent which already has been unconditionally
given.  The  individuals  executing this Agreement and the documents  referenced
herein on behalf of Buyer have the legal  power,  right and actual  authority to
bind Buyer to the terms and  conditions  hereof.  This  Agreement is a valid and
binding obligation of Buyer enforceable in accordance with its terms,  except as
the same may be affected by bankruptcy,  insolvency, moratorium or similar laws,
or by legal or  equitable  principles  relating  to or  limiting  the  rights of
contracting parties generally.

         6.1.3 Confidentiality. Buyer shall hold as confidential all information
concerning   Seller  or  the  Properties   disclosed  in  connection  with  this
transaction and Buyer shall not, prior to the Close of Escrow,  release any such
information  relating  to  Seller or the  Properties  to third  parties  without
Seller's prior written consent,  except pursuant to a court order requiring such
release or as  otherwise  may be required by law.  Buyer shall  provide  written
notice to Seller prior to the time it makes  disclosure of any information  with
respect to the transaction contemplated hereby pursuant to any obligation it has
under the law to disclose this Agreement,  the transactions  contemplated hereby
or  otherwise  in order to permit  Seller to take  appropriate  legal  action to
prohibit or limit such  disclosure.  Seller  hereby gives its consent to Buyer's
disclosure  of  information  relating  to  the  Properties  to its  lenders  and
financial  partners to the extent  reasonably  necessary in order to obtain such
lenders' and/or partners'  participation in the contemplated  transaction and to
Buyer's  disclosure  of  information  relating  to  the  Properties  to  Buyer's
consultants and contractors, in each instance to the extent reasonably necessary
to verify  information  given to Buyer by Seller or  otherwise  to carry out the
purposes of this  Agreement,  provided,  however,  that prior to disclosing  any
information to such lenders,  financial  partners,  consultants and contractors,
Buyer shall first obtain their written  agreement for the benefit of Seller that
they shall hold as confidential all such information.

     6.2 Of Seller.  As an  inducement  to Buyer to enter  into this  Agreement,
Seller, represents, warrants and covenants to Buyer as follows:

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<PAGE>

         6.2.1 Regarding Seller's Authority.

              6.2.1.1 Seller is a limited partnership duly organized and validly
existing  under  the laws of the  State of  Delaware.  Seller  has the power and
authority to enter into this  Agreement  and,  subject to obtaining the Investor
Consent and to the extent deemed necessary or desirable by Seller,  the Fairness
Opinion,  to sell the Properties on the terms set forth in this  Agreement.  The
execution and delivery  hereof and the  performance by Seller of its obligations
hereunder, will not violate or constitute an event of default under any material
terms or material provisions of any agreement, document,  instrument,  judgment,
order or decree to which Seller is a party or by which Seller is bound.

              6.2.1.2 The individuals executing this Agreement and the documents
referenced  herein on behalf of Seller  have the legal  power,  right and actual
authority to bind Seller to the terms and conditions hereof. This Agreement is a
valid and binding  obligation  of Seller,  enforceable  in  accordance  with its
terms, except as the same may be affected by bankruptcy,  insolvency, moratorium
or similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.

         6.2.2  Tenant  Leases._)  There are no leases  which  will  affect  any
Property or any portion thereof following the Close of Escrow, except the Tenant
Leases set forth on the Schedule of Leases. To Seller's knowledge, the rent roll
and  delinquency  report  attached  as Exhibit I annexed  hereto and made a part
hereof is true and correct in all material  respects as of the date thereof.  To
Seller's  knowledge,  no  outstanding  notice of default has been  delivered  by
Seller or  received  by Seller with  respect to any Tenant  Lease  except as set
forth in the  Schedule  of  Leases.  All of the  Tenant  Security  Deposits  are
described on Exhibit I.

         6.2.3  Service  Contracts.  There are no service  contracts  which will
affect or be  obligations  of Buyer  relating to the  Properties  or any of them
following the Close of Escrow, other than the Service Contracts.

         6.2.4 Claims. To Seller's  knowledge,  there is no pending  litigation,
condemnation  or claims  threatened in writing  (whether or not  asserted)  with
respect to the Property  other than as set forth in Exhibit J annexed hereto and
made a part hereof (the "Schedule of Claims").

         6.2.5  Employees.  Seller  does not  employ  any  persons at any of the
Buildings.

         6.2.6  Compliance  with Laws.  To  Seller's  knowledge,

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Seller  has not  received  written  notice  from any party,  including,  without
limitation,  from any municipal, state, federal or other governmental authority,
of violation of any zoning, building, fire, water, use, health, environmental or
other  statute,  ordinance,  code or  regulation  which has not been  heretofore
corrected or disclosed in writing to Buyer.

         6.2.7 Hazardous Materials. To Seller's knowledge,  except as may be set
forth  in  the  Environmental   Reports,   (a)  the  Properties  are  not  being
investigated  by any  governmental  authority  and (b)  Seller has  received  no
written notice, in each case, respecting the violation of any federal,  state or
local law,  ordinance or  regulation  relating to  industrial  hygiene or to the
environment.

         6.2.8 Brokerage Agreements. To Seller's knowledge,  except as expressly
permitted  by this  Agreement,  there  are no  brokerage,  commission  or  other
agreements related to the Tenant Leases which will be binding upon Buyer.

     6.3 Purchase As Is

         6.3.1 Prior to the Closing Date,  Buyer will be afforded  access to the
Records  and Plans and to other  information  readily  available  to Seller with
respect to the Properties and will have an opportunity to review and analyze the
same.  Seller has made no  representations  or  warranties as to the accuracy or
completeness of such information except as expressly set forth herein.

         6.3.2 THE  PURCHASE  PRICE  REFLECTS THE FACT THAT THE  PROPERTIES  ARE
BEING  PURCHASED BY BUYER ON AN "AS IS," "WHERE IS" AND "WITH ALL FAULTS" BASIS.
BUYER HEREBY WAIVES AND RELINQUISHES  ALL RIGHTS AND PRIVILEGES  ARISING OUT OF,
OR WITH RESPECT OR IN RELATION TO, ANY REPRESENTATIONS, WARRANTIES OR COVENANTS,
WHETHER  EXPRESS OR IMPLIED,  WHICH MAY HAVE BEEN MADE OR GIVEN, OR WHICH MAY BE
DEEMED TO HAVE BEEN MADE OR GIVEN, BY SELLER, EXCEPT FOR THOSE  REPRESENTATIONS,
WARRANTIES  AND  COVENANTS  SET FORTH  EXPRESSLY  IN THIS  AGREEMENT.  EXCEPT AS
EXPRESSLY  PROVIDED IN THIS  AGREEMENT,  BUYER HEREBY FURTHER  ACKNOWLEDGES  AND
AGREES THAT WARRANTIES OF  MERCHANTABILITY  AND FITNESS FOR A PARTICULAR PURPOSE
ARE EXCLUDED FROM THE  TRANSACTION  CONTEMPLATED  HEREBY,  AS ARE ANY WARRANTIES
ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE,  AND THAT THE SELLER HAS NOT
WARRANTED, AND DOES NOT HEREBY WARRANT, THAT THE PROPERTIES NOW OR IN THE FUTURE
WILL MEET OR COMPLY WITH THE  REQUIREMENTS OF ANY LAW, CODE OR REGULATION OF ANY
APPLICABLE GOVERNMENTAL AUTHORITY OR JURISDICTION.  EXCEPT AS EXPRESSLY PROVIDED
IN THIS  AGREEMENT,  WITHOUT  LIMITING THE  GENERALITY OF THE  FOREGOING,  BUYER
HEREBY  ASSUMES ALL RISK AND  LIABILITY  (AND  AGREES  THAT SELLER  SHALL NOT BE
LIABLE FOR ANY  SPECIAL,  DIRECT,  INDIRECT,  CONSEQUENTIAL,  OR OTHER  DAMAGES)
RESULTING  OR  ARISING  FROM  OR  RELATING  TO THE  OWNERSHIP,  USE,  CONDITION,
LOCATION,  MAINTENANCE,  REPAIR  OR  OPERATION  OF  THE

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<PAGE>

PROPERTIES.  EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,  BUYER ACKNOWLEDGES
AND AGREES THAT THE SALE  PROVIDED  FOR HEREIN IS MADE  WITHOUT ANY  WARRANTY BY
SELLER AS TO THE NATURE OR QUALITY OF THE PROPERTIES;  THE DEVELOPMENT POTENTIAL
OF THE  PROPERTIES;  THE PRIOR HISTORY OF OR ACTIVITIES ON THE  PROPERTIES;  THE
QUALITY OF LABOR AND/OR MATERIALS INCLUDED IN ANY OF THE BUILDINGS;  THE FITNESS
OF THE PROPERTIES FOR AND/OR THE SOIL CONDITIONS  EXISTING AT THE PROPERTIES FOR
ANY  PARTICULAR  PURPOSE OR  DEVELOPMENT  POTENTIAL;  THE  PRESENCE OR SUSPECTED
PRESENCE OF HAZARDOUS  WASTE OR SUBSTANCES ON, ABOUT, OR UNDER THE PROPERTIES OR
THE BUILDINGS; OR THE ZONING OR OTHER LEGAL STATUS OF THE PROPERTIES.  EXCEPT AS
SPECIFICALLY  SET FORTH IN THIS AGREEMENT,  NO PERSON ACTING ON BEHALF OF SELLER
IS AUTHORIZED TO MAKE,  AND BY THE  EXECUTION  HEREOF BUYER HEREBY  ACKNOWLEDGES
THAT NO PERSON HAS MADE, ANY  REPRESENTATION,  AGREEMENT,  STATEMENT,  WARRANTY,
GUARANTY OR PROMISE  REGARDING THE PROPERTIES,  OR THE TRANSACTION  CONTEMPLATED
HEREIN,  OR  REGARDING  THE ZONING,  CONSTRUCTION,  PHYSICAL  CONDITION OR OTHER
STATUS OF THE PROPERTIES, AND NO REPRESENTATION, WARRANTY, AGREEMENT, STATEMENT,
GUARANTY OR PROMISE, IF ANY, MADE BY ANY PERSON ACTING ON BEHALF OF SELLER WHICH
IS NOT  CONTAINED  HEREIN  SHALL BE VALID OR  BINDING  UPON  SELLER.  SELLER HAS
OBTAINED THE  ENVIRONMENTAL  REPORTS FOR BUYER AS AN ACCOMMODATION  AND MAKES NO
REPRESENTATION   OR  WARRANTY  WITH  RESPECT  TO  SUCH   ENVIRONMENTAL   REPORTS
WHATSOEVER,  NOR SHALL  SELLER  HAVE ANY  LIABILITY  WHATSOEVER  TO SELLER  WITH
RESPECT TO SUCH ENVIRONMENTAL REPORTS OR THE ADEQUACY THEREOF.

         6.3.3  Except for any breach of the  representation  and  warranty  set
forth in Section  6.2.7,  Buyer  waives its right to recover from Seller and its
affiliates,   limited  partners,  general  partners  and  officers,   directors,
partners, shareholders,  employees, agents, representatives and attorneys of any
of the foregoing (collectively, "Released Parties") any and all damages, losses,
liabilities,  costs or expenses  whatsoever  (including  attorneys'  fees, court
costs and litigation expenses) and claims therefor,  whether direct or indirect,
known or unknown,  foreseen or  unforeseen,  which may arise on account of or in
any way growing out of or connected with the physical or environmental condition
of the Properties  (including the improvements thereon) or any law or regulation
applicable   thereto,   including,   without   limitation,   the   Comprehensive
Environmental  Response,  Compensation  and  Liability  Act of 1980, as amended,
including the Superfund  Amendments and  Reauthorization Act of 1986, (42 U.S.C.
Sections 9601 et seq.), the Resources Conservation and Recovery Act of 1976, (42
U.S.C.  Sections 6901 et seq.), the Clean Water Act, (33 U.S.C.  Sections 466 et
seq.),  the Safe  Drinking  Water  Act,  (14  U.S.C.  Sections  1401-1450),  the
Hazardous Materials  Transportation Act, (49 U.S.C.  Sections 1801 et seq.), the
Toxic  Substance  Control  Act,  (15 U.S.C.  Sections  2601-2629),  the  Georgia
Hazardous Site Response Act (Code 1981,  Section 12-8-90 enacted by G.A.L. 1992,
p. 2234 ' 5) and the Florida  Resource  Recovery  and  Management  Act,  Section
403.701,  et seq., and the Pollutant Spill  Prevention and Control Act,  Section
376.011-

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376.17 and 376.19-376.21 Florida Statutes.

     6.4  Survival.  Buyer and Seller each hereby  covenants and agrees with the
other that the  representations  and warranties of Buyer and Seller (as the case
may be) set forth in  Section  6.1.1,  Section  6.1.2 and  Section  6.2.1  shall
survive the Close of Escrow  without  limitation as to duration.  Unless earlier
terminated as provided in the following sentence,  the remaining  warranties and
representations  of Seller set forth in Section  6.2 shall  survive the Close of
Escrow until the earlier of (a) the date which is ninety (90) days following the
Closing Date and (b) October 31, 1997.  The  representations  and  warranties of
Seller with respect to a Tenant Lease shall terminate upon receipt by Buyer of a
Tenant  Estoppel  Certificate in accordance with the provisions of Section 9.1.1
with respect to such Tenant Lease.

     6.5 Public  Filings.  Buyer is deemed to be of notice  with  respect to any
matter set forth in Seller's  public  filings with the  Securities  and Exchange
Commission.

     6.6 Radon RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS, THAT, WHEN IT HAS
ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES,  MAY PRESENT HEALTH RISKS TO
PERSONS WHO ARE EXPOSED TO IT OVER TIME. LEVELS OF RADON THAT EXCEED FEDERAL AND
STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN FLORIDA. ADDITIONAL INFORMATION
REGARDING RADON AND RADON TESTING MAY BE OBTAINED FROM YOUR COUNTY PUBLIC HEALTH
UNIT. [NOTE:  THIS PARAGRAPH IS PROVIDED FOR INFORMATIONAL  PURPOSES PURSUANT TO
SECTION 404.056(8), FLORIDA STATUES, (1988).]


                                   SECTION 7.

         DUE DILIGENCE; TITLE TO THE REAL PROPERTY: PERMITTED EXCEPTIONS

     7.1  Buyer's  Review of Title.  As soon as  reasonably  possible  after the
Execution  Date,  Seller  shall  cause to be  delivered  to Buyer  (i) a current
preliminary  title report or commitment for title insurance  issued by the Title
Company  showing the condition of title to each Property  (each,  a "Preliminary
Title Report") together with a copy of all documents  evidencing or creating the
exceptions  to title  referenced  therein  and (ii) a current  ALTA  survey with
respect to each portion of the Real  Property,  certified to Buyer and the Title
Company, meeting all state land survey requirements (each a "Survey").

         7.1.1  Buyer  shall  deliver  to  Seller   written  notice  of  Buyer's
disapproval  of any of the  matters  shown on any  Preliminary  Title  Report or
Buyer's disapproval of any of the matters shown on any Survey (those disapproved
title and  survey  matters as so  identified  by Buyer  during the Title  Review
Period are hereafter  called the "Disapproved  Exceptions").  Buyer's failure to
provide such notice on or before the expiration of the

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Title Review Period shall irrevocably  constitute  Buyer's approval of the title
matters  reflected in the Preliminary Title Reports and the matters shown on the
Surveys.

         7.1.2 If Buyer timely  notifies  Seller of any  Disapproved  Exceptions
before the expiration of the Title Review  Period,  Seller shall notify Buyer in
writing  within  ten (10)  days of  receipt  of the  notice  of the  Disapproved
Exceptions that: (a) Seller will remove such Disapproved Exceptions on or before
Closing;  or (b) Seller  will not remove  any or certain  specified  Disapproved
Exceptions.  Seller shall not be obligated to remove any Disapproved  Exceptions
except to the extent  provided  in Section 7.3 with  respect to monetary  liens.
Seller's failure to give a notice as to any Disapproved  Exceptions  strictly in
accordance with the provisions of this Section 7.1.2, shall constitute  Seller's
statement that it will not agree to remove such  Disapproved  Exceptions  (other
than a monetary lien which shall be subject to the provisions of Section 7.3).

         7.1.3 If Seller  does not  provide  Buyer  with  written  notice of its
agreement to remove any  Disapproved  Exceptions,  Buyer shall have the right to
terminate this Agreement in accordance with the provisions of this Section 7.1.3
by delivery of written  notice of  termination on or before the date that is ten
(10) days  after the  receipt by Seller of Buyer's  notice  with  respect to the
Disapproved  Exceptions  (the  "Decision  Date"),  as Buyer's sole and exclusive
remedy.  Buyer's  failure to provide such notice of termination on or before the
Decision Date shall constitute Buyer's withdrawal of its disapproval and Buyer's
acceptance of the Disapproved Exceptions.  In the case of Buyer's acceptance (or
deemed  acceptance)  of  any  Disapproved  Exceptions,   Seller  shall  have  no
obligation to remove or otherwise address such Disapproved Exceptions.  If Buyer
elects to terminate this Agreement pursuant to this Section 7.1.3, Escrow Holder
shall deliver the Deposit to Buyer  together with all interest  thereon and this
Agreement and the Escrow shall be deemed terminated;  provided, however, if such
election by Buyer is made after the  expiration  of the  Financial Due Diligence
Period and the Disapproved  Exception with respect to which such  termination is
based does not materially  reduce the value of the applicable  Property,  Seller
shall be  entitled  to receive  from  Escrow  Holder  one-half  of the  Deposit,
together with all interest  accrued thereon and one-half of the Deposit together
with interest thereon shall be delivered from Escrow Holder to Buyer. Except for
any (i) Disapproved  Exceptions which Seller agrees to remove in accordance with
the preceding  provisions  of this Section  7.1.3 and (ii) monetary  liens which
Seller is obligated to remove pursuant to Section 7.3, the standard  pre-printed
exceptions  together with the matters shown by the Preliminary  Title Report and
Survey  shall be deemed  "Permitted  Exceptions"  for all  purposes  under  this
Agreement.

     7.2 Title  Insurance  Policy.  Buyer's title to the Real

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Property shall be insured by one or more ALTA extended coverage owner's policies
of title insurance (10-17-70) (collectively, the "Title Policies") issued by the
Title Company,  insuring fee title to the Real Property vested in Buyer, subject
only to the Permitted  Exceptions  together with such customary  endorsements as
requested by Buyer (provided,  that no such endorsements shall require Seller to
indemnify the Title Company or otherwise expose Seller to liability).

     7.3 Monetary Liens.  Seller shall be obligated subject to the provisions of
this  Section  7.3 to remove any  monetary  liens upon the Real  Property or any
portion thereof of an ascertainable  amount identified by Buyer as a Disapproved
Exception in accordance  with the foregoing  provisions of this Article 7 in the
case of any  lien  recorded  prior  to the date of  issuance  of the  applicable
Preliminary  Title Report, or identified by Buyer promptly  following  discovery
thereof in the case of any lien  recorded  after  such date,  other than (a) any
lien  for  taxes  or  assessments  which  are not yet  due and  payable  and (b)
mechanics liens with respect to work in progress. If Seller diligently commences
to cure a monetary lien upon notice thereof by Buyer and  thereafter  diligently
proceeds to perfect such cure,  then this Agreement shall continue in full force
and  effect  and the  Closing  Date  shall be  adjusted  accordingly  until such
monetary lien is removed of record.  If Seller is unable to cure such objections
using reasonable efforts, then this Agreement shall terminate upon ten (10) days
notice from Seller to Buyer and Escrow Holder (the "Notice Period"),  and Escrow
Holder shall return the Deposit plus all interest  earned thereon to Buyer,  and
this  Agreement and the Escrow will be deemed  terminated.  Notwithstanding  the
foregoing, however, Purchaser may waive any title defect (including any monetary
lien) that Seller is unable or chooses not to cure at any time during the Notice
Period,  and upon  receipt by Seller of such waiver from Buyer,  this  Agreement
shall remain in full force and effect with no reduction in the Purchase Price.

     7.4 Financial  Due  Diligence.  On or prior to the date hereof,  Seller has
made  available  to Buyer all of its  Records  and  Plans  with  respect  to the
Properties.  Buyer shall have the right to terminate  this Agreement upon notice
to Seller  and Escrow  Holder at any time  during the  Financial  Due  Diligence
Period.  If Seller elects to terminate this  Agreement  during the Financial Due
Diligence  Period by delivery of such notice  during the Financial Due Diligence
Period,  Escrow Holder shall promptly  return the Deposit to Buyer together with
all interest accrued thereon.

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     7.5 Environmental Due Diligence Investigation.estigation

         7.5.1 Seller at Seller=s sole cost and expense shall provide Buyer with
an  ASTM  Phase  One  Environmental  Report  (collectively,  the  AEnvironmental
Reports@)  with  respect  to  each  portion  of the  Real  Property  as  soon as
practicable after the Execution Date. Buyer shall,  during the Environmental Due
Diligence Period,  review, analyze and evaluate the Environmental Reports and at
its sole  option  may upon  notice  to  Seller  and  Escrow  Holder  during  the
Environmental Due Diligence Period terminate this Agreement.

         7.5.2 Subject to the  provisions of Section  7.5.3,  if Buyer elects to
terminate  this  Agreement  during the  Environmental  Due  Diligence  Period by
delivery of such notice during the Environmental  Due Diligence  Period,  Escrow
Holder shall  promptly  return  one-half  (1/2) of the Deposit to Buyer together
with all  interest  accrued  thereon and shall  disburse  one-half  (1/2) of the
Deposit to Seller together with all interest accrued thereon.

         7.5.3  If  Buyer  elects  to  terminate  this   Agreement   during  the
Environmental Due Diligence Period on account of an environmental liability at a
Property,  then,  in such  event,  if Buyer and Seller  agree to  continue  this
Agreement in full force and effect and to remove the  applicable  Property  from
the Properties to be conveyed  hereunder,  then, in such event,  notwithstanding
the provisions of Section 7.5.2, the entire Deposit shall continue to be held by
the Escrow Holder in accordance with the provisions of this Agreement.


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                                   SECTION 8.

                               INTERIM ACTIVITIES

     8.1 Entry on Properties to Inspect.to Inspect

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         8.1.1 Buyer and its agents shall have the right to enter on and inspect
the  Properties  prior to the Close of Escrow,  subject to the rights of tenants
under the Tenant Leases and others  claiming  through or under Tenants.  Nothing
herein shall  authorize any subsurface  testing or drilling on the Properties by
Buyer or its agents unless  specifically  approved by Seller in accordance  with
the  provisions  of  this  Article  8.  All  inspection  fees,  appraisal  fees,
engineering  fees and other  expenses of any kind relating to the  inspection of
the  Properties  by  Buyer  will  be  solely  Buyer's  expense  except  for  the
Environmental  Reports  which  shall  be  paid  for by  Seller.  Any  additional
investigation  recommended  by the  Environmental  Reports shall be conducted at
Buyer's sole cost and expense in  accordance  with the provision of this Article
8. Seller hereby reserves the right to have a representative present at the time
of making any such  inspection  or  performing  any test.  At least two (2) days
prior to Seller's proposed entry on any Property, Buyer shall: (a) notify Seller
of  intention  to enter a  Property  to conduct an  inspection  thereof  and the
proposed date and time of such entry (Buyer and its agents may enter only on the
dates and at the times  contained  in such  notices,  and Seller  shall have the
right (i) to have one or more of its agents or  representatives  accompany Buyer
and its agents at all times  while Buyer or its agents are on any  Property  and
(ii) to  reasonably  approve  the date and time of entry);  (b)  provide  Seller
copies of any work plans for any  physical  testing for Seller's  prior  written
approval,  which  work  plan  Seller  may  modify,  limit or  disapprove  in its
reasonable  discretion;  and (c) provide  Seller with a certificate of insurance
from  Buyer's  agents  inspecting  such  Property  (from  an  insurance  carrier
reasonably  acceptable to Seller)  evidencing  the  existence of (i)  commercial
general  liability  insurance,  in an amount not less than  $1,000,000  combined
limits for any injuries,  deaths or property damage sustained as a result of any
one accident or occurrence,  (ii) worker's  compensation  insurance at statutory
limits,  and (iii)  employer's  liability  insurance  in an amount not less than
$1,000,000 for each accident, disease per employee and disease policy limit. The
commercial  general  liability  insurance  shall  name  Seller as an  additional
insured.  Any Buyer's  agent which  conducts  environmental  inspections  of any
Property shall also provide evidence of environmental liability insurance of not
less than  $1,000,000.  In addition,  Buyer and Buyer's  agents waive any claims
against Seller (except to the extent caused by the gross negligence, intentional
misconduct or intentional material omission of Seller) for any injury to persons
or damage  to  property  arising  out of any  inspection  or  physical  testing,
including any damage to the tools and equipment of Buyer and Buyer's agents, all
of which shall be brought on the Properties at the sole risk and  responsibility
of Buyer and  Buyer's  agents.  Buyer  shall not meet with or contact any Tenant
without Seller's consent and a representative  of Seller shall have the right to
be present at any such meetings.

         8.1.2  Buyer  shall  indemnify,   protect  and  hold

                                 Page 84 of 199
<PAGE>

Seller, and its affiliates and limited partners,  general partners and officers,
shareholders,  partners, directors,  employees, agents and contractors of any of
the  foregoing  harmless  from  any and all  injuries,  losses,  liens,  claims,
judgments,   liabilities,  costs,  expenses  or  damages  (including  reasonable
attorneys'  fees  and  court  costs)  which  result  from  or  arise  out of any
activities  or  omissions  of Buyer or its  representatives  in, on or about the
Property at any time prior to the Close of Escrow.

         8.1.3 Buyer agrees to keep the  Properties  free from any liens arising
out of any work performed,  materials furnished or obligations incurred by or on
behalf of Buyer or Buyer's  Agents with  respect to any  inspection  or physical
testing of the  Properties.  If any such lien shall at any time be filed,  Buyer
shall cause the same to be  discharged  of record  within twenty (20) days after
receiving  notice  thereof by satisfying the same or, if Buyer in its discretion
and in good faith determines that such lien should be contested,  by recording a
bond or having such lien insured over.

         8.1.4  Buyer  shall,  at its sole  cost and  expense,  comply  with all
applicable  federal,  state  and  local  laws,  statutes,   rules,  regulations,
ordinances, or policies in conducting any inspection and physical testing of the
Properties.

         8.1.5 Buyer,  shall, at its sole cost and expense,  clean up and repair
the Properties,  in whatever manner necessary,  after Buyer's or Buyer's agents,
entry  thereon so that the  Properties  shall be returned to the same  condition
that existed prior to Buyer's or Buyer's agents, entry thereon.

         8.1.6  Seller  shall  promptly be  provided  with a copy of any and all
information,  materials  and data that Buyer  and/or  Buyer's  agents  discover,
obtain or generate in connection  with or resulting from its inspection and work
under this Section 8.1.

         8.1.7  Buyer's  obligations  under this  Section 8.1 shall  survive the
close of Escrow and/or the termination of this Agreement.

     8.2 Operation of Properties through the Close of Escrow.  During the period
from the  Execution  Date through the earlier of (i) the Close of Escrow or (ii)
termination  of this  Agreement  pursuant to any provision  hereof,  no material
obligations of the Tenants or conditions in favor of Seller shall be waived,  no
rent  (except for  security  deposits)  shall be  accepted  more than 30 days in
advance,  no approval of any  assignment  or  subletting  shall be given (except
where Seller's  consent is not to be unreasonably  withheld or similar  criteria
for approval exists),  and no other material agreements affecting the Properties
or any of them will be entered into by Seller, without the prior written consent
of Buyer, which consent shall not be unreasonably withheld or delayed.

                                 Page 85 of 199
<PAGE>

         8.2.1 No Modifications of Service Contracts,  Leases. The Tenant Leases
and the Approved Service Contracts will not be materially  modified,  terminated
or extended (e.g., a modification,  termination or extension  having an economic
effect  upon the  Properties  and/or the owner  thereof  in excess of  $50,000),
without  the  prior  written  consent  of  Buyer,  which  consent  will  not  be
unreasonably  withheld,  delayed or conditioned.  Prior to the expiration of the
Environmental Due Diligence Period and the Title Review Period, Seller may enter
into, renew, extend or modify a lease notwithstanding Buyer's failure to approve
such lease,  renewal,  extension or modification;  provided,  that, in the event
Seller elects to enter into any such lease, renewal,  extension or modification,
Seller,  shall,  notwithstanding  any provision to the contrary in Section 5, be
charged with all tenant improvement costs of landlord,  leasing  commissions and
legal costs with respect  thereto  unless Buyer  approves  such lease,  renewal,
extension  or  modification.  Seller  shall  provide  Buyer  with  notice of any
proposed lease, renewal,  extension or modification which notice shall set forth
all material terms thereof.  If Buyer fails to respond to Seller's notice within
three (3) days of receipt thereof, the lease, renewal, extension or modification
described in Seller's  notice shall be deemed approved by Buyer for all purposes
under this Agreement.

         8.2.2 Work in Progress and  Alterations.  Exhibit K annexed  hereto and
made a part hereof  contains a description  of the  construction  work by Seller
which is in progress on the  Properties as of the date of this  Agreement if any
(the "Work-in-Progress"). Upon the Close of Escrow, all assignable contracts for
the  design  and  construction  of the  Work-in-Progress  will be  deemed  to be
Approved  Service  Contracts,  which will be  assigned  to and assumed by Buyer.
Except for the Work-in-Progress, no alterations to the physical condition of the
Land or costing in excess of an aggregate amount of $50,000 will be made without
the prior written  consent of Buyer,  which  consent  shall not be  unreasonably
withheld or delayed.  Seller shall obtain any necessary permits required for the
Work-in-Progress  and shall comply with all applicable  laws in carrying out the
Work-in-Progress;

         8.2.3  Operations  and Services.  Unless  interrupted  by fire or other
casualty,  or by another cause beyond the control of Seller,  the Buildings will
be  operated  in  substantially  the manner in which they were  operated  on the
Execution  Date and all  services  with respect to the  Properties  that are now
required to be provided  will be  provided,  in order to operate the  Buildings.
Seller shall perform all of its material obligations under the Tenant Leases and
the Service Contracts;

         8.2.4 Maintenance. All services necessary to maintain and keep the Real
Property and Tangible Personal

                                 Page 86 of 199
<PAGE>

Property  (including  mechanical  equipment of every kind used in the  operation
thereof) in  substantially  the same  condition as it is on the Execution  Date,
except  for  reasonable  wear  and  tear,  casualty  and  condemnation,  will be
provided;

         8.2.5  Insurance   Policies.   All  existing   insurance  policies  (or
replacements  thereof)  affecting the Properties or any portion  thereof will be
kept in full force and effect through the Close of Escrow;

         8.2.6  Termination of Management  Contract.  Seller shall terminate all
property management agreements with respect to each Property effective as of the
Closing Date.

     8.3 Investor Consent. Seller shall use all reasonable efforts to obtain the
Investor Consent promptly following the Execution Date.

     8.4 Fairness Opinion.  Seller shall use all reasonable  efforts to obtain a
Fairness Opinion  promptly  following the Execution Date it if decides that such
opinion  is  necessary  or  advisable  in  connection   with  the   transactions
contemplated hereby.


                                   SECTION 9.

                         CONDITIONS PRECEDENT TO CLOSING

     9.1 Conditions  Precedent to Buyer's  Obligations.  The Close of Escrow and
the   obligation  of  Buyer  to  purchase  the  Properties  is  subject  to  the
satisfaction,  not later  than the  Scheduled  Closing  Date,  of the  following
conditions:

         9.1.1 Estoppel Certificates.  Buyer shall have received (a) from ninety
percent (90%) or more of the Major Tenants, an estoppel  certificate  materially
in the form  attached  as Exhibit L annexed  hereto and made a part  hereof (the
"Tenant  Estoppel  Certificate")  or, if a form of estoppel is  described  in or
attached to a Tenant  Lease,  in such form and (b) from Seller,  with respect to
any of the remaining Major Tenants,  an estoppel  certificate  materially in the
form  attached as Exhibit M annexed  hereto and made a part hereof (the  "Seller
Estoppel Certificate").

         9.1.2 No  Material  Changes.  There  shall  have  been no  casualty  or
condemnation for which Buyer has elected to terminate this Agreement pursuant to
Section 12 or 13 of this Agreement;

         9.1.3  Seller's  Deliveries.  Seller  shall  have  delivered  the items
described in Section 4.2 and shall be prepared to deliver the items described in
Section 4.4;

                                 Page 87 of 199
<PAGE>

         9.1.4  Title  Policies.  The  Title  Company  shall be  unconditionally
prepared (subject only to payment of all necessary title insurance  premiums and
other charges) to issue to Buyer the Title Policies;

         9.1.5 Representations,  Warranties and Covenants of Seller. There shall
not be any Material Inaccuracies in Seller's  representations and warranties set
forth in Section 6.2 as of the Close of Escrow;

         9.1.6 Seller  Performance.  Seller shall have performed in all material
respects all of the  obligations of Seller under this  Agreement,  to the extent
required to be performed at or prior to the Close of Escrow;

     The  conditions set forth in this Section 9.1 are solely for the benefit of
Buyer and may be waived  only by Buyer.  Buyer shall at all times have the right
to waive any condition. Any such waiver or waivers shall be in writing and shall
be delivered to Seller and Escrow Holder.  Neither Seller nor Buyer shall act or
fail to act for the  purpose of  permitting  or causing any  condition  to fail.
Nothing  contained in this  Agreement  shall require Seller to bring any suit or
other proceeding or, except as otherwise  expressly  required by this Agreement,
to pay any substantial sum, to satisfy any of said conditions.

     9.2 Conditions Precedent to Seller's  Obligations.  The Close of Escrow and
Seller's  obligation  with  respect  to the  transactions  contemplated  by this
Agreement are subject to the satisfaction,  not later than the Scheduled Closing
Date, of the following conditions:

         9.2.1 Funds and Documents. Buyer shall have delivered to Escrow Holder,
prior to the Scheduled Closing Date, for disbursement as directed by Seller, all
cash or other  immediately  available  funds due from Buyer in  accordance  with
Section 4 of this Agreement and the documents described in Section 4.3;

         9.2.2  Representations,  Warranties  and  Covenants  of Buyer.  Buyer's
representations  and warranties set forth in Section 6.1 of this Agreement shall
be true and correct as of the Close of Escrow;

         9.2.3 No Material Changes.  There shall have been no casualty for which
Seller has elected to terminate this Agreement pursuant to Section 12.2;

         9.2.4  Consent of  Investors.  Seller shall have  received the Investor
Consent;

         9.2.5 Fairness Opinion. Seller shall have received the Fairness Opinion
if Seller has proceeded to obtain such

                                 Page 88 of 199
<PAGE>

Fairness Opinion in accordance with the provisions of Section 8.4.

     9.3 Failure of Condition.  Except as otherwise  provided in this Agreement,
if the  Escrow  fails to  close on the  Scheduled  Closing  Date for any  reason
whatsoever,  including,  without limitation,  a failure of a condition precedent
set forth in this  Section 9,  either  Buyer or  Seller,  if not then in default
under this Agreement, may terminate the Escrow and this Agreement upon notice to
the other; and, thereupon:

         9.3.1 This Agreement and the Escrow shall terminate.

         9.3.2 The costs of the Escrow through the Scheduled  Closing Date shall
be governed by Section 4.8.3;

         9.3.3 All monies paid into the Escrow and all  documents  deposited  in
the Escrow shall be returned to the party paying or depositing the same together
with interest earned thereon; and

         9.3.4 Each party  shall be  released  from all  obligations  under this
Agreement  except for the obligations  that are expressly  stated to survive the
termination of this Agreement.

     9.4 Additional  Offers.  In the event that, prior to the Scheduled  Closing
Date,  Seller shall  receive from an  unaffiliated  third party (a  "Replacement
Buyer") a bona fide offer (any such offer, a "Purchase  Offer") for the purchase
of the Properties,  Seller shall have the option (the  "Termination  Option") to
terminate this Agreement in accordance with the provisions of this Section 9.4.

         9.4.1 In the event that  Seller has  received  a Purchase  Offer  which
Seller desires to accept,  Seller shall send Buyer a notice (the "Purchase Offer
Notice") informing Buyer that it has received a Purchase Offer and that it is in
good faith  negotiating a definitive  agreement with the Replacement  Buyer (the
"Replacement  Contract")  regarding the purchase and sale of the Properties.  If
Seller and Replacement Buyer shall enter into the Replacement  Contract prior to
the Determination Date, this Agreement shall automatically  terminate and Escrow
Agent shall  promptly  deliver to Buyer the Deposit  together  with all interest
earned  thereon.  If no Replacement  Contract has been entered into prior to the
Determination  Date,  this  Agreement  shall  continue  in full force and effect
without any  modification  under or pursuant to this Section 9.4.  When and if a
closing occurs under a Replacement Contract,  Seller shall promptly pay to Buyer
a sum (the "Topping Fee") equal to Six Hundred Thousand Dollars ($600,000.00).

         9.4.2 Notwithstanding anything to the contrary

                                 Page 89 of 199
<PAGE>

contained  herein,  Seller  covenants and agrees that it shall not actively seek
out or solicit  any  Purchase  Offer  without  Buyer's  prior  written  consent,
provided,  however,  Seller  may  negotiate  in good  faith  with any Person who
submits an unsolicited Purchase Offer.

         9.4.3 The  provisions of Section 9.4 shall survive the  termination  of
the Agreement.


                                   SECTION 10.

                                     BROKER

         Buyer and Seller  each  represent  and warrant to the other that it has
not dealt with any broker,  finder or other  middleman in  connection  with this
Agreement or the transactions  contemplated hereby, except for ROBERT A. STANGER
& CO., INC.  ("Broker"),  and that no other broker,  finder,  middleman or other
person has claimed or has the right to claim a commission, finder's fee or other
brokerage fee in connection with this Agreement or the transactions contemplated
hereby.  Buyer  shall pay any  commission  due to Broker  pursuant to a separate
agreement between Buyer and Broker and shall indemnify, protect, defend and hold
harmless  Seller  from any claims made by Broker.  Each party  shall  indemnify,
protect,  defend and hold the other party  harmless  from and against any costs,
claims or expenses (including actual attorneys' fees and expenses),  arising out
of  the  breach  by the  indemnifying  party  of  any  of  its  representations,
warranties or agreements  contained in this Section 10. The  representations and
obligations under this Section 10 shall survive the Close of Escrow,  or, if the
Close of Escrow does not occur, the termination of this Agreement.


                                   SECTION 11.

                          REMEDIES FOR SELLER'S DEFAULT

     11.1 Buyer's Remedies in General.in General

         11.1.1 A default by Seller in the performance of its obligations  under
this  Agreement  discovered  by Buyer on or before the Close of Escrow shall not
entitle Buyer to terminate this Agreement or refuse to close Escrow,  unless (a)
Buyer notified Seller of such default  immediately  upon its discovery by Buyer,
(b) such default is not cured by Seller on or before the Scheduled Closing Date,
and (c) such  uncured  default  when  considered  together  with any other  such
uncured  defaults  materially  and  adversely  affects  the (i) value of any one
Building by an amount  equal to or in excess of One Hundred  Thousand and xx/100
Dollars  ($100,000.00)  and/or (ii) value of all of the  Buildings  by an amount
equal to or in excess of Seven Hundred

                                 Page 90 of 199
<PAGE>

Thousand and xx/100 Dollars  ($700,000.00) (a "Seller Default").  If Buyer shall
discover prior to the Close of Escrow any default in any of Seller's obligations
under this Agreement,  Buyer shall promptly  notify Seller  thereof,  and Seller
shall have until the Scheduled Closing Date to cure the default.  If there shall
be any  default by Seller  discovered  by Buyer prior to the Close of Escrow and
not cured by the Scheduled Closing Date and such default (when combined with any
other such uncured defaults)  constitutes a Seller Default, then Buyer may elect
not to close Escrow, in which case Buyer's sole right and remedy shall be (i) to
terminate  this  Agreement  and  receive  back the  Deposit,  together  with all
interest earned thereon and (ii) a  reimbursement  from Seller of its reasonable
out of pocket  expenses in connection with this Agreement up to One Hundred Five
Thousand  and xx/100  Dollars  ($105,000.00).  If Buyer  elects to close  Escrow
notwithstanding  the  existence  of any default by Seller,  Buyer shall have the
right to specific  performance  of this  Agreement  and to an  adjustment of the
Purchase Price if such default constitutes a Seller Default. Buyer shall have no
right to any action at law or equity with respect to a Seller default  hereunder
(including  a Seller  Default)  except as  expressly  provided  in this  Section
11.1.1.

         11.1.2 If the Close of Escrow occurs, Buyer shall not have the right to
commence any action in law or in equity for damages or otherwise  against Seller
for any  default  or alleged  default of  Seller's  under this  Agreement  first
discovered  by Buyer after the Close of Escrow,  or  otherwise  recover  against
Seller, whether by cross-complaint,  counterclaim, offset or otherwise, for such
default or alleged  default,  unless such default relates to a matter  expressly
surviving  the Close of Escrow  and, in such event such claim must be made prior
to the earlier of (a) October  31, 1997 and (b) ninety (90) days  following  the
Closing Date.

                                 Page 91 of 199
<PAGE>

                                   SECTION 12.

                    DAMAGE TO OR DESTRUCTION OF THE PROPERTY

     12.1 Insured Casualty.d Casualty

         12.1.1  If,  prior to the Close of  Escrow,  all or any  portion of the
Buildings or any one of them, is damaged or destroyed,  whether by fire or other
insured  casualty,  Seller  shall  promptly  notify  Buyer  of  such  damage  or
destruction and of the good-faith  estimate of a reputable  licensed  contractor
selected  by Seller and  reasonably  approved by Buyer of the cost to repair the
damage and  Seller's  good-faith  belief  that such  casualty  is  insured  (the
"Insured Casualty  Notice").  If such estimated cost to repair to Seller for any
Building or Buildings constituting a single Property is in excess of One Hundred
Thousand  and  xx/100  Dollars  ($100,000.00),  Buyer may be  released  from its
obligation to purchase such Property by delivering to Seller  written  notice of
Buyer's  intent to do so within ten (10) days after the date Buyer  receives the
Insured  Casualty  Notice.  In such event,  (a) this Agreement shall continue in
full force and effect with  respect to each other  Property and (b) the Purchase
Price  shall be reduced by an amount  equal to the market  value of the  damaged
Property  one day  prior to the date of the  casualty  under  Seller's  casualty
insurance policy then in effect.

         12.1.2 If the casualty is insured, and (i) the estimated cost of repair
to Seller for any Building or Buildings  constituting  a single  Property is One
Hundred Thousand and xx/100 Dollars ($100,000.00) or less, or (ii) the estimated
cost of repair  to Seller  exceeds  One  Hundred  Thousand  and  xx/100  Dollars
($100,000.00)  but Buyer elects not to terminate  this  Agreement in  accordance
with this Section 12.1,  then the Escrow and this Agreement shall remain in full
force and effect,  the Closing  shall occur on or before the  Scheduled  Closing
Date, and Seller shall assign to Buyer, as a condition precedent to the Close of
Escrow,  all of Seller's right, title and interest in and to any of the casualty
insurance proceeds or claims therefor with respect to such damage or destruction
(which shall  thereafter be repaired or not, at Buyer's  option),  together with
any and all rental loss insurance of Seller, if any, payable with respect to the
Property for any period after the Proration  Time and any and all claims against
other persons for such damage or  destruction.  Additionally,  if the Escrow and
this Agreement  remain in full force and effect,  Seller shall pay to Buyer,  by
way of a reduction  in the  Purchase  Price at Closing,  an amount  equal to the
deductible under the casualty  insurance  policy (such  deductible  amount to be
that determined, prior to Closing, by Seller's estimate).

     12.2 Uninsured Casualty.

                                 Page 92 of 199
<PAGE>

         12.2.1  If,  prior to the Close of  Escrow,  all or any  portion of the
Buildings, or any one of them, are damaged or destroyed by an uninsured casualty
(including,  without  limitation,  a  casualty  as to  which  coverage  has been
disclaimed by Seller's  insurers),  Seller shall  promptly  notify Buyer of such
damage or  destruction  and of the Seller's  reasonable  estimate of the cost to
Seller to repair the same of a reputable licensed  contractor selected by Seller
and  reasonably  approved by Buyer (the  "Uninsured  Estimate  to  Repair")  and
Seller's  reasonable  belief that such  casualty is  uninsured  (the  "Uninsured
Casualty Notice").

         12.2.2 If such Uninsured Estimate to Repair is in excess of One Hundred
Thousand and xx/100 Dollars ($100,000.00),  either party may elect to remove the
damaged  Property from the  Properties to be sold  hereunder by giving the other
party written  notice of its intent to do so within ten (10) days after the date
Buyer receives the Uninsured Casualty Notice,  except that Seller shall not have
the right to remove  such  damaged  Property if within such ten (10) day period,
Buyer  elects to bear the loss in  excess of One  Hundred  Thousand  and  xx/100
Dollars  ($100,000.00)  upon the Close of  Escrow  and  notifies  Seller of such
election in writing  within such ten (10) day period.  If Buyer is released from
its  obligations  to purchase such damaged  Property as provided in this Section
12.2.2, then, in such event, (a) this Agreement shall continue in full force and
effect with respect to each other  Property and (b) the Purchase  Price shall be
reduced by an amount equal to the market value allocated to the damaged Property
one day prior to the date of the  casualty  under  Seller's  casualty  insurance
policy then in effect.

         12.2.3 If the casualty is uninsured,  and (i) the Uninsured Estimate to
Repair is One Hundred Thousand and xx/100 Dollars ($100,000.00) or less, or (ii)
the  Uninsured  Estimate to Repair is more than One Hundred  Thousand and xx/100
Dollars  ($100,000.00)  and neither  party has  elected to remove  such  damaged
Property in accordance with Section  12.2.2,  then the Escrow and this Agreement
shall remain in full force and effect,  the Closing shall occur on or before the
Scheduled  Closing  Date,  and Buyer shall be  entitled  to a  reduction  in the
Purchase Price in an amount equal to the Uninsured Estimate to Repair,  less any
amount thereof which Buyer has elected under Section 12.2.2 to bear.

         12.2.4  If and to the  extent  that  the  Purchase  Price  is  adjusted
pursuant  to this  Section  12.2 as a result  of a  disclaimer  of  coverage  by
Seller's  insurers,  Buyer shall not be entitled to insurance proceeds due under
Seller's  policies or to be assigned any claim under or with respect to Seller's
policies,  and Seller shall retain all rights thereunder or with respect thereto
and to proceeds therefrom,  it being the intent of this Section 12 that there be
no double recovery by or double compensation of Buyer for the casualty.


                                 Page 93 of 199
<PAGE>

                                   SECTION 13.

                                  CONDEMNATION

     If,  prior to the  Close of  Escrow,  more  than ten  percent  (10%) of any
Building is taken by power of eminent domain and, as a result,  the Building can
no longer be  operated in  substantially  the same manner as it was prior to the
taking,  or if access to the Building is  materially  reduced or  restricted  by
eminent  domain (or is the subject of such a pending  taking  which has not been
consummated), Seller shall immediately notify Buyer of such fact. In such event,
Buyer shall be released from its  obligation to purchase the Property where such
Building is located upon written  notice to Seller given not later than five (5)
days after  receipt of  Seller's  notice and in such event,  (a) this  Agreement
shall  continue in full force and effect with respect to each other Property and
(b) the  Purchase  Price  shall be reduced by the amount of the  Purchase  Price
allocated  to the  Property  which  is  the  subject  of  such  condemnation  in
accordance  with the  provisions of Section 3. If Buyer does not so exercise any
option which Buyer may have  pursuant to this Section 13 to remove such Property
from the Properties to be sold under this Agreement, or if less than ten percent
(10%) of a Building is taken by or is the subject to eminent domain Proceedings,
and access to the Building is not materially reduced or restricted, then neither
party shall have the right to remove such  Property  from the  Properties  to be
sold in accordance with the provisions  hereof, but Seller shall assign and turn
over, and Buyer shall be entitled to receive and keep, all awards for the taking
of any of the Real  Property by eminent  domain which accrue to Seller,  and the
parties  shall  proceed  to the Close of Escrow  pursuant  to the terms  hereof,
without modification of the terms of this Agreement and without any reduction in
the Purchase Price.


                                   SECTION 14.

                                     NOTICES

     14.1  Addresses.  Whenever  any  notice,  demand or request is  required or
permitted hereunder, such notice, demand or request shall be made in writing and
shall be sent via facsimile,  a nationally  recognized overnight courier service
fully  prepaid,  or  deposited  in the  United  States  by mail,  registered  or
certified,   return  receipt  requested,   postage  prepaid,  addressed  to  the
addressees (and individuals) set forth below:

                                    As to Seller:

                                          T. Rowe Price Realty Income Fund II
                                          c/o T. Rowe Price Real Estate Group


                                 Page 94 of 199
<PAGE>

                                          100 East Pratt Street
                                          Baltimore, Maryland 21202
                                          Facsimile:  (410)547-6824
                                                  and (410)547-0852
                                          Attn: Mr. Joseph P. Croteau
                                                    and Mr. Mark Ruhe
                                          and

                                          Lucy B. Robins, Esq.
                                          T. Rowe Price
                                          100 East Pratt Street
                                          Baltimore, Maryland  21202
                                          Facsimile:  (410)345-6575

                                    With a copy to Seller's Alternate Addressee:

                                          Greenberg Traurig, Hoffman, Rosen
                                          & Quentel
                                          153 East 53rd Street
                                          New York, NY 10022
                                          Attn:  Judith D. Fryer, Esq.

                                    As to Buyer:

                                          Glenborough Realty Trust Incorporated
                                          400 South El Camino Real
                                          San Mateo, CA 94402
                                          Attn:  Mr. Stephen Saul
                                          Facsimile:  (415)343-7438

                                    With a copy to Buyer's Alternate Addressee:

                                          G. Lee Burns, Jr., Esq.
                                          Glenborough Realty Trust Incorporated
                                          400 South El Camino Real
                                          San Mateo, CA  94402
                                          Facsimile:  (415)343-7438

                                    As to Escrow Holder:

                                          First American Title Insurance Company
                                          173 N. First Street
                                          Suite 100
                                          San Jose, CA  95112
                                          Attn:  Susan Melton
                                          Facsimile:  (408) 451-7836

     14.2  Receipt of  Notices.  Any  notice,  demand or  request  that shall be
delivered to Buyer and its Alternate  Addressee in the manner aforesaid shall be
deemed  sufficiently given to and received by Buyer for all purposes  hereunder,
and any  notice,  demand or request  that shall be  delivered  to Seller and its
Alternate  Addresses in the manner aforesaid shall be deemed

                                 Page 95 of 199
<PAGE>

sufficiently  given to and  received by Seller for all purposes  hereunder,  (i)
upon receipt of a legible  facsimile  transmission,  (ii) the next  business day
following  the day such  notice,  demand or request is delivered by a nationally
recognized  overnight  courier  service  fully  prepaid,  to such  party and its
Alternate  Addressee,  or (iii) if sent via registered or certified mail, at the
time of receipt by such party and its Alternate Addressee.

     14.3 Refusal of Delivery.  The  inability to deliver any notice,  demand or
request  because the  individual to whom it is properly  addressed in accordance
with this  Section  14 refused  delivery  thereof or no longer can be located at
that address shall constitute delivery thereof to such individual.

     14.4 Change of  Address.  Each party shall have the right from time to time
to designate by written  notice to the other parties hereto such other person or
persons and such other place or places as said party may desire written  notices
to be delivered or sent in accordance herewith.


                                   SECTION 15.

                               GENERAL PROVISIONS

     15.1  Amendment.  Except as provided in Section  4.1, no  provision of this
Agreement or of any documents or instrument entered into, given or made pursuant
to this  Agreement  may be amended,  changed,  waived,  discharged or terminated
except by an instrument in writing, signed by the party against whom enforcement
of the amendment, change, waiver, discharge or termination is sought.

     15.2 Time of Essence.  All times  provided  for in this  Agreement  for the
performance of any act will be strictly construed, time being of the essence.

     15.3 Entire  Agreement.  This  Agreement and other  documents  delivered at
Closing,  set forth the entire  agreement  and  understanding  of the parties in
respect of the  transactions  contemplated by this Agreement,  and supersede all
prior agreements, arrangements and understandings relating to the subject matter
hereof and  thereof.  No  representation,  promise,  inducement  or statement of
intention  has been  made by  Seller  or Buyer  which  is not  embodied  in this
Agreement, or in the attached Exhibits or the written certificates, schedules or
instruments of assignment or conveyance  delivered  pursuant to this  Agreement,
and  neither  Buyer  nor  Seller  shall be bound by or  liable  for any  alleged
representations,  promise,  inducement  or statement of intention not therein so
set forth.

     15.4 No Waiver.  No failure of any party to  exercise  any power given such
party hereunder or to insist upon strict

                                 Page 96 of 199
<PAGE>

compliance by the other party with its obligations  hereunder shall constitute a
waiver of any party's right to demand strict  compliance  with the terms of this
Agreement.

     15.5 Counterparts. This Agreement, any document or instrument entered into,
given or made pursuant to this Agreement or authorized hereby, and any amendment
or supplement thereto may be executed in two or more counterparts,  and, when so
executed,  will have the same force and effect as though all signatures appeared
on a  single  document.  Any  signature  page  of this  Agreement  or of such an
amendment,   supplement,  document  or  instrument  may  be  detached  from  any
counterpart  without impairing the legal effect of any signatures  thereon,  and
may be  attached to another  counterpart  identical  in form  thereto but having
attached to it one or more additional signature pages.

     15.6 Costs and Attorneys'  Fees. If any legal action or any  arbitration or
other  proceeding  is  brought  for the  enforcement  of this  Agreement  or any
document or instrument entered into, given or made pursuant to this Agreement or
authorized hereby or thereby (including,  without limitation, the enforcement of
any  obligation  to indemnify,  defend or hold  harmless  provided for herein or
therein),  or because of an alleged dispute,  default, or  misrepresentation  in
connection  with any of the  provisions of this Agreement or of such document or
instrument,  or if Escrow  Holder  commences  any  action  with  respect  to the
Escrow(s),  the  successful  or  prevailing  party  shall be entitled to recover
actual  attorneys'  fees,  charges  and other  costs  incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.

     15.7 Payments;  Interests.  Payment of all amounts required by the terms of
this Agreement  shall be made in the United States and in immediately  available
funds of the United States of America which, at the time of payment, is accepted
for the  payment of all public and  private  obligations  and debts.  Unless the
parties  otherwise agree,  payments shall be made through the Escrow Holder.  If
any payment due under this  Agreement is not paid when due, it shall  thereafter
bear interest at a variable rate equal to the rate  announced  from time to time
by  Citibank,  N.A. as its prime or reference  rate,  plus five percent (5%) per
annum,  but in no event more than the maximum rate, if any, allowed by law to be
charged by the party receiving the interest on such type of indebtedness.

                                 Page 97 of 199
<PAGE>

     15.8 No Transfers  by Buyer;  Seller's  Right to Transfer.  Buyer shall not
have the right to assign any of its rights or obligations  under this Agreement.
Buyer may designate  another entity or entities to take title separately to each
or any combination of Properties. If Buyer designates another entity or entities
to take title to the Properties (or any Property), it shall not relieve Buyer of
any of its obligations  under this  Agreement.  Any assignment made in violation
hereof shall be null and void.

     15.9  Parties  in  Interest.  Subject  to  Section  15.8,  the  rights  and
obligations  of the parties  hereto shall be binding upon and shall inure to the
benefit of the parties hereto and their respective  successors,  assigns,  heirs
and the legal  representatives  of their  respective  estates.  Nothing  in this
Agreement is intended to confer any right or remedy under this  Agreement on any
person other than the parties to this Agreement and their respective  successors
and permitted assigns, or to relieve or discharge the obligation or liability of
any  person to any party to this  Agreement  or to give any  person any right of
subrogation or action over or against any party to this Agreement.

     15.10 Applicable  Law/Submission  to Jurisdiction.  This Agreement shall be
governed by and construed and enforced in accordance  with the laws of the State
of Maryland without giving effect to the conflict-of-law rules and principles of
that state. The Circuit Court of Maryland shall have exclusive jurisdiction with
respect to any dispute hereunder.

     15.11  Recording.  Each  of  Seller  and  Buyer  represents,  warrants  and
covenants  that it will not record or cause to be recorded  this  Agreement or a
memorandum  hereof  or a lis  pendens  with  respect  to the  Properties  or any
Property in the public  records for the States and  counties in which any of the
Property is located or in any other jurisdiction.  The violation of this Section
15.11 by Buyer  shall (a)  result in the  immediate  forfeiture  of the  Deposit
together with all interest  accrued  thereon which Escrow Holder shall  promptly
disburse to Seller and (b) relieve Seller from any obligations hereunder.

     15.12  Incorporation  of Recitals and  Exhibits.  The Recitals and Exhibits
attached  to  this  Agreement  are  incorporated  into  and  made a part of this
Agreement.

     15.13  Construction  of  Agreement.  The  language  in all  parts  of  this
Agreement shall be in all cases construed  simply  according to its fair meaning
and not  strictly  for or against  any of the  parties  hereto.  Headings at the
beginning of sections of this  Agreement are solely for the  convenience  of the
parties and are not a part of this  Agreement.  When  required  by the  context,
whenever the singular number is used in this  Agreement,  the same shall include
the plural,  and the plural shall  include

                                 Page 98 of 199
<PAGE>

the  singular,  the  masculine  gender  shall  include the  feminine  and neuter
genders,  and vice versa.  As used in this  Agreement,  the term "Seller"  shall
include the respective  permitted successors and assigns of Seller, and the term
"Buyer" shall include the permitted successors and assigns of Buyer, if any. All
times,  even if  designated  as Eastern  Standard  Time refer to the time in New
York, New York.

     15.14  Severability.  If  any  term  or  provision  of  this  Agreement  is
determined  to be illegal,  unconscionable  or  unenforceable,  all of the other
terms,  provisions and sections hereof will nevertheless remain effective and be
in force to the fullest extent permitted by law.

     15.15  Announcements.  Seller and Buyer shall  consult with each other with
regard to all press releases and other  announcements  issued at or prior to the
Close of Escrow  concerning  the existence of this  Agreement or the sale of the
Properties  and,  except as permitted  under Section  6.1.3,  neither Seller nor
Buyer shall issue any such press  release or other such  publicity  prior to the
Close of Escrow  without the prior consent of the other party.  Buyer agrees not
to refer to "T. Rowe Price" or "T. Rowe" in any  description  of the  Properties
acquired pursuant to this Agreement in any future  announcements  and/or filings
with the Securities and Exchange Commission and/or other sales,  investor and/or
offering  materials.  Buyer may make a one time announcement and a corresponding
disclosure in its required public filings  subject to the applicable  provisions
of this  Agreement  that it  acquired  the  Properties  from real  estate  funds
sponsored by T. Rowe Price.  The  provisions of this Section 15.15 shall survive
the termination of this Agreement.

     15.16 Submission of Agreement. The submission of this Agreement to Buyer or
its broker,  agent or attorney for review or signature  does not  constitute  an
offer to sell the  Properties  to Buyer or the  granting  of an  option or other
rights with respect to the Properties to Buyer. No agreement with respect to the
purchase and sale of the Properties  shall exist, and this writing shall have no
binding  force or effect,  until this  Agreement  shall have been  executed  and
delivered by Buyer and by Seller and Buyer shall have deposited the Deposit with
Escrow Holder.

     15.17  Further   Assurances.   Buyer  and  Seller  agree  to  execute  such
instructions  to the  Escrow  Holder and such  other  instruments  and take such
further  actions either before or after the Close of Escrow as may be reasonably
necessary  to  carry  out the  provisions  of this  Agreement  provided  that no
material additional cost or liability shall be created thereby.

     15.18  Limitations  on Liability.  In addition to any other  limitations on
Seller's  obligations  to Buyer and Buyer's  rights and  remedies  contained  in
Section 11.1 or elsewhere in this  Agreement,  if the Closing  occurs,  Seller's
liability   to  Buyer  for

                                 Page 99 of 199
<PAGE>

any inaccuracies in Seller's  warranties and  representations  contained in this
Agreement and breaches of Seller's obligations under Section 8 of this Agreement
or any other agreements of Seller respecting the condition, operation or leasing
of the Properties contained in this Agreement shall be limited as follows:

         15.18.1  Seller  shall not have any  liability  to Buyer based upon any
inaccuracy  in Seller's  warranties  and  representations  or breach of Seller's
obligations  resulting  in damage to Buyer of less than Two  Hundred  Eight-Four
Thousand Nine Hundred Eight and 20/100 Dollars ($284,908.20); and

         15.18.2 Seller's  aggregate  liability to Buyer for damages based upon,
arising out of or proximately  caused by any  inaccuracy in Seller's  warranties
and  representations or breach of Seller's  obligations shall in no event exceed
Two Million Two Hundred Thousand and xx/100 Dollars  ($2,200,000.00);  provided,
however,  that the  foregoing  limitations  shall not apply to any  liability of
Seller to Buyer based upon fraud or intentional misrepresentation.

     15.19 Access to Records and Plans.  Buyer shall allow Seller and its agents
access to the  Records and Plans  following  the Close of Escrow  during  normal
business  hours and upon  reasonable  prior written  notice.  Buyer shall permit
Seller and its agents to make  duplicate  copies of any of the Records and Plans
at Seller's cost.

     15.20  Cooperation.ooBuyer  and Seller  shall  cooperate  with the other to
carry out the purpose of this Agreement  (provided,  such cooperation  shall not
require  either party to expend any sum not otherwise  required  pursuant to the
other provisions of this Agreement).  This Section 15.20 shall survive the Close
of Escrow.

                      [Balance of Page Intentionally Blank]

                                Page 100 of 199
<PAGE>

     IN WITNESS  WHEREOF,  Buyer and Seller  have caused  this  Agreement  to be
executed as of the day and year first above written.

                                     "Seller"

                                     T. ROWE PRICE REALTY INCOME FUND II,
                                     America's Sales-Commission-Free
                                     Real Estate Limited Partnership, a Delaware
                                     limited partnership

                                             By: T. Rowe Price Realty
                                                Income Fund II Management, Inc.,
                                             a Maryland corporation
                                             its General Partner

                                             By:________________________________




                                     "Buyer"

                                     GLENBOROUGH REALTY TRUST INCORPORATED,
                                     a Maryland corporation


                                             By:________________________________



                                     GLENBOROUGH PROPERTIES, L.P.,
                                     a California limited partnership

                                             By: Glenborough Realty Trust
                                             Incorporated, a Maryland
                                             Corporation, Its General Partner


                                             By:________________________________


ACCEPTED:

"Escrow Holder"
FIRST AMERICAN TITLE INSURANCE COMPANY


By:_______________________________


                                Page 101 of 199
<PAGE>

                               PURCHASE AGREEMENT
                                Centerstone Plaza

     THIS PURCHASE AGREEMENT ("Agreement") is dated as of the Effective Date (as
defined in Addendum I hereto) by and among CT Realty  Corporation,  a California
corporation  ("Transferor")  and  Glenborough  Properties,  L.P.,  a  California
limited partnership ("GPLP") ("Transferee").

                                    Recitals

     A. In June 1995,  Transferor and Yale Loop Partners,  a limited partnership
("YLP")  formed  Culver Center  Associates  II, a joint venture ("CCA II") which
became the owner of the  Property  (as  defined  below).  Under the CCA II joint
venture agreement ("JV Agreement")  Transferor and Yale Loop Partners each owned
a 50% interest in CCA II.

     B. As part of the June 1995  transaction  Transferor and YLP obtained (i) a
loan from NationsCredit in the face amount of $18,800,000.00 (the "NationsCredit
Loan") and (ii) a loan from Heller Financial in the face amount of $2,900,000.00
(the "Heller Loan").  The NationsCredit Loan and the Heller Loan shall sometimes
hereinafter be collectively referred to as the "Loans".

     C. Through a series of  distributions  in kind of the Property from CCA II,
Transferor  and Ronald E.  Soderling,  Trustee,  or his successor in trust U/D/T
dated February 20, 1996, and any amendments thereto (the "Soderling Trust"), now
each own an undivided 50% interest in the Property.

     D.  Transferee  desires to acquire the Property and  Transferor  desires to
sell its  undivided 50% interest in the Property to  Transferee,  upon the terms
and subject to the conditions set forth in this Agreement. Pursuant to a certain
Contribution  Agreement being executed  concurrently  herewith by Transferee and
the Soderling Trust, the Soderling Trust intends to contribute its undivided 50%
interest  in the  Property to  Transferee  in exchange  for  operating  units in
Transferee.

     NOW,   THEREFORE,   in   consideration   of  the   premises,   the   mutual
representations, warranties, covenants and agreements hereinafter contained, and
other good and valuable  consideration  the receipt and sufficiency of which are
hereby  acknowledged and intending to be legally bound, the parties hereby agree
as follows:

1.  Definitions.  Terms used in this Agreement shall have the meanings set forth
in Addendum I attached hereto.

2. Agreement to Purchase and Sell.  Subject to and upon the terms and conditions
herein  set forth  and the  representations  and  warranties  contained  herein,
Transferor  agrees to sell the Property to Transferee,  and Transferee agrees to
acquire the Property from Transferor.

                                Page 102 of 199
<PAGE>

3.  Consideration.  Transferor and Transferee agree that the total Consideration
for the Property shall be Fifteen Million Dollars ($15,000,000).

     (a) The Consideration shall comprise the following components:

          (i)  Earnest  Money  Deposit.  Within  two  (2)  business  days of the
          Effective Date,  Transferee  shall deposit the Earnest Money in escrow
          with the Title Company. The Earnest Money shall be held in a federally
          insured  interest-bearing  account and interest accruing thereon shall
          be for the account of  Transferee.  The Earnest  Money shall be in the
          form of cash,  certificates  of deposit or letters of credit issued by
          major national banks. In the event the transaction contemplated hereby
          is consummated,  the Earnest Money plus interest accrued thereon shall
          be credited against Transferee's payment obligations hereunder.

          (ii) The Loans. The Loans will be paid off at Closing.  If the Closing
          occurs on any day during the month of July 1997, (i) all principal and
          accrued interest under the Heller Loan,  including the Buy-Out Fee (in
          the amount of $1,085,000.00)  will be paid at the Closing and shall be
          paid off from proceeds  otherwise  payable hereunder to Transferor and
          (ii) 50% of all principal and accrued interest under the NationsCredit
          Loan shall be paid off from proceeds  otherwise  payable  hereunder to
          Transferor. If the Closing occurs at any other time, (i) all principal
          and accrued interest under the Heller Loan shall be paid by Transferor
          from  proceeds  otherwise  payable  hereunder to  Transferor  but that
          portion  of the  Buy-Out  Fee  in  excess  of  $1,085,000.00  and  any
          prepayment or other changes imposed under said loan documents shall be
          the additional obligation of Transferee, and (ii) 50% of all principal
          and accrued  interest  under the  NationsCredit  Loan shall be paid by
          Transferor from proceeds  otherwise  payable  hereunder to Transferor,
          but 50% of any  prepayment  or other  charges  imposed under said loan
          documents, shall be the additional obligation of Transferee.

          (iii) Cash.  Immediately  available  funds,  in an amount equal to the
          Consideration,  less (i) the  amounts  paid  under  Section 3 (a) (ii)
          above,  (ii) the  Earnest  Money  Deposit,  if any and  (iii)  charges
          against  Transferor  for  prorations  and  closing  costs as set forth
          elsewhere  herein,  shall be paid in  immediately  available  funds at
          close of escrow.

          (iv) Coordination with the Related  Transaction.  Transferor agrees to
          reach agreement with the Soderling Trust so that the  consideration to
          be received  by  Transferor  hereunder  plus the  consideration  to be
          received  by  the  Soderling  Trust,  as  transferor  in  the  Related
          Transaction, will be equal to $30,000,000 in the aggregate. Transferee
          agrees to execute  such  modifications  to this

                                Page 103 of 199
<PAGE>

          Agreement  and to the  documents  utilized in the Related  Transaction
          which  may  be  reasonably   necessary  to  adjust  the  Consideration
          hereunder  and the  Consideration  under the Related  Agreement  to be
          equal  to  $30,000,000  plus  any  additional  amounts  under  Section
          3(a)(ii)in the aggregate.  All such  adjustments  shall be made to the
          cash portion of the Consideration.

     (b) Withhold if Transferor a Foreign Person.  Transferor  acknowledges  and
     agrees that, if Transferor is a foreign person,  Transferee may be required
     to withhold a portion of the Consideration  pursuant to Section 1445 of the
     Internal Revenue Code or Sections 18805 and 26131 of the California Revenue
     and  Taxation  Code or similar laws or  regulations  of other  states.  Any
     amount properly so withheld by Transferee shall be deemed to have been paid
     by Transferee as part of the Consideration,  and Transferor's obligation to
     consummate  the  transactions  contemplated  herein  shall not be  excused,
     reduced,  terminated or otherwise  affected  thereby.  Transferee  does not
     intend to withhold any portion of the Consideration if Transferor  executes
     the FIRPTA  Certificate and any equivalent  certificates  and/or affidavits
     required under applicable state law.

     (c) Lender Holdback Funds. NationsCredit currently possesses holdback funds
     as part of the terms of the NationsCredit Loan (the "Holdback Funds").  The
     Holdback  Funds  shall be paid to the  Transferor  for the  benefit  of the
     Soderling  Trust  and  itself,  and  such  funds  are  not a  part  of  the
     consideration to be paid hereunder by Transferee.

4. Transferee's Due Diligence.  As more fully provided below,  Transferor agrees
to assist and cooperate with Transferee in obtaining  access to the Property and
certain documents relating thereto for purposes of inspection and due diligence.

     (a) Physical  Inspection  of the  Property.  Prior to the  effective  date,
     Transferee  has had  reasonable  access to the  Property  for  purposes  of
     satisfying itself with respect to the condition of the Property. Transferee
     has conducted its own independent investigation of the Property and has not
     relied on statements or  representations  of Transferor with respect to the
     condition of the Property except as is specifically set forth herein.

     (b)  Contacts  with  Tenants.  At  any  time(s)  reasonably   requested  by
     Transferee  following the Effective  Date and prior to Closing,  Transferee
     may contact and  interview  the  Tenants,  provided  that such  contacts or
     interviews  shall  occur only after  reasonable  oral or written  notice to
     Transferor and Transferor may be present during any interview.

     (c) Delivery of Documents and Records.  Transferor has previously delivered
     the Due Diligence Materials to Transferee and Transferee has reviewed those
     documents prior to executing this Agreement.


                                Page 104 of 199
<PAGE>

     (d)  Rejection  of  Service  Contracts.  Prior  to the  execution  of  this
     Agreement  Transferee  has advised  Transferor  in writing of those Service
     Contracts which it desires to assume and Transferee shall be deemed to have
     rejected all other Service Contracts.

     (e) No Assumption of Renewal or Option Commissions. Transferee specifically
     disclaims any liability for brokerage  commissions that may be payable upon
     the renewal or extension of the term of any Lease,  whether pursuant to the
     exercise of an option or otherwise.

     (f)  Transferee's  Right to  Terminate.  At any  time up to June 30,  1997,
     Transferee has the unqualified right to terminate this Agreement and obtain
     a refund of any and all  amounts  paid  hereunder  to Title  Company  or to
     Transferor,  subject to  Transferee's  obligations  to return Due Diligence
     Materials to Transferor as provided in the Section entitled  "Conditions to
     Closing."

5.   Conditions to Closing.

     (a) Transferee's Conditions Precedent. Transferee's Conditions Precedent as
     set forth below are  precedent to  Transferee's  obligation  to acquire the
     Property. The Transferee's Conditions Precedent are intended solely for the
     benefit of Transferee.  If any of the Transferee's  Conditions Precedent is
     not  satisfied,  Transferee  shall  have the  right in its sole  discretion
     either to waive the Transferee's  Condition  Precedent and proceed with the
     acquisition or terminate this Agreement by written notice to Transferor and
     the Title Company.

          (i) Approval of Title. Prior to June 30, 1997, Transferee shall advise
          Transferor  what  exceptions  to title,  if any,  will be  accepted by
          Transferee.  Transferor shall have two (2) business days after receipt
          of Transferee's  objections to give to Transferee:  (A) written notice
          that Transferor will remove such objectionable exceptions on or before
          the Closing Date; or (B) written notice that Transferor  elects not to
          cause such  exceptions  to be  removed.  Transferor's  failure to give
          notice to  Transferee  within the two (2) business day period shall be
          deemed to be Transferor's  election not to cause such exceptions to be
          removed.  If Transferor gives Transferee notice or is otherwise deemed
          to have  elected to proceed  under clause (B),  Transferee  shall have
          until the Closing  Date to elect to proceed  with the  transaction  or
          terminate  this  Agreement.  If  Transferee  fails to give  Transferor
          notice of its  election on or before the Closing  Date and the Closing
          does not otherwise  occur,  Transferee shall be deemed to have elected
          to terminate this  Agreement.  If Transferor  gives notice pursuant to
          clause (A) and fails to remove any such objectionable  exceptions from
          title prior to the Closing Date,  and  Transferee is unwilling to take
          title subject  thereto,  Transferor shall be in default and Transferee
          shall have the rights and remedies  set forth in the Section  entitled
          "Non-Consummation of the Transaction."


                                Page 105 of 199
<PAGE>

          (ii) Review of Property,  Due  Diligence  Materials  and  Disclosures.
          [Intentionally Deleted.]

          (iii)  Leases.  Except as may be  approved by  Transferee,  all of the
          Leases shall be in full force and effect,  without default  thereunder
          by either tenant or landlord,  and no tenant shall be the subject of a
          proceeding under any Creditors Rights Laws.

          (iv)   Representations   and  Warranties.   The   representations  and
          warranties of Transferor contained herein shall be true and correct as
          of the Closing Date as though made at and as of the Closing Date,  and
          Transferor's  covenants  under this Agreement shall be satisfied as of
          the Closing Date (to the extent such  covenants are to be satisfied as
          of the  Closing  Date),  and  Transferee  shall have  received  at the
          Closing a Certificate in the form of Exhibit H hereto, dated as of the
          Closing  Date and  executed  on  behalf  of  Transferor  by  executive
          officers  of  Transferor  or of the  respective  general  partners  of
          Transferor,  as  applicable,  certifying as to the  fulfillment of the
          conditions set forth in this Subsection.

          (v) Conveyances by Transferor. At the Closing, Transferor shall convey
          to Transferee all of its right,  title and interest to the Property by
          executing and  delivering  all  documents  required to be delivered by
          Transferor pursuant to the Section entitled "Closing and Escrow."

          (vi) Title Policy. Title Company shall be committed to issue the Title
          Policy with the Required Endorsements at Closing, showing title to the
          Real  Property  vested in  Transferee,  subject only to the  Permitted
          Exceptions. On or before the Closing, Transferor shall cause the Title
          Company to deliver to Transferee a certification  that, in issuing the
          Title Policy, the Title Company has not relied on any  representations
          or  indemnities  of  Transferor  or any of its  affiliates  (except as
          disclosed in such certification).

          (vii) No Financing Statements.  Transferee shall be satisfied that, as
          of the Closing,  there is no outstanding  financing  statement showing
          Transferor as debtor filed in accordance  with the Uniform  Commercial
          Code of any  applicable  jurisdiction  with  respect  to the  Property
          except for any financing  statements  approved by Transferee  prior to
          the Approval Date or relating to the Loan.

          (viii)  Tenant  Estoppel   Certificates.   Transferor   obtaining  and
          delivering to Transferee the Tenant Estoppel Certificates on or before
          7 calendar days prior to the Closing Date.


                                Page 106 of 199
<PAGE>

          (ix) Property  Condition.  The physical condition of the Real Property
          shall  be  substantially  the  same  on  the  Closing  Date  as on the
          Effective  Date,  reasonable  wear  and  tear  and  loss  by  casualty
          excepted.

          (x)  Termination  of  Agreements.  On  or  before  the  Closing  Date,
          Transferor  shall give written  notice of  termination of all property
          management, leasing brokerage agreements and Service Contracts (except
          those  specifically  assumed by Transferee  in writing)  affecting the
          Property,  and such  termination  shall be without  cost or expense to
          Transferee.

     (b) Closing of Related Transactions. The simultaneous closing of all of the
     Related  Transactions  with the Closing of this  transaction is a condition
     precedent to both  Transferor's  and  Transferee's  obligations  under this
     Agreement.  This condition  precedent is for the benefit of both Transferor
     and Transferee, and if it is not satisfied, then either party may terminate
     this Agreement by written notice to the other party and Title Company,  and
     the transaction shall not be consummated  unless both parties each in their
     sole  discretion  waive this condition  precedent and elect to proceed with
     the transaction.

     (c) Deemed  Approval of Conditions.  In the event that any party having the
     right of cancellation  hereunder based on failure of a condition  precedent
     set forth  herein  does not  inform  the other  party and Title  Company in
     writing of its disapproval of any condition precedent prior to the Closing,
     such condition  precedent shall be deemed to have been satisfied,  approved
     or waived, effective as of the Closing;  provided that a party shall not be
     deemed  to have  waived  any  claim for  breach  of any  representation  or
     warranty by the other party unless such party has Actual  Knowledge of such
     breach prior to Closing.

     (d) Return of Materials.  Upon termination of this Agreement and the escrow
     for failure of a condition precedent, Transferee shall return to Transferor
     all materials provided by Transferor to Transferee  pursuant to the Section
     entitled "Transferee's Due Diligence."

6.   Closing and Escrow.

     (a) Closing Date. The Closing shall be conducted through,  and all items to
     be delivered  shall be delivered  to, the Title  Company,  on or before the
     Closing Date,  which may be extended by Transferee for a period of not more
     than thirty (30) days by delivery of written notice to Transferor not later
     than two (2) business days prior to Closing.

     (b)  Deposit  of  Agreement  and Escrow  Instructions.  The  parties  shall
     promptly deposit a fully executed copy of this Agreement with Title Company
     and this Agreement shall serve as escrow  instructions to Title Company for
     consummation of


                                Page 107 of 199
<PAGE>

     the  transactions  contemplated  hereby.  The parties agree to execute such
     additional  escrow  instructions  as may be  appropriate  to  enable  Title
     Company to comply with the terms of this Agreement; provided, however, that
     in the event of any conflict  between the  provisions of this Agreement and
     any supplementary  escrow  instructions,  the terms of this Agreement shall
     control   unless  a  contrary   intent  is  expressly   indicated  in  such
     supplementary  instructions.  Transferor  and Transferee  hereby  designate
     Title  Company as the  Reporting  Person for the  transaction  pursuant  to
     Section   6045(e)  of  the  Internal   Revenue  Code  and  the  regulations
     promulgated thereunder.

     (c) Transferor's Deliveries to Escrow. At or before the Closing, Transferor
     shall  deliver to  Transferee  the  following,  to the extent they have not
     already been  delivered:
          (i) the duly executed and acknowledged Deed;
          (ii) a duly executed Assignment of Leases;
          (iii) a duly executed Bill of Sale;
          (iv) a duly executed Assignment of Contracts;
          (v) a FIRPTA  affidavit  (in the form attached as Exhibit E) pursuant
          to Section  1445(b)(2) of the Internal  Revenue Code of 1986 (the code
          ), and on which Transferee is entitled to rely, that Transferor is not
          a foreign  person  within the  meaning of  Section  1445(f)(3)  of the
          Internal Revenue Code; and
          (vi) a California Form 590 (or equivalent form for another appropriate
          state) from  Transferee  certifying  that  Transferor  has a permanent
          place of business in California or such other state is qualified to do
          business in California or such other state; and
          (vii) any other  instruments,  records  or  correspondence  called for
          hereunder which have not previously been delivered.

     (d) Transferor's Deliveries to Transferee.
          (i) Deliveries at Closing. At or before the Closing,  Transferor shall
          deliver to  Transferee  the  following,  to the  extent  they have not
          already been delivered:
               a) a Closing  Certificate in the form attached  hereto as Exhibit
               H;
               b)  operating  statements  for that  portion of the current  year
               ending at the end of the calendar  month  preceding  the month in
               which the Closing Date occurs,  certified in the manner specified
               in Addendum III;
               c) a Rent Roll and Delinquency  Report both dated as of the first
               day of the month in which the Closing Date occurs;
               d) duly executed original Tenant Estoppel Certificates;
               e)such  original  resolutions,  authorizations,  bylaws  or other
               corporate and/or partnership  documents or agreements relating to
               Transferor as shall be reasonably  required by Transferee  and/or
               the Title Company;
               f) an  original  signed  notice in the form of Exhibit G attached
               hereto for each of the Tenants; and

                                Page 108 of 199
<PAGE>

               g) all keys to the Property,  which shall be personally delivered
               at  the  Property  by  a   representative   of  Transferor  to  a
               representative of Transferee.
          (ii) Deliveries After Closing. On the first business day following the
          Closing,  Transferor shall deliver to Transferee the following, to the
          extent they have not already been  delivered,  and such delivery shall
          be made in the manner set forth in Addendum IV:
               a)  originals  of  the  Contracts  not  previously  delivered  to
               Transferee;
               b) originals of the Leases;
               c) originals of any and all building  permits and certificates of
               occupancy  for the Real  Property  that are in the  possession or
               control of Transferor and/or an affiliate of Transferor;
               d) originals of all other matters described in Addendum III; and
               e) any other  instruments,  records or correspondence  called for
               hereunder which have not previously been delivered.

     (e)  Transferee's  Deliveries  to  Transferor.  At or before  the  Closing,
     Transferee  shall deliver or cause to be delivered to escrow the following:
          (i) a duly executed Assignment of Leases;
          (ii) a duly executed Assignment of Contracts; and
          (iii) the Cash.

     (f) Deposit of Other  Instruments.  Transferor  and  Transferee  shall each
     deposit such other instruments as are reasonably  required by Title Company
     or otherwise  required to close the escrow and consummate the  transactions
     described herein in accordance with the terms hereof.

7.  Closing  Adjustments  and  Prorations.  With respect to each  Property,  the
following  adjustments  shall be made,  and the  following  procedures  shall be
followed:

     (a) Basis of  Prorations.  All  prorations  shall be calculated as of 12:01
     a.m. on the Closing Date, on the basis of a 365-day year.

     (b) Items Not to be Prorated.  There shall be no prorations or  adjustments
     of any kind with respect to:

          (i) Insurance premiums;

          (ii) Delinquent  Rents for full months prior to the month in which the
          Closing occurred.  Delinquent Rents for full months prior to the month
          in which the Closing occurred shall remain the property of Transferor;
          however  Transferee  shall  cooperate with Transferor and shall assist
          Transferor  in efforts to collect;  provided  further,  however,  that
          Transferee  shall have no duty to  initiate  any legal  proceeding  or
          action  against  any  Tenant on  Transferor's  behalf

                                Page 109 of 199
<PAGE>

          related to such Delinquent Rents.  Transferor may take all appropriate
          collection measures  (including  litigation if deemed by Transferor to
          be necessary or  desirable),  except that  Transferor may not seek any
          remedy which would interfere with the Tenant's continued occupancy and
          full use of its premises under such Tenant's  Lease,  or  Transferee's
          rights to receive  Rent with  respect to any period  beginning  on the
          Closing Date.

          (iii) Additional Rents relating to full or partial months prior to the
          Closing Date. If Additional  Rents  relating to full or partial months
          prior to the Closing Date are not finally adjusted between  Transferor
          and any Tenant until after the Closing Date,  then any refund to which
          any Tenant may be entitled shall be the obligation of Transferor,  and
          any  additional  amounts due from the Tenant for such period  shall be
          the property of Transferor.  Transferee  shall have no obligation with
          respect to any such  refund due to any Tenant and no claim to any such
          amounts due from any Tenant. In seeking to collect any such amount due
          from  any  Tenant,  Transferor  may take  all  appropriate  collection
          measures (including litigation if deemed by Transferor to be necessary
          or desirable),  except that, in seeking to collect any such additional
          amounts due from any Tenant,  Transferor may not seek any remedy which
          would interfere with the Tenant's continued  occupancy and full use of
          its premises  under such Tenant's  Lease,  or  Transferee's  rights to
          receive Rent with respect to any period beginning on the Closing Date.
          If  Transferor  receives  any  refund of  expenses  paid  prior to the
          Closing  and  relating  to a  period  prior to the  Closing,  and such
          expenses were reimbursed in whole or in part by any Tenant, Transferor
          shall refund to each Tenant its share of any such refund.

     (c) Closing  Adjustments.  Prior to Closing,  Transferor  shall prepare for
     review,  comment and agreement by Transferee a proration statement for each
     Property,  substantially in the form attached hereto as Exhibit I, and each
     party shall be credited or charged at the Closing,  in accordance  with the
     following:

          (i)  Rents.  Transferor  shall  account  to  Transferee  for any Rents
          actually  collected by Transferor  for the period in which the Closing
          occurs, and Transferee shall be credited for its share.

          (ii) Expenses.

               a) Prepaid Expenses.  To the extent Expenses have been paid prior
               to the Closing  Date for the period in which the Closing  occurs,
               Transferor shall account to Transferee for such prepaid Expenses,
               and  Transferor  shall be credited for its pro rata share thereof
               for the period after the Closing Date.

                                Page 110 of 199
<PAGE>

               b) Unpaid Expenses. To the extent Expenses relating to the period
               in which the Closing occurs are unpaid as of the Closing Date but
               are ascertainable (e.g., interest on the Loan),  Transferee shall
               be credited for  Transferor's pro rata share of such Expenses for
               the period prior to the Closing  date.  The amount to be credited
               to  Transferee  hereunder  shall include the amount of any future
               payments  due  to  any  Tenant  under  such  Tenant's   Lease  as
               reimbursement for tenant improvements or otherwise.

               c)  Property  Taxes.  For  purposes of this  Subsection  entitled
               "Expenses," the Title Company shall pro-rate property taxes based
               on the most recent available tax bills.

          (iii) Security  Deposits.  Transferor  shall deliver to Transferee all
          prepaid  rents,  security  deposits,   letters  of  credit  and  other
          collateral   given  to  Transferor   or  any  of  its   affiliates  or
          successors-in-interest under any of the Leases.

     (d)  Post-Closing  Adjustments.  After the  Closing  Date,  Transferor  and
     Transferee  shall  meet  from  time  to  time  to  discuss  adjustments  in
     accordance with the following.

          (i)  Non-delinquent  Rents.  Transferor  shall take all reasonable and
          customary efforts to bill and collect July Rents for the Property.  If
          Transferor  collects  any  Rents  applicable  to the  month  of  July,
          Transferor  shall  promptly  endorse such payments over to Transferee,
          which  shall in turn  pay to  Transferor  its pro  rata  share of such
          Rents, if any.

          (ii)  Delinquent  Rents for month in which the  Closing  occurred.  If
          Transferee  collects from any Tenant Rents that were  delinquent as of
          the  Closing  Date and that  relate to the period in which the Closing
          occurred,  then such Rents shall be applied in the following  order of
          priority:   First,   to  reimburse   Transferee   for  all  reasonable
          out-of-pocket   third-party  collection  costs  actually  incurred  by
          Transferee in collecting  such Rents  (including  the portion  thereof
          relating to the period  after the Closing  Date);  second,  to satisfy
          such  Tenant's  Rent  obligations  relating  to the  period  after the
          Closing Date; and third, to satisfy such  delinquent Rent  obligations
          relating to the period before the Closing Date.  Transferor shall have
          no right to pursue the collection of such delinquent Rents.

          (iii)  Expenses.  With respect to any invoice  received by  Transferee
          after the Closing Date for Expenses that relate to the period in which
          the Closing occurred,  Transferee will either, at Transferee's option,
          (A) pay the entire  amount of the invoice  and either bill  Transferor
          for  Transferor's  share,  or offset  Transferor's  share  against any
          prorated Rents due to Transferor under subsection(i) or (ii) above, or
          (B) compute Transferee's pro rata share, write a

                                Page 111 of 199
<PAGE>

          check  for  that  amount  in favor of the  vendor,  and then  send the
          invoice and check to Transferor,  in which case Transferor agrees that
          it will pay for its share and forward the invoice and the two payments
          to the vendor. If real property taxes and assessments  payable for any
          period  prior to Closing  are  determined  to be more than the amounts
          prorated  herein  (in  the  case  of the  current  year)  or  paid  by
          Transferor (in the case of any prior year),  due to a reassessment  of
          the Real  Property  or  otherwise,  Transferor  and  Transferee  shall
          promptly  adjust  the  proration  of  such  real  property  taxes  and
          assessments  after the  determination  of such amounts and  Transferor
          shall  pay to  Transferee  any  increase  in the  amount  of such real
          property  taxes  and  assessment  applicable  to any  period  prior to
          Closing.

          (iv)  Survival of  Obligations.  The  obligations  of  Transferor  and
          Transferee under the Subsection  entitled  "Post-Closing  Adjustments"
          shall survive the Closing.

     (e)  Allocation of Closing  Costs.  Closing costs shall be allocated as set
     forth below:  
          (i) Escrow charges: 50% to Transferor and 50% to Transferee.
          (ii) Recording fees: 50% to Transferor and 50% to Transferee.
          (iii)  Title  insurance   premium:   50%  to  Transferor  and  50%  to
          Transferee.
          (iv) Transfer taxes: 100% to Transferor and 0% to Transferee.

     (f) Allocation  among Related  Transactions.  All Closing  Adjustments  and
     prorations chargeable to Transferor in this Agreement and to the transferor
     in  the  Related  Transactions  shall  be  aggregated  and  charged  50% to
     Transferor  under this  Agreement and 50% to the  transferor in the Related
     Transaction.

     (g)Tenant  Estoppel  Certificates.  Transferor  shall  use  all  reasonable
     efforts to obtain a Tenant Estoppel Certificate from all Tenants,  dated no
     earlier than thirty (30) days prior to the Closing Date,  conforming to the
     most recent Rent Roll and  Delinquency  Report  approved by Transferee  and
     alleging no defaults,  offsets,  or claims against  Transferor.  Transferor
     shall deliver completed Tenant Estoppel  Certificates to Transferee as they
     are received by Transferor, and shall use all reasonable efforts to deliver
     all Tenant  Estoppel  Certificates  to Transferee not later than 7 calendar
     days prior the Closing. It shall be a condition to Transferee's  obligation
     to close the sell and acquisition of the Property not later than 7 calendar
     days  prior  to the  Closing,  Transferor  delivers  to  Transferee  Tenant
     Estoppel  Certificates  from  the  Required  Tenants  and,  to  the  extent
     Transferor is unable to obtain Tenant Estoppel  Certificates,  or any items
     required to be therein,  from the  Non-Required  Tenants,  Transferor shall
     deliver to Transferee  and  Transferee  shall be obligated to accept on the
     Closing Date a certification in which Transferor warrants and represents to
     Transferee,  with respect to such missing Tenant  Estoppel  Certificates or
     any missing items required to be included  therein,  each such missing item
     or Tenant Estoppel Certificate.

                                Page 112 of 199
<PAGE>

8. Transferor's Representations and Warranties. Transferor hereby represents and
warrants  to  Transferee  the  matters  set  forth  on  Addendum  II,  which  is
incorporated  herein  by this  reference  as  though  fully  set  forth  herein.
Transferee is entitled to rely on  Transferor's  representations  and warranties
notwithstanding Transferor's inspection and investigation of the Property.

9. Transferee's Representations and Warranties. Transferee hereby represents and
warrants to Transferor as follows:

     (a) GPLP is a duly organized and validly  existing  limited  partnership in
     good standing under the laws of the State of California. This Agreement and
     all  documents  executed  by  Transferee  which  are  to  be  delivered  to
     Transferor  at the  Closing  are or at the  time  of  Closing  will be duly
     authorized, executed and delivered by Transferee, and are or at the Closing
     will be legal, valid and binding obligations of Transferee,  and do not and
     at the time of Closing will not violate any  provisions of any agreement or
     judicial order to which Transferee is subject.

     (b)  Transferee  has made  (or will  make  prior  to the  Closing  Date) an
     independent  investigation  with regard to the  Property  and  Transferee's
     intended use thereof, including without limitation,  review and/or approval
     of matters disclosed by Transferor pursuant to this Agreement.

     (c)  There  is  no  litigation  pending  or,  to  Transferee's   knowledge,
     threatened,  against Transferee or any basis therefor that might materially
     and  detrimentally   affect  the  ability  of  Transferee  to  perform  its
     obligations  under  this  Agreement.  Transferee  shall  notify  Transferor
     promptly of any such litigation of which Transferee becomes aware.

     (d) All representations and warranties set forth herein shall be true as of
     the Effective Date and the Closing Date.

10.  Indemnification.

     (a) Mutual Indemnification. Each party hereby agrees to indemnify the other
     party and defend and hold it harmless  from and against any and all claims,
     demands,  liabilities,  costs,  expenses,  penalties,  damages  and

                                Page 113 of 199
<PAGE>

     losses, including,  without limitation,  attorneys fees, resulting from any
     misrepresentation  or breach of warranty or breach of covenant made by such
     party in this  Agreement  or in any  document,  certificate,  or Exhibit or
     Schedule given or delivered to the other pursuant to or in connection  with
     this Agreement.

     (b)   Indemnification   by  Transferor.   Transferor  agrees  to  indemnify
     Transferee and its partners and defend and hold Transferee and its partners
     harmless from and against any and all claims, demands, liabilities,  costs,
     expenses,  penalties,  damages and losses,  including,  without limitation,
     attorneys'  fees,  asserted  against,  incurred or  suffered by  Transferee
     resulting from or arising out of (i) any personal injury or property damage
     occurring in, on or under the Property during the period from June 28, 1995
     to the Closing Date, from any cause  whatsoever other than as a consequence
     of  the  acts  or  omissions  of  Transferee,   its  agents,  employees  or
     contractors;  and (ii) the failure of Transferor to perform any  obligation
     under the Loan  Documents  to be  performed  by the  borrower  prior to the
     Closing Date (other than the obligation to obtain the Lender's  Consent for
     the transfer of the Property contemplated herein).

     (c)   Indemnification   by  Transferee.   Transferee  agrees  to  indemnify
     Transferor and its partners and defend and hold Transferor and its partners
     harmless from any claims, losses,  demands,  liabilities,  costs, expenses,
     penalties,  damages and losses,  including,  without limitation,  attorneys
     fees, asserted against,  incurred or suffered by Transferor  resulting from
     or  arising  out of (i)  any  personal  injury  or  property  damage  first
     occurring  in,  on or under  the  Property  during  Transferee's  ownership
     thereof,  from any cause whatsoever other than as a consequence of the acts
     or omissions of Transferor,  or its agents,  employees or contractors,  and
     (ii) if  Transferee  does not pay off the Loan on or before the Loan Payoff
     Date,  the failure of Transferor to perform any  obligation  under the Loan
     Documents to be performed by the borrower after the Closing Date.

     (d) Survival of  Indemnifications.  The indemnification  provisions of this
     Section shall survive beyond the Closing, or, if the Closing does not occur
     pursuant to this Agreement, beyond any termination of this Agreement.

11.  Risk of Loss.

     (a) Notice of Loss.  If, prior to the Closing  Date,  any portion of the of
     the Property suffers a Minor or Major Loss,  Transferor  shall  immediately
     notify  Transferee  of that fact,  which  notice shall  include  sufficient
     detail  to  apprise  Transferee  of the  current  status  of  the  Property
     following such loss.

     (b) Minor Loss. Transferee's obligations hereunder shall not be affected by
     the occurrence of a Minor Loss, provided that: (i) upon the Closing,  there
     shall be a credit  against  the  Consideration  equal to the  amount of any
     insurance  proceeds or  condemnation  awards  collected by  Transferor as a
     result of such Minor Loss, plus the amount of any insurance deductible;  or
     insurance or condemnation  proceeds  available to Transferor are sufficient
     to cover the cost of  restoration;  and the insurance  carrier has admitted
     liability  for  the  payment  of  such  costs;  and  (ii)  the  Loan is not
     accelerated or defaulted by reason of such casualty or condemnation. If the
     proceeds  or  awards  have  not  been  collected  as of the  Closing,  then
     Transferor's  right, title and interest to such proceeds or awards shall be
     assigned to Transferee.

                                Page 114 of 199
<PAGE>

     (c) Major Loss. In the event of a Major Loss, Transferee may, at its option
     to be exercised by written notice to Transferor  within twenty (20) days of
     Transferor's  notice to  Transferee  of the  occurrence  thereof,  elect to
     either (i) terminate this Agreement,  or (ii) consummate the acquisition of
     the  Property  for the full  Consideration,  subject to the  following.  If
     Transferee elects to proceed with the acquisition of the Property, then the
     Closing  shall be  postponed  to the later of the Closing  Date or the date
     which is five (5) days after  Transferee  makes such election and, upon the
     Closing, Transferee shall be given a credit against the Consideration equal
     to the amount of any insurance proceeds or condemnation awards collected by
     Transferor as a result of such Major Loss, plus the amount of any insurance
     deductible.  If the  proceeds or awards have not been  collected  as of the
     Closing,  then Transferor's  right,  title and interest to such proceeds or
     awards shall be assigned to Transferee,  and Transferor will cooperate with
     Transferee as reasonably  requested by Transferee in the collection of such
     proceeds or award.  If Transferee  fails to give  Transferor  notice within
     such  20-day  period,  then  Transferee  will be deemed to have  elected to
     terminate this Agreement.

12.  Transferor's Continued Operation of the Property

     (a)  General.  Except  as  otherwise  contemplated  or  permitted  by  this
     Agreement or approved by Transferee in writing,  from the Effective Date to
     the Closing Date, Transferor will operate,  maintain,  repair and lease the
     Property in a prudent  manner,  in the ordinary  course of business,  on an
     arm's-length  basis and  consistent  with its past  practices  (and without
     limiting the foregoing, Transferor shall, in the ordinary course, negotiate
     with  prospective  tenants and enter into leases of the  Property,  enforce
     leases in all material respects including eviction  proceedings against all
     Tenants with delinquencies in excess of 30 days, pay all costs and expenses
     of the Property,  including,  without limitation, debt service, real estate
     taxes and assessments,  maintain insurance and pay and perform  obligations
     under the Loan  Documents)  and will not dispose of or encumber  any of the
     Property,  except for  dispositions  of personal  property in the  ordinary
     course of business. Between the Effective Date and the Closing,  Transferor
     shall  continue  to  undertake  capital  improvements  with  respect to the
     Property in the ordinary course of business.

     (b) Actions Requiring Transferee's Consent. Notwithstanding the above terms
     of this Section,  Transferor  shall not, without the prior written approval
     of Transferee, take any of the following actions:

          (i) Leases. Execute or renew any Lease, terminate any Lease; or modify
          or waive any material term of any Lease;

          (ii)  Contracts.  Except as otherwise  required under this  Agreement,
          enter into, execute or terminate any operating  agreement,  reciprocal
          easement  agreement,  management  agreement  or any  lease,  contract,
          agreement or other  commitment of any sort (including any contract for
          capital items or

                                Page 115 of 199
<PAGE>

          expenditures),  with respect to the Property  requiring payments to or
          by  Transferor  in excess of $5,000 per year,  or the  performance  of
          services by Transferor the value of which exceeds $5,000 per year.

     (c) Cost of Tenant Improvements and Leasing Commissions. In connection with
     any new leases or modifications of existing Leases entered into between the
     Effective  Date and the Closing and  approved  by  Transferee,  the cost of
     tenant improvement work and leasing commissions (but not legal fees, except
     to the extent the same have been approved in advance by  Transferee)  shall
     be prorated  between  Transferee  and Transferor in proportion to the ratio
     between the portion of the new lease term prior to the Closing Date and the
     portion  of the new  lease  term  after  the  Closing  Date.  Except  as is
     otherwise  disclosed by  Transferor  in writing to  Transferee  as shown on
     Schedule  II.E.3,  Transferor  shall be responsible  for the cost of tenant
     improvement  work and leasing  commissions  for all Leases (and  amendments
     thereto)  entered into prior to the Effective Date  (regardless of when the
     same are payable), and Transferor's  obligations with respect thereto shall
     survive the Closing.

13.  Cooperation

     (a) Before  Closing.  Transferor and Transferee  shall cooperate and do all
     acts as may be reasonably required or requested by the other with regard to
     the  fulfillment  of any  Condition  Precedent or the  consummation  of the
     transactions  contemplated  hereby  including  execution of any  documents,
     applications  or  permits.   Transferor   hereby   irrevocably   authorizes
     Transferee  and its  agents  to make  all  inquiries  of any  third  party,
     including any governmental  authority, as Transferee may reasonably require
     to complete its due diligence.

     (b)  After  Closing.  For a  period  of  three  years  after  the  Closing,
     Transferor  will  give  Transferee   timely  and  complete  access  to  the
     historical  financial and property  records of  Transferor  relating to its
     acquisition, ownership and operation of the Property, and Transferor agrees
     that it will not destroy any of the records  during any such period of time
     without  the prior  written  consent of  Transferee.  During the first year
     after the Closing,  Transferor  will provide to  Transferee on a timely and
     complete basis such historical  financial  information  with respect to the
     acquisition,  ownership  and  operation of the Property as  Transferee  may
     reasonably  request in connection with any reports which  Transferee or its
     general  partner  is  required  to file  with  the  Securities  &  Exchange
     Commission or the New York Stock Exchange.

14.  Non-Consummation of the Transaction.  If the transaction is not consummated
on or before the Closing Date, the following provisions shall apply:

     (a) No Default.  If the  transaction is not  consummated for a reason other
     than a default by one of the parties, then (i) Title Company and each party
     shall return to the depositor thereof the Earnest Money and all other funds
     and items which were

                                Page 116 of 199
<PAGE>

     deposited  hereunder;  (ii)  Transferor  and  Transferee  shall  each  bear
     one-half of any Escrow cancellation  charges.  Any return of funds or other
     items by the  Title  Company  or any  party as  provided  herein  shall not
     relieve either party of any liability it may have for its wrongful  failure
     to close.

     (b) Default by  Transferor.  If the  transaction  is not  consummated  as a
     result of a default by Transferor, then Transferee may either (i) terminate
     this  Agreement  by  delivery  of  notice  of  termination  to  Transferor,
     whereupon  (A) the Earnest  Money plus  interest  accrued  thereon shall be
     immediately  returned  to  Transferee,  and  (B)  Transferor  shall  pay to
     Transferee  any  title,  escrow,  legal and  inspection  fees  incurred  by
     Transferee and any other expenses incurred by Transferee in connection with
     the performance of its review under the Section entitled  "Transferee's Due
     Diligence"  (including,  without limitation,  environmental and engineering
     consultants' fees and expenses), in which case neither party shall have any
     further  rights or  obligations  hereunder;  or (2) continue this Agreement
     pending Transferee's action for specific performance and/or damages.

     (c) Default by  Transferee.  If the Closing does not occur as a result of a
     default  by  Transferee,   then  (i)   Transferee   shall  pay  all  escrow
     cancellation charges, (ii) Title Company shall deliver the Earnest Money to
     Transferor  as its full and  complete  liquidated  damages and its sole and
     exclusive  remedy  for  Transferee's  default.  If the  transaction  is not
     consummated because of a default by Transferee,  the Earnest Money together
     with  the  interest  accrued  thereon  shall  be  paid to and  retained  by
     Transferor as liquidated damages. THE PARTIES HAVE AGREED THAT TRANSFEROR'S
     ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY TRANSFEREE, WOULD BE EXTREMELY
     DIFFICULT  OR  IMPRACTICABLE  TO  DETERMINE.  THEREFORE,  BY PLACING  THEIR
     INITIALS  BELOW,  THE PARTIES  ACKNOWLEDGE  THAT THE EARNEST MONEY HAS BEEN
     AGREED UPON,  AFTER  NEGOTIATION,  AS THE PARTIES'  REASONABLE  ESTIMATE OF
     TRANSFEROR'S   DAMAGES  AND  AS  TRANSFEROR'S   EXCLUSIVE   REMEDY  AGAINST
     TRANSFEREE,  AT LAW OR IN  EQUITY,  IN THE  EVENT OF A DEFAULT  UNDER  THIS
     AGREEMENT ON THE PART OF TRANSFEREE.

                    INITIALS:  Transferor _____   Transferee  _____

15.  Miscellaneous

     (a) Disclosure of  Transaction.  Prior to the Closing,  neither party shall
     publicly  announce  or  discuss  the  execution  of this  Agreement  or the
     transaction  contemplated  hereby except in accordance  with the following.
     Neither  party shall  publicly  announce or discuss the  execution  of this
     Agreement  or  the  transaction   contemplated   hereby  unless:   (i)  the
     information  disseminated  by such  party is  limited  to the  names of the
     Transferor and Transferee;  a general description of the Property including
     size, type and location;  the amount and nature of the  Consideration;  and
     Transferee's  anticipated

                                Page 117 of 199
<PAGE>

     yield from the  acquisition of the Property;  or (ii) the announcing  party
     has obtained the prior written consent of the other party,  which shall not
     be unreasonably withheld.

     (b) Possession. Possession of the Property shall be delivered to Transferee
     upon the Closing.

     (c) Notices.  Any notice,  consent or approval  required or permitted to be
     given under this Agreement  shall be in writing and shall be deemed to have
     been given upon (i) hand delivery,  (ii) one (1) day after being  deposited
     with Federal Express,  DHL Worldwide Express or another reliable  overnight
     courier service or transmitted by facsimile telecopy, or (iii) two (2) days
     after being  deposited in the United  States mail,  registered or certified
     mail, postage prepaid,  return receipt required, and addressed as indicated
     below,  or such other address as either party may from time to time specify
     in writing to the other.

         If to Transferee:                           If to Transferor:
         Glenborough Realty Trust Incorporated       CT Realty
         400 South El Camino Real, 11th Floor        4001 MacArthur Boulevard
         San Mateo, CA  94402-1708                   Suite 100
         Attention: Stephen Saul                     Newport Beach, CA 92660
                                                     Attention: Robert Campbell
                                                            cc: Larry R. Mathena

         with a copy to:
         Glenborough Realty Trust Incorporated
         400 South El Camino Real, 11th Floor
         San Mateo, CA  94402-1708
         Attention: G. Lee Burns, Jr.

     (d)  Brokers  and  Finders.  Transferee  has  agreed  to pay to  Provine  &
     Associates  a  brokerage  fee  pursuant  to the terms and  conditions  of a
     separate agreement.  Except as set forth in the preceding sentence, neither
     party has had any  contact  or  dealings  regarding  the  Property,  or any
     communication  in connection  with the subject  matter of this  transaction
     through any real estate  broker or other  person who can claim a right to a
     commission  or finder's fee in  connection  with the transfer  contemplated
     herein.  In the event  that any  broker or  finder  perfects  a claim for a
     commission  or  finder's  fee  based  upon any such  contact,  dealings  or
     communication,  the party through whom the broker or finder makes its claim
     shall be  responsible  for said  commission or fee and shall  indemnify and
     hold  harmless  the other party from and against all  liabilities,  losses,
     costs and  expenses  (including  reasonable  attorneys'  fees)  arising  in
     connection with such claim for a commission or finder's fee. The provisions
     of this Subsection shall survive the Closing.

                                Page 118 of 199
<PAGE>

     (e) Joint and Several Liability.  If Transferor consists of two (2) or more
     parties,  each of  such  parties  (and  each of  their  respective  general
     partners if applicable) shall be liable for Transferor's  obligations under
     this Agreement,  and all documents executed in connection herewith, and the
     liability of such parties shall be joint and several.

     (f) Successors and Assigns. Subject to the following,  this Agreement shall
     be  binding  upon,  and inure to the  benefit  of,  the  parties  and their
     respective successors,  heirs, administrators and assigns. Transferee shall
     have the right,  with notice to  Transferor  (but without the  necessity of
     Transferor's  consent),  to assign its right,  title and interest in and to
     this  Agreement  to one or more  assignees  at any time  before the Closing
     Date; provided,  however that such assignee(s) shall assume all obligations
     of  Transferee,  and such  assignment  and  assumption  shall  not  release
     Transferee  from any obligation  hereunder.  Transferor  shall not have the
     right to assign its interest in this Agreement.

     (g) Amendments.  Except as otherwise provided herein, this Agreement may be
     amended or modified only by a written instrument executed by Transferor and
     Transferee.

     (h) Governing Law. This  Agreement has been  negotiated and executed in San
     Mateo  County,  California  and  the  substantive  laws  of  the  State  of
     California,  without  reference  to its conflict of laws  provisions,  will
     govern the validity, construction, and enforcement of this Agreement.

     (i) Merger of Prior  Agreements.  This Agreement and the Addenda,  Exhibits
     and Schedules hereto  constitute the entire  agreement  between the parties
     and supersede all prior agreements and  understandings  between the parties
     relating to the subject matter hereof.

     (j) Arbitration of Disputes.  Any  controversy,  claim ,  counterclaim,  or
     disputes  between or among the parties hereto arising out of or relating to
     the interpretation, application, breach or enforcement of this Agreement or
     any related agreements or instruments  ("Subject  Documents")  ("Dispute"),
     shall,  at the  option  of any  party,  and at  that  party's  expense,  be
     submitted to mediation,  using either the American Arbitration  Association
     (AAA) or Judicial  Arbitration  and Mediation  Services,  Inc.  (JAMS).  If
     mediation is not used, or if it is used and it fails to resolve the Dispute
     within 30 days from the date AAA or JAMS is engaged, then the Dispute shall
     be  determined  by  neutral  binding  arbitration  in  accordance  with the
     Commercial  Arbitration  Rules then in effect of either JAMS or AAA (at the
     option of the party  initiating  the  arbitration)  and Title 9 of the U.S.
     Code, notwithstanding any other choice of law provision(s) herein or in the
     Subject  Documents.   Any  controversy  concerning  whether  a  Dispute  is
     arbitrable shall be determined by the arbitrator(s). The parties agree that
     related arbitration  proceedings may be consolidated.  The arbitrator shall
     prepare  written  reasons for the award.  The parties hereto agree that the

                                Page 119 of 199
<PAGE>

     arbitrator shall be empowered to grant equitable, as well as legal, relief,
     including,  without limitation, the power to compel specific performance of
     this  Agreement.  The  parties  further  consent  that  the  initiation  of
     mediation and/or arbitration  pursuant to these provisions shall constitute
     an action or the  equivalent for purposes of determining a party's right to
     file a lis pendens in the official  records of the  jurisdiction  where the
     Property  is/are  located.  The parties  consent that judgment on the award
     rendered  may be  entered  in any  state  court  sitting  in the  state  of
     California,  and that any mediation and/or  arbitration shall take place in
     Irvine, California.

     NOTICE:  BY  INITIALING  IN THE SPACE  BELOW YOU ARE  AGREEING  TO HAVE ANY
     DISPUTE  ARISING  OUT OF  THE  MATTERS  INCLUDED  IN  THE  "ARBITRATION  OF
     DISPUTES"   PROVISION  DECIDED  BY  NEUTRAL   ARBITRATION  AS  PROVIDED  BY
     CALIFORNIA  LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT  POSSESS TO HAVE
     THE DISPUTE  LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE
     BELOW YOU ARE  GIVING UP YOUR  JUDICIAL  RIGHTS TO  DISCOVERY  AND  APPEAL,
     UNLESS  THOSE  RIGHTS ARE  SPECIFICALLY  INCLUDED  IN THE  "ARBITRATION  OF
     DISPUTES" PROVISION.  IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING
     TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER AUTHORITY OF THE
     CALIFORNIA  CODE OF CIVIL  PROCEDURE.  YOUR  AGREEMENT TO THIS  ARBITRATION
     PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE
     TO SUBMIT DISPUTES  ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION
     OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION.

                 ____________                                ____________
                  Transferor                                  Transferee

     (k)  Enforcement.  If either party fails to perform any of its  obligations
     under this Agreement or if a dispute arises between the parties  concerning
     the meaning or interpretation of any provision of this Agreement,  then the
     defaulting  party or the party not prevailing in such dispute shall pay any
     and all costs and  expenses  incurred by the other party on account of such
     default  and/or  in  enforcing  or  establishing   its  rights   hereunder,
     including,  without  limitation,  arbitration or court costs and attorneys'
     fees  and  disbursements.  Any such  attorneys'  fees  and  other  expenses
     incurred  by either  party in  enforcing a judgment in its favor under this
     Agreement shall be recoverable separately from and in addition to any other
     amount  included in such judgment,  and such  attorneys' fees obligation is
     intended to be severable from the other provisions of this Agreement and to
     survive and not be merged into any such judgment.

     (l) Time of the Essence. Time is of the essence of this Agreement.

                                Page 120 of 199
<PAGE>

     (m)  Severability.  If any provision of this Agreement.  or the application
     thereof to any person, place, or circumstance,  shall be held by a court of
     competent jurisdiction to be invalid,  unenforceable or void, the remainder
     of this Agreement and such  provisions as applied to other persons,  places
     and circumstances shall remain in full force and effect.

     (n) Marketing.  Transferor agrees not to market or show the Property to any
     other prospective purchasers during the term of this Agreement.

     (o)  Confidentiality.  Transferee  and  Transferor  shall each  maintain as
     confidential any and all material or information about the other or, in the
     case of Transferee and its agents, employees,  consultants and contractors,
     about the Property,  and shall not disclose such  information  to any third
     party,   except,  in  the  case  of  information  about  the  Property  and
     Transferor,  to  Transferee's  investment  bankers,  lender or  prospective
     lenders,   insurance  and  reinsurance  firms,   attorneys,   environmental
     assessment  and  remediation  service  firms  and  consultants,  as  may be
     reasonably  required for the  consummation of the transaction  contemplated
     hereunder and/or as required by law.

     (p) Counterparts.  This Agreement may be executed in counterparts,  each of
     which shall be deemed an original,  but all of which taken  together  shall
     constitute one and the same instrument.

     (q) Addenda,  Exhibits and Schedules.  All addenda,  exhibits and schedules
     referred to herein are, unless otherwise  indicated,  incorporate herein by
     this reference as though set forth herein in full.

     (r) Construction.  Headings at the beginning of each section and subsection
     are solely for the  convenience  of the  parties  and are not a part of the
     Agreement. Whenever required by the context of this Agreement, the singular
     shall include the plural and the  masculine  shall include the feminine and
     vice  versa.  This  Agreement  shall  not be  construed  as if it had  been
     prepared by one of the parties,  but rather as if both parties had prepared
     the same.  In the  event  the date on which  Transferor  or  Transferee  is
     required  to take any  action  under the terms of this  Agreement  is not a
     business  day,  the action shall be taken on the next  succeeding  business
     day.

     (s) Property  Condition.  Except for the  Representations and Warranties of
     Transferor  specifically  set forth herein,  the Property is being sold and
     conveyed by Transferee to Transferor "AS IS, WHERE IS, WITH ALL FAULTS", in
     such  condition  as the  same  may  be on the  Closing  Date,  without  any
     representations  and  warranties by the  Transferor as to any conditions of
     the  Property,  including,  without  limitation,   surface  and  subsurface
     environmental  conditions,  whether  latent  or  patent,.  Except  for  the
     Representations and Warranties of Transferor specifically set forth herein,
     Transferor  makes no  guarantee,  warranty  or  representation,  express or
     implied, as to the quality, character, or condition of the Property (or any
     part  thereof) or the

                                Page 121 of 199
<PAGE>

     fitness of the Property (or any part thereof) for any use or purpose or any
     representation  as to the  nonexistence  of any toxic or  hazardous  waste.
     Except  for  any  claim  related  to  a  breach  of  Transferor's   express
     representations  and warranties,  Transferee shall have no claim, in law or
     in equity,  based upon the  condition of the Property or the failure of the
     Property to meet any standards.  In no event shall Transferor be liable for
     any incidental,  special,  exemplary or consequential  damages,  including,
     without limitation, loss of profits or revenue,  interference with business
     operations,  loss of tenants,  lenders,  investors,  buyers,  diminution in
     value  of the  Property,  or  inability  to use  the  Property,  due to the
     condition  of  the  Property,  absent  a  breach  of  Transferor's  express
     Representations and Warranties contained herein.  Transferee represents and
     warrants to Transferor  that upon  expiration of the Due Diligence  Period,
     Transferee  will have had ample  opportunity  to make a proper  inspection,
     examination and  investigation  of the Property to familiarize  itself with
     its condition and that it will do so to its satisfaction. Transferee agrees
     that,  upon  acceptance  of the  condition of the Property  hereunder,  and
     except for its reliance on the representations and warranties of Transferor
     contained  herein,  it shall  purchase  and  accept  title to the  Property
     including  any and all  environmental  conditions.  In the  event  that any
     hazardous  substances are  discovered on, at or under the Property,  except
     for any claim for breach of any  representation  or warranty of  Transferee
     specifically  made  herein,  Transferee  shall not  maintain  any action or
     assert any claim against  Transferor,  its successors and their  respective
     members,  employees  and  agents  arising  out of or  relating  to any such
     hazardous substances,  including,  without limitation, any for contribution
     or  the   generation,   use,   handling,   treatment,   removal,   storage,
     decontamination,  cleanup, transport or disposal thereof. The provisions of
     this  Section  shall  survive  the  Closing  or  any  termination  of  this
     Agreement.

     (t) Tax Free Exchange. As an accommodation to Transferee, Transferor agrees
     to cooperate with Transferee to accomplish an I.R.C. Section 1031 like kind
     tax deferred exchange, provided that the following terms and conditions are
     met; (i) Transferee  shall give Transferor  notice of any desired  exchange
     not later  than two (2) days prior to the  Closing  Date;  (ii)  Transferor
     shall in no way be liable for any additional  costs,  fees and/or  expenses
     relating to the  exchange;  (iii) in no way shall the Closing be contingent
     or otherwise  subject to the consummation of the exchange,  and the Closing
     shall  timely  occur  despite any  failure,  for what ever  reason,  of the
     parties to the exchange to effect the same; and (iv)  Transferor  shall not
     be required to make any  representations  or warranties nor assume or incur
     any  obligations or personal  liability  whatsoever in connection  with the
     exchange transaction.

     The 1031  Exchange  Transaction  in  question  will  involve  funds held by
     exchange  facilitators  for the benefit of  Glenborough  Fund III,  Limited
     Partnership ("Fund III"). Transferor agrees to convey a proportionate share
     of the equitable and beneficial  ownership of the Property to Fund III, and
     Transferee and Fund III direct that legal title be transferred  directly to
     Glenborough Fund V, Limited Partnership, a Delaware limited partnership.

                                Page 122 of 199
<PAGE>
 
     IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as of the
Effective Date.

Transferor

CT Realty Corporation,
a California corporation

By  ____________________________
its ____________________________

Date:    June  _______, 1997


Transferee

Glenborough Properties, L.P.
a California limited partnership

By       Glenborough Realty Trust Incorporated
         a Maryland corporation
         its General Partner


         By       __________________________________

Date:    June  _______, 1997


                                Page 123 of 199
<PAGE>

             Summary Description of Addenda, Exhibits and Schedules
                                 Not Attached to
                           Purchase Agreement between
                              CT Realty Corporation
                                       And
                          Glenborough Properties, L.P.


                                     Addenda


I        Definitions.

II       Transferor's Representations and Warranties.

III      Due Diligence Materials to be Delivered by Transferor to Transferee.

IV       Description of  Method of Delivery of Certain Documents by Transferor
         After Closing.

                                    Exhibits

A        Form of Deed.

B        Form of Assignment and Assumption of Leases.

C        Form of Warranty Bill of Sale.

D        Form of Assignment and Assumption of Service Contracts,
         Warranties and Guaranties, and Other Intangible Property.

E        Certificate of Transferor Other Than an Individual (FIRPTA Affidavit).

F        Form of Tenant Estoppel Certificate.

G        Form of Notice to Tenants regarding Transfer.

H        Form of Closing Certificate of Transferor.

I        Form of Closing Proration Statement.


                                    Schedules

1.       Description of Land.

2.       Permitted Title Exceptions at Closing.

                                Page 124 of 199
<PAGE>

3.       List of Title Policy Endorsements required by Transferee.

4.       Listing of Personal Property transferred to Transferee.

5.       Listing of Existing Contracts regarding Property Operation.

6.       Description of Other Interests being transferred to Transferee.

7.       Listing of Environmental Reports delivered to Transferee.

8.       Rent Roll.

9.       Tenant Delinquency Report.

10.      Description of Existing Secured Loans encumbering the Property.

11.      Related Transactions that were a condition to closing.

II.C.1.  Transferor's Listing of Property Defects.

II.C.2.  Transferor's Listing of Violations of Laws and Regulations concerning
         property operation.

II.C.3.  Transferor's Description of Regulatory or Condemnation Proceedings.

II.D.3.  Transferor's Description of Lease Exceptions and Tenant Defaults.

II.D.7.  Transferor's Description of Pending Brokerage Fees Due to Third 
         Parties.

II.E.2.  Transferor's Description of Litigation involving the Property.

II.E.3.  Transferor's  Description  of  Tenant  Improvements  Costs  and
         Leasing  Commissions  that  remain  the Transferor's Responsibility.


                                Page 125 of 199
<PAGE>

                             CONTRIBUTION AGREEMENT
                                Centerstone Plaza

     THIS CONTRIBUTION AGREEMENT ("Agreement") is dated as of the Effective Date
(as defined in Addendum I) by and among  Ronald E.  Soderling,  Trustee,  or his
succesor in trust U/D/T dated  February 20,  1996,  and any  amendments  thereto
("Transferor")   and  Glenborough   Properties,   L.P.,  a  California   limited
partnership ("GPLP") ("Transferee").

                                    Recitals

     A. In  June  1995,  Transferor  and CT  Realty  Corporation,  a  California
corporation  ("CT") formed Culver  Center  Associates  II, a joint venture ("CCA
II") which became the owner of the Property (as defined below). Under the CCA II
joint venture  agreement  ("JV  Agreement")  Transferor  and CT each owned a 50%
interest in CCA II.

     B. As part of the June 1995  transaction  Transferor  and CT obtained (i) a
loan from  NationsCredit in the unpaid principal amount of  $18,800,000.00  (the
"NationsCredit  Loan") and (ii) a loan from Heller  Financial in the face amount
of $2,900,000.00 (the "Heller Loan"). The NationsCredit Loan and the Heller Loan
shall sometimes hereinafter be collectively referred to as the "Loans".

     C. Glenborough Realty Trust Incorporated, a Maryland corporation ("GLB") is
general  partner of GPLP,  and GLB's  stock is  publicly  traded on the New York
Stock Exchange.

     D. Through  distributions  in kind of the Property from CCA II,  Transferor
and CT, each own an undivided 50% interest in the Property.

     E.  Transferee  desires to acquire the Property and  Transferor  desires to
contribute  its undivided 50% interest in the Property to Transferee in exchange
for operating units in Transferee,  upon the terms and subject to the conditions
set forth in this  Agreement.  Pursuant  to a  certain  Purchase  Agreement,  CT
desires concurrently herewith to sell its undivided 50% interest in the Property
to Transferee in exchange for certain cash consideration.


     NOW,   THEREFORE,   in   consideration   of  the   premises,   the   mutual
representations, warranties, covenants and agreements hereinafter contained, and
other good and valuable  consideration  the receipt and sufficiency of which are
hereby  acknowledged and intending to be legally bound, the parties hereby agree
as follows:

1.  Definitions.  Terms used in this Agreement shall have the meanings set forth
in Addendum I attached hereto.

                                Page 126 of 199
<PAGE>

2.  Agreement  to  Acquire  and  Contribute.  Subject  to and upon the terms and
conditions  herein set forth and the  representations  and warranties  contained
herein,  Transferor  agrees  to  contribute  the  Property  to  Transferee,  and
Transferee agrees to acquire the Property from Transferor.

3.  Consideration.  Transferor and Transferee agree that the total Consideration
for the Property shall be Fifteen Million Dollars ($15,000,000).

     (a) The Consideration shall comprise the following components:

          (i) OP Units.  275,000 OP Units,  as defined  and subject to the other
          terms and  conditions of Addendum V  which is  incorporated  herein by
          this  reference  as though  set forth in full.  Said  275,000 OP Units
          shall be deemed to have a value of  $5,500,000  to apply  against  the
          Consideration.

          (ii) The Loans. At the Closing  Transferee  shall pay off an undivided
          50%  portion  of the Loan  payable  to  NationsCredit  secured  by the
          Property in the approximate  unpaid  principal amount of approximately
          $18,450,000  (50% of which is  approximately  $9,225,000).  Under  the
          Related   Transaction,   concurrently  with  the  Closing   hereunder,
          Transferee  shall pay off the other  undivided 50% portion of the Loan
          payable to NationsCredit and 100% of the Heller Loan. Transferor shall
          not be charged with or responsible  to pay for any prepayment  penalty
          with respect to the  NationsCredit  Loan.  Transferor  represents  and
          warrants  that  there  will be no  prepayment  penalty  if the Loan is
          repaid during July, 1997.

          (iii) Cash. The balance of the Consideration  shall be paid in cash at
          the Closing.  All charges and credits for prorations and other charges
          in  connection  with this  transaction  shall be  charged  against  or
          credited to the cash portion of the Consideration.

          (iv) Coordination with the Related  Transaction.  Transferor agrees to
          reach agreement with CT Realty Corporation  (Transferor in the Related
          Transaction)  so that the  consideration  to be received by Transferor
          hereunder  plus  the   consideration   to  be  received  by  CT Realty
          Corporation,  as Transferor in the Related Transaction,  will be equal
          to  $30,000,000 in the  aggregate.  Transferee  agrees to execute such
          modifications  to this Agreement and to the documents  utilized in the
          Related  Transaction  which may be reasonably  necessary to adjust the
          Consideration  hereunder  and  the  Consideration  under  the  Related
          Agreement  to be  equal  to  $30,000,000  in the  aggregate.  All such
          adjustments shall be made to the cash portion of the Consideration."

     (b) Withhold if Transferor a Foreign Person.  Transferor  acknowledges  and
     agrees that, if Transferor is a foreign person,  Transferee may be required
     to withhold a

                                Page 127 of 199
<PAGE>

     portion  of the  Consideration  pursuant  to Section  1445 of the  Internal
     Revenue  Code or  Sections  18805 and 26131 of the  California  Revenue and
     Taxation Code or similar laws or  regulations  of other states.  Any amount
     properly  so withheld  by  Transferee  shall be deemed to have been paid by
     Transferee as part of the  Consideration,  and  Transferor's  obligation to
     consummate  the  transactions  contemplated  herein  shall not be  excused,
     reduced,  terminated or otherwise  affected  thereby.  Transferee  does not
     intend to withhold any portion of the Consideration if Transferor  executes
     the FIRPTA  Certificate and any equivalent  certificates  and/or affidavits
     required under applicable state law.

     (c) Lender Holdback Funds. NationsCredit currently possesses holdback funds
     as part of the terms of the NationsCredit Loan (the "Holdback Funds").  The
     Holdback  Funds  shall  be  paid  to  the  transferor   under  the  Related
     Transaction  for the benefit of the Transferor  and itself,  and such funds
     are not a part of the consideration to be paid hereunder by Transferee.

4. Transferee's Due Diligence.  As more fully provided below,  Transferor agrees
to assist and cooperate with Transferee in obtaining  access to the Property and
certain documents relating thereto for purposes of inspection and due diligence.

     (a) Physical  Inspection  of the  Property.  Prior to the  effective  date,
     Transferee  has had  reasonable  access to the  Property  for  purposes  of
     satisfying  itself  with  respect to the  representations,  warranties  and
     covenants of Transferor  contained herein and with respect to the condition
     of the Property. Transferee has conducted its own independent investigation
     of the  Property and has not relied on  statements  or  representations  of
     Transferor  with  respect to the  condition  of the  Property  except as is
     specifically set forth herein.

     (b)  Contacts  with  Tenants.  At  any  time(s)  reasonably   requested  by
     Transferee  following the Effective  Date and prior to Closing,  Transferee
     may contact and  interview  the  Tenants,  provided  that such  contacts or
     interviews  shall  occur only after  reasonable  oral or written  notice to
     Transferor and Transferor may be present during any interview.

     (c) Delivery of Documents and Records.  Transferor has previously delivered
     the Due Diligence Materials to Transferee and Transferee has reviewed those
     documents prior to executing this Agreement.

     (d)  Rejection  of  Service  Contracts.  Prior  to the  execution  of  this
     Agreement,  Transferee  has advised  Transferor in writing of those Service
     Contracts which it desires to assume and Transferee shall be deemed to have
     rejected all other Service Contracts.

                                Page 128 of 199
<PAGE>

     (e) No Assumption of Renewal or Option Commissions. Transferee specifically
     disclaims any liability for brokerage  commissions that may be payable upon
     the renewal or extension of the term of any Lease,  whether pursuant to the
     exercise of an option or otherwise.

     (f)  Transferee's  Right to  Terminate.  At any  time up to June 30,  1997,
     Transferee has the unqualified right to terminate this Agreement and obtain
     a refund of any and all  amounts  paid  hereunder  to Title  Company  or to
     Transferor,  subject to  Transferee's  obligations  to return Due Diligence
     Materials to Transferor as provided in the Section entitled  "Conditions to
     Closing."

5.   Conditions to Closing.

     (a) Transferee's Conditions Precedent. Transferee's Conditions Precedent as
     set forth below are  precedent to  Transferee's  obligation  to acquire the
     Property. The Transferee's Conditions Precedent are intended solely for the
     benefit of Transferee.  If any of the Transferee's  Conditions Precedent is
     not  satisfied,  Transferee  shall  have the  right in its sole  discretion
     either to waive the Transferee's  Condition  Precedent and proceed with the
     acquisition or terminate this Agreement by written notice to Transferor and
     the Title Company.

          (i) Approval of Title. Prior to June 30, 1997, Transferee shall advise
          Transferor  what  exceptions  to title,  if any,  will be  accepted by
          Transferee.  Transferor shall have two (2) business days after receipt
          of Transferee's  objections to give to Transferee:  (A) written notice
          that Transferor will remove such objectionable exceptions on or before
          the Closing Date; or (B) written notice that Transferor  elects not to
          cause such  exceptions  to be  removed.  Transferor's  failure to give
          notice to  Transferee  within the two (2) business day period shall be
          deemed to be Transferor's  election not to cause such exceptions to be
          removed.  If Transferor gives Transferee notice or is otherwise deemed
          to have  elected to proceed  under clause (B),  Transferee  shall have
          until the Closing  Date to elect to proceed  with the  transaction  or
          terminate  this  Agreement.  If  Transferee  fails to give  Transferor
          notice of its  election on or before the Closing  Date and the Closing
          does not otherwise  occur,  Transferee shall be deemed to have elected
          to terminate this  Agreement.  If Transferor  gives notice pursuant to
          clause (A) and fails to remove any such objectionable  exceptions from
          title prior to the Closing Date,  and  Transferee is unwilling to take
          title subject  thereto,  Transferor shall be in default and Transferee
          shall have the rights and remedies  set forth in the Section  entitled
          "Non-Consummation of the Transaction."

          (ii) Review of Property,  Due  Diligence  Materials  and  Disclosures.
          {Intentionally deleted.]

                                Page 129 of 199
<PAGE>

          (iii)  Leases.  Except as may be  approved by  Transferee,  all of the
          Leases shall be in full force and effect,  without default  thereunder
          by either tenant or landlord,  and no tenant shall be the subject of a
          proceeding under any Creditors Rights Laws.

          (iv)   Representations   and  Warranties.   The   representations  and
          warranties of Transferor contained herein shall be true and correct as
          of the Closing Date as though made at and as of the Closing Date,  and
          Transferor's  covenants  under this Agreement shall be satisfied as of
          the Closing Date (to the extent such  covenants are to be satisfied as
          of the  Closing  Date),  and  Transferee  shall have  received  at the
          Closing a Certificate in the form of Exhibit H hereto, dated as of the
          Closing  Date and  executed  on  behalf  of  Transferor  by  executive
          officers  of  Transferor  or of the  respective  general  partners  of
          Transferor,  as  applicable,  certifying as to the  fulfillment of the
          conditions set forth in this Subsection.

          (v) Conveyances by Transferor. At the Closing, Transferor shall convey
          to Transferee all of its right,  title and interest to the Property by
          executing and  delivering  all  documents  required to be delivered by
          Transferor pursuant to the Section entitled "Closing and Escrow."

          (vi) Title Policy. Title Company shall be committed to issue the Title
          Policy with the Required Endorsements at Closing, showing title to the
          Real  Property  vested in  Transferee,  subject only to the  Permitted
          Exceptions. On or before the Closing, Transferor shall cause the Title
          Company to deliver to Transferee a certification  that, in issuing the
          Title Policy, the Title Company has not relied on any  representations
          or  indemnities  of  Transferor  or any of its  affiliates  (except as
          disclosed in such certification).

          (vii) No Financing Statements.  Transferee shall be satisfied that, as
          of the Closing,  there is no outstanding  financing  statement showing
          Transferor as debtor filed in accordance  with the Uniform  Commercial
          Code of any  applicable  jurisdiction  with  respect  to the  Property
          except for any financing  statements  approved by Transferee  prior to
          the Approval Date or relating to the Loan.

          (viii)  Tenant  Estoppel   Certificates.   Transferor   obtaining  and
          delivering to Transferee the Tenant Estoppel Certificates.

          (ix) Property  Condition.  The physical condition of the Real Property
          shall  be  substantially  the  same  on  the  Closing  Date  as on the
          Effective  Date,  reasonable  wear  and  tear  and  loss  by  casualty
          excepted.

          (x)  Termination  of  Agreements.  On  or  before  the  Closing  Date,
          Transferor  shall give written  notice of  termination of all property
          management, leasing brokerage agreements and Service Contracts (except
          those  specifically

                                Page 130 of 199
<PAGE>

          assumed by  Transferee in writing)  affecting  the Property,  and such
          termination shall be without cost or expense to Transferee.

     (b) Closing of Related Transaction.  The simultaneous closing of all of the
     Related  Transactions  with the Closing of this  transaction is a condition
     precedent to both  Transferor's  and  Transferee's  obligations  under this
     Agreement.  This condition  precedent is for the benefit of both Transferor
     and Transferee, and if it is not satisfied, then either party may terminate
     this Agreement by written notice to the other party and Title Company,  and
     the transaction shall not be consummated  unless both parties each in their
     sole  discretion  waive this condition  precedent and elect to proceed with
     the transaction.

     (c) Deemed  Approval of Conditions.  In the event that any party having the
     right of cancellation  hereunder based on failure of a condition  precedent
     set forth  herein  does not  inform  the other  party and Title  Company in
     writing of its disapproval of any condition precedent prior to the Closing,
     such condition  precedent shall be deemed to have been satisfied,  approved
     or waived, effective as of the Closing;  provided that a party shall not be
     deemed  to have  waived  any  claim for  breach  of any  representation  or
     warranty by the other party unless such party has Actual  Knowledge of such
     breach prior to Closing.

     (d) Return of Materials.  Upon termination of this Agreement and the escrow
     for failure of a condition precedent, Transferee shall return to Transferor
     all materials provided by Transferor to Transferee  pursuant to the Section
     entitled "Transferee's Due Diligence."

6.   Closing and Escrow.

     (a) Closing Date. The Closing shall be conducted through,  and all items to
     be delivered  shall be delivered  to, the Title  Company,  on or before the
     Closing Date,  which may be extended by Transferee for a period of not more
     than thirty (30) days by delivery of written notice to Transferor not later
     than one (1) day prior to the Closing Date.

     (b)  Deposit  of  Agreement  and Escrow  Instructions.  The  parties  shall
     promptly deposit a fully executed copy of this Agreement with Title Company
     and this Agreement shall serve as escrow  instructions to Title Company for
     consummation of the transactions  contemplated hereby. The parties agree to
     execute such additional escrow instructions as may be appropriate to enable
     Title  Company  to  comply  with  the  terms of this  Agreement;  provided,
     however,  that in the event of any conflict  between the provisions of this
     Agreement  and any  supplementary  escrow  instructions,  the terms of this
     Agreement shall control unless a contrary intent is expressly  indicated in
     such supplementary instructions. Transferor and Transferee hereby designate
     Title

                                Page 131 of 199
<PAGE>

     Company as the  Reporting  Person for the  transaction  pursuant to Section
     6045(e)  of the  Internal  Revenue  Code  and the  regulations  promulgated
     thereunder.

     (c) Transferor's Deliveries to Escrow. At or before the Closing, Transferor
     shall  deliver to  Transferee  the  following,  to the extent they have not
     already been delivered:
          (i) the duly executed and acknowledged Deed;
          (ii) a duly executed Assignment of Leases;
          (iii) a duly executed Bill of Sale;
          (iv) a duly executed Assignment of Contracts;
          (v) a  Lease  for  Suite  210  at  the  Property,  executed  by  Resco
          Properties,  a California  general  partnership,  in the form attached
          hereto as Exhibit J (the "Suite 210 Lease";
          (vi) a FIRPTA  affidavit  (in the form attached as Exhibit E) pursuant
          to Section  1445(b)(2) of the Internal  Revenue Code of 1986 (the code
          ), and on which Transferee is entitled to rely, that Transferor is not
          a foreign  person  within the  meaning of  Section  1445(f)(3)  of the
          Internal Revenue Code; and
          (vii) a California Form 590 from Transferor certifying that Transferor
          has a permanent  place of business in California or is qualified to do
          business in California; and
          (viii) any other  instruments,  records or  correspondence  called for
          hereunder which have not previously been delivered.

     (d) Transferor's Deliveries to Transferee.

          (i) Deliveries at Closing. At or before the Closing,  Transferor shall
          deliver to  Transferee  the  following,  to the  extent  they have not
          already been delivered:
               a) a Closing  Certificate in the form attached  hereto as Exhibit
               H;
               b)  operating  statements  for that  portion of the current  year
               ending at the end of the calendar  month  preceding  the month in
               which the Closing Date occurs,  certified in the manner specified
               in Addendum III;
               c) a Rent Roll and Delinquency  Report both dated as of the first
               day of the month in which the Closing Date occurs;
               d) duly executed original Tenant Estoppel Certificates;
               e) such  original  resolutions,  authorizations,  bylaws or other
               corporate and/or partnership  documents or agreements relating to
               Transferor as shall be reasonably  required by Transferee  and/or
               the Title Company;
               f) an  original  signed  notice in the form of Exhibit G attached
               hereto for each of the Tenants; and
               g) all keys to the Property,  which shall be personally delivered
               at  the  Property  by  a   representative   of  Transferor  to  a
               representative of Transferee.
          (ii) Deliveries After Closing. On the first business day following the
          Closing,  Transferor shall deliver to Transferee the following, to the
          extent they

                                Page 132 of 199
<PAGE>

          have not already been  delivered,  and such delivery  shall be made in
          the manner set forth in Addendum IV:
               a)  originals  of  the  Contracts  not  previously  delivered  to
               Transferee;
               b) originals of the Leases;
               c) originals of any and all building  permits and certificates of
               occupancy  for the Real  Property  that are in the  possession or
               control of Transferor and/or an affiliate of Transferor;
               d) originals of all other matters described in Addendum III; and
               e) any other  instruments,  records or correspondence  called for
               hereunder which have not previously been delivered.

     (e)  Transferee's  Deliveries  to  Transferor.  At or before  the  Closing,
     Transferee shall deliver or cause to be delivered to escrow the following:
          (i) a duly executed Assignment of Leases;
          (ii) a duly executed Assignment of Service Contracts;
          (iii) a duly executed counterpart of the Suite 210 Lease;and
          (iv) the Cash.

     (f) Deposit of Other  Instruments.  Transferor  and  Transferee  shall each
     deposit such other instruments as are reasonably  required by Title Company
     or otherwise  required to close the escrow and consummate the  transactions
     described herein in accordance with the terms hereof.

7.  Closing  Adjustments  and  Prorations.  With respect to each  Property,  the
following  adjustments  shall be made,  and the  following  procedures  shall be
followed:

     (a) Basis of  Prorations.  All  prorations  shall be calculated as of 12:01
     a.m. on the Closing Date, on the basis of a 365-day year.

     (b) Items Not to be Prorated.  There shall be no prorations or  adjustments
     of any kind with respect to:

          (i) Insurance premiums;

          (ii) Delinquent  Rents for full months prior to the month in which the
          Closing occurred.  Delinquent Rents for full months prior to the month
          in which the Closing occurred shall remain the property of Transferor;
          however  Transferee  shall  cooperate with Transferor and shall assist
          Transferor  in efforts to collect;  provided  further,  however,  that
          Transferee  shall have no duty to  initiate  any legal  proceeding  or
          action  against  any  Tenant on  Transferor's  behalf  related to such
          Delinquent  Rents.  Transferor  may  take all  appropriate  collection
          measures (including litigation if deemed by Transferor to be necessary
          or  desirable),  except that  Transferor may not seek any remedy which
          would interfere with the Tenant's continued  occupancy and full use of
          its premises

                                Page 133 of 199
<PAGE>

          under such Tenant's Lease, or Transferee's rights to receive Rent with
          respect to any period beginning on the Closing Date.

          (iii) Additional Rents relating to full or partial months prior to the
          Closing Date. If Additional  Rents  relating to full or partial months
          prior to the Closing Date are not finally adjusted between  Transferor
          and any Tenant until after the Closing Date,  then any refund to which
          any Tenant may be entitled shall be the obligation of Transferor,  and
          any  additional  amounts due from the Tenant for such period  shall be
          the property of Transferor.  Transferee  shall have no obligation with
          respect to any such  refund due to any Tenant and no claim to any such
          amounts due from any Tenant. In seeking to collect any such amount due
          from  any  Tenant,  Transferor  may take  all  appropriate  collection
          measures (including litigation if deemed by Transferor to be necessary
          or desirable),  except that, in seeking to collect any such additional
          amounts due from any Tenant,  Transferor may not seek any remedy which
          would interfere with the Tenant's continued  occupancy and full use of
          its premises  under such Tenant's  Lease,  or  Transferee's  rights to
          receive Rent with respect to any period beginning on the Closing Date.
          If  Transferor  receives  any  refund of  expenses  paid  prior to the
          Closing  and  relating  to a  period  prior to the  Closing,  and such
          expenses were reimbursed in whole or in part by any Tenant, Transferor
          shall refund to each Tenant its share of any such refund.

     (c) Closing  Adjustments.  Prior to Closing,  Transferor  shall prepare for
     review,  comment and agreement by Transferee a proration statement for each
     Property,  substantially in the form attached hereto as Exhibit I, and each
     party shall be credited or charged at the Closing,  in accordance  with the
     following:

          (i)  Rents.  Transferor  shall  account  to  Transferee  for any Rents
          actually  collected by Transferor  for the period in which the Closing
          occurs, and Transferee shall be credited for its share.

          (ii) Expenses.

               a) Prepaid Expenses.  To the extent Expenses have been paid prior
               to the Closing  Date for the period in which the Closing  occurs,
               Transferor shall account to Transferee for such prepaid Expenses,
               and  Transferor  shall be credited for its pro rata share thereof
               for the period after the Closing Date.

               b) Unpaid Expenses. To the extent Expenses relating to the period
               in which the Closing occurs are unpaid as of the Closing Date but
               are ascertainable (e.g., interest on the Loan),  Transferee shall
               be credited for  Transferor's pro rata share of such Expenses for
               the period prior to the Closing date.

                                Page 134 of 199
<PAGE>

               c)  Property  Taxes.  For  purposes of this  Subsection  entitled
               "Expenses," the Title Company shall pro-rate property taxes based
               on the most recent available tax bills.

          (iii) Security  Deposits.  Transferor  shall deliver to Transferee all
          prepaid  rents,  security  deposits,   letters  of  credit  and  other
          collateral   given  to  Transferor   or  any  of  its   affiliates  or
          successors-in-interest under any of the Leases.

     (d)  Post-Closing  Adjustments.  After the  Closing  Date,  Transferor  and
     Transferee  shall  meet  from  time  to  time  to  discuss  adjustments  in
     accordance with the following.

          (i)  Non-delinquent  Rents.  Transferor shalll take all reasonable and
          customary efforts to bill and collect July Rents for the Property.  If
          Transferor  collects  ay  Rents  applicable  to  the  month  of  July,
          Transferor  shall  promptly  endorse such payments over to Transferee,
          which  shall in turn  pay to  Transferor  its pro  rata  share of such
          Rents, if any.

          (ii)  Delinquent  Rents for month in which the  Closing  occurred.  If
          Transferee  collects from any Tenant Rents that were  delinquent as of
          the  Closing  Date and that  relate to the period in which the Closing
          occurred,  then such Rents shall be applied in the following  order of
          priority:   First,   to  reimburse   Transferee   for  all  reasonable
          out-of-pocket   third-party  collection  costs  actually  incurred  by
          Transferee in collecting  such Rents  (including  the portion  thereof
          relating to the period  after the Closing  Date);  second,  to satisfy
          such  Tenant's  Rent  obligations  relating  to the  period  after the
          Closing Date; and third, to satisfy such  delinquent Rent  obligations
          relating to the period before the Closing Date.  Transferor shall have
          no right to pursue the collection of such delinquent Rents.

          (iii)  Expenses.  With respect to any invoice  received by  Transferee
          after the Closing Date for Expenses that relate to the period in which
          the Closing occurred,  Transferee will either, at Transferee's option,
          (A) pay the entire  amount of the invoice  and either bill  Transferor
          for  Transferor's  share,  or offset  Transferor's  share  against any
          prorated Rents due to Transferor under subsection(i) or (ii) above, or
          (B) compute Transferee's pro rata share, write a check for that amount
          in favor  of the  vendor,  and then  send  the  invoice  and  check to
          Transferor,  in which case Transferor  agrees that it will pay for its
          share and forward the invoice and the two  payments to the vendor.  If
          real property  taxes and  assessments  payable for any period prior to
          Closing are determined to be more than the amounts prorated herein (in
          the case of the current  year) or paid by  Transferor  (in the case of
          any  prior  year),  due to a  reassessment  of the  Real  Property  or
          otherwise,   Transferor  and  Transferee  shall  promptly  adjust  the
          proration  of such  real  property  taxes  and  assessments  after

                                Page 135 of 199
<PAGE>

          the  determination  of  such  amounts  and  Transferor  shall  pay  to
          Transferee  any increase in the amount of such real property taxes and
          assessment applicable to any period prior to Closing.

          (iv)  Survival of  Obligations.  The  obligations  of  Transferor  and
          Transferee under the Subsection  entitled  "Post-Closing  Adjustments"
          shall survive the Closing.

     (e)  Allocation of Closing  Costs.  Closing costs shall be allocated as set
     forth below:
          (i) Escrow charges: 50% to Transferor and 50% to Transferee.
          (ii) Recording fees: 50% to Transferor and 50% to Transferee.
          (iii)  Title  insurance   premium:   50%  to  Transferor  and  50%  to
          Transferee.
          (iv) Transfer taxes: 100% to Transferor and 0% to Transferee.

     (f) Allocation  among Related  Transactions.  All Closing  Adjustments  and
     prorations chargeable to Transferor in this Agreement and to the transferor
     in  the  Related  Transactions  shall  be  aggregated  and  charged  50% to
     Transferor  under this  Agreement and 50% to the  transferor in the Related
     Transaction.

8. Tenant Estoppel Certificates.  Transferor shall use all reasonable efforts to
obtain a Tenant  Estoppel  Certificate  from all Tenants,  dated no earlier than
thirty (30) days prior to the Closing  Date,  conforming to the most recent Rent
Roll and  Delinquency  Report  approved by Transferee  and alleging no defaults,
offsets, or claims against Transferor. Transferor shall deliver completed Tenant
Estoppel  Certificates  to  Transferee as they are received by  Transferor,  and
shall use all reasonable efforts to deliver all Tenant Estoppel  Certificates to
Transferee prior the Closing. It shall be a condition to Transferee's obligation
to close the  contribution and acquisition of the Property that on or before the
Closing:

     (a) Transferor delivers to Transferee Tenant Estoppel Certificates from the
     Required Tenants,  and, to the extent Transferor is unable to obtain Tenant
     Estoppel  Certificates,  or any  items  required  to be  therein,  from the
     Non-Required Tenants, Transferor shall deliver to Transferee and Transferee
     shall be obligated to accept on the Closing Date a  certification  in which
     Transferor  warrants and  represents  to  Transferee,  with respect to such
     missing Tenant  Estoppel  Certificates  or any missing items required to be
     included therein, each such missing item or Tenant Estoppel Certificate.

9. Transferor's Representations and Warranties. Transferor hereby represents and
warrants  to  Transferee  the  matters  set  forth  on  Addendum  II,  which  is
incorporated  herein  by this  reference  as  though  fully  set  forth  herein.
Transferee is entitled to rely on  Transferor's  representations  and warranties
notwithstanding Transferor's inspection and investigation of the Property.

                                Page 136 of 199
<PAGE>

10. Transferee's  Representations  and Warranties.  Transferee hereby represents
and warrants to Transferor as follows:

     (a) GPLP is a duly organized and validly  existing  limited  partnership in
     good standing under the laws of the State of California,  and GLB is a duly
     organized and validly existing  corporation  under the laws of the State of
     Maryland. This Agreement and all documents executed by Transferee which are
     to be delivered to  Transferor at the Closing are or at the time of Closing
     will be duly authorized,  executed and delivered by Transferee,  and are or
     at the Closing will be legal, valid and binding  obligations of Transferee,
     and do not and at the time of Closing  will not violate any  provisions  of
     any agreement or judicial order to which Transferee is subject.

     (b)  Transferee  has made  (or will  make  prior  to the  Closing  Date) an
     independent  investigation  with regard to the  Property  and  Transferee's
     intended use thereof, including without limitation,  review and/or approval
     of matters disclosed by Transferor pursuant to this Agreement.

     (c)  There  is  no  litigation  pending  or,  to  Transferee's   knowledge,
     threatened,  against Transferee or any basis therefor that might materially
     and  detrimentally   affect  the  ability  of  Transferee  to  perform  its
     obligations  under  this  Agreement.  Transferee  shall  notify  Transferor
     promptly of any such litigation of which Transferee becomes aware.

     (d) All representations and warranties set forth herein shall be true as of
     the Effective Date and the Closing Date.

     (e) The 1996 Annual Report of GLB, the  Prospectus  Supplement of GLB dated
     March  17,  1997  and  the  Form  10-K  Annual  Report  for  1996 of GLB as
     previously  delivered  to  Transferor  are true and correct in all material
     respects and do not omit any material information about GLB or Transferee.

     (f) The Second  Amended and Restated  Agreement of Limited  Partnership  of
     Glenborough  Properties,  LP  dated  as of  October  17,  1996  (the  "GPLP
     Agreement")  previously  delivered to Transferor is a true and correct copy
     of such  agreement  and  sets  forth  all of the  rights,  preferences  and
     privileges  of  Transferor  as a holder of OP Units  except as such rights,
     preferences  and  privileges  of  Transferor  as a holder  of OP Units  are
     modified by this Agreement.

     (g)  True  and  correct  copies  of  the  provisions  of  the  Articles  of
     Incorporation of GLB to which reference is made in Section 8.6C of the GPLP
     Agreement have been previously delivered to Transferor."

11.      Indemnification.

                                Page 137 of 199
<PAGE>

     (a) Mutual Indemnification. Each party hereby agrees to indemnify the other
     party and defend and hold it harmless  from and against any and all claims,
     demands,  liabilities,  costs,  expenses,  penalties,  damages  and losses,
     including,   without  limitation,   attorneys  fees,   resulting  from  any
     misrepresentation  or breach of warranty or breach of covenant made by such
     party in this  Agreement  or in any  document,  certificate,  or Exhibit or
     Schedule given or delivered to the other pursuant to or in connection  with
     this Agreement.

     (b)   Indemnification   by  Transferor.   Transferor  agrees  to  indemnify
     Transferee and its partners and defend and hold Transferee and its partners
     harmless from and against any and all claims, demands, liabilities,  costs,
     expenses,  penalties,  damages and losses,  including,  without limitation,
     attorneys'  fees,  asserted  against,  incurred or  suffered by  Transferee
     resulting from or arising out of (i) any personal injury or property damage
     occurring in, on or under the Property during the period from June 18, 1995
     to the  date  of  Closing,  from  any  cause  whatsoever  other  than  as a
     consequence of the acts or omissions of Transferee,  its agents,  employees
     or  contractors;  and  (ii)  the  failure  of  Transferor  to  perform  any
     obligation  under the Loan  Documents to be performed by the borrower prior
     to the  Closing  Date  (other than the  obligation  to obtain the  Lender's
     Consent for the of the Property contemplated herein).

     (c)   Indemnification   by  Transferee.   Transferee  agrees  to  indemnify
     Transferor and its partners and defend and hold Transferor and its partners
     harmless from any claims, losses,  demands,  liabilities,  costs, expenses,
     penalties,  damages and losses,  including,  without limitation,  attorneys
     fees, asserted against,  incurred or suffered by Transferor  resulting from
     or  arising  out of (i)  any  personal  injury  or  property  damage  first
     occurring  in,  on or under  the  Property  during  Transferee's  ownership
     thereof,  from any cause whatsoever other than as a consequence of the acts
     or omissions of Transferor,  or its agents,  employees or contractors,  and
     (ii) if  Transferee  does not pay off the Loan on or before the Loan Payoff
     Date,  the failure of Transferor to perform any  obligation  under the Loan
     Documents to be performed by the borrower after the Closing Date.

     (d) Survival of  Indemnifications.  The indemnification  provisions of this
     Section shall survive beyond the Closing, or, if the Closing does not occur
     pursuant to this Agreement, beyond any termination of this Agreement.

12.  Risk of Loss.

     (a) Notice of Loss.  If, prior to the Closing  Date,  any portion of the of
     the Property suffers a Minor or Major Loss,  Transferor  shall  immediately
     notify  Transferee  of that fact,  which  notice shall  include  sufficient
     detail  to  apprise  Transferee  of the  current  status  of  the  Property
     following such loss.

                                Page 138 of 199
<PAGE>

     (b) Minor Loss. Transferee's obligations hereunder shall not be affected by
     the occurrence of a Minor Loss, provided that: (i) upon the Closing,  there
     shall be a credit  against  the  Consideration  equal to the  amount of any
     insurance  proceeds or  condemnation  awards  collected by  Transferor as a
     result of such Minor Loss, plus the amount of any insurance deductible;  or
     insurance or condemnation  proceeds  available to Transferor are sufficient
     to cover the cost of  restoration;  and the insurance  carrier has admitted
     liability  for  the  payment  of  such  costs;  and  (ii)  the  Loan is not
     accelerated or defaulted by reason of such casualty or condemnation. If the
     proceeds  or  awards  have  not  been  collected  as of the  Closing,  then
     Transferor's  right, title and interest to such proceeds or awards shall be
     assigned to Transferee.

     (c) Major Loss. In the event of a Major Loss, Transferee may, at its option
     to be exercised by written notice to Transferor  within twenty (20) days of
     Transferor's  notice to  Transferee  of the  occurrence  thereof,  elect to
     either (i) terminate this Agreement,  or (ii) consummate the acquisition of
     the  Property  for the full  Consideration,  subject to the  following.  If
     Transferee elects to proceed with the acquisition of the Property, then the
     Closing  shall be  postponed  to the later of the Closing  Date or the date
     which is five (5) days after  Transferee  makes such election and, upon the
     Closing, Transferee shall be given a credit against the Consideration equal
     to the amount of any insurance proceeds or condemnation awards collected by
     Transferor as a result of such Major Loss, plus the amount of any insurance
     deductible.  If the  proceeds or awards have not been  collected  as of the
     Closing,  then Transferor's  right,  title and interest to such proceeds or
     awards shall be assigned to Transferee,  and Transferor will cooperate with
     Transferee as reasonably  requested by Transferee in the collection of such
     proceeds or award.  If Transferee  fails to give  Transferor  notice within
     such  20-day  period,  then  Transferee  will be deemed to have  elected to
     terminate this Agreement.

13.  Transferor's Continued Operation of the Property

     (a)  General.  Except  as  otherwise  contemplated  or  permitted  by  this
     Agreement or approved by Transferee in writing,  from the Effective Date to
     the Closing Date, Transferor will operate,  maintain,  repair and lease the
     Property in a prudent  manner,  in the ordinary  course of business,  on an
     arm's-length  basis and  consistent  with its past  practices  (and without
     limiting the foregoing, Transferor shall, in the ordinary course, negotiate
     with  prospective  tenants and enter into leases of the  Property,  enforce
     leases in all material respects including eviction  proceedings against all
     Tenants with delinquencies in excess of 30 days, pay all costs and expenses
     of the Property,  including,  without limitation, debt service, real estate
     taxes and assessments,  maintain insurance and pay and perform  obligations
     under the Loan  Documents)  and will not dispose of or encumber  any of the
     Property,  except for  dispositions  of personal  property in the  ordinary
     course of business. Between the Effective Date and the Closing,  Transferor
     shall  continue  to  undertake  capital  improvements  with  respect to the
     Property in the ordinary course of business.

                                Page 139 of 199
<PAGE>

     (b) Actions Requiring Transferee's Consent. Notwithstanding the above terms
     of this Section,  Transferor  shall not, without the prior written approval
     of Transferee, take any of the following actions:

          (i) Leases. Execute or renew any Lease, terminate any Lease, or modify
          or waive any material term of any Lease;

          (ii)  Contracts.  Except as otherwise  required under this  Agreement,
          enter into, execute or terminate any operating  agreement,  reciprocal
          easement  agreement,  management  agreement  or any  lease,  contract,
          agreement  or other  commitment  of any sort  that  will  survive  the
          Closing  (including  any contract for capital items or  expenditures),
          with respect to the Property requiring payments to or by Transferor in
          excess of $5000 per year, or the performance of services by Transferor
          the value of which exceeds $5,000 per year.

     (c) Cost of Tenant Improvements and Leasing Commissions. In connection with
     any new leases or modifications of existing Leases entered into between the
     Effective  Date and the Closing and  approved  by  Transferee,  the cost of
     tenant  improvement work and leasing  commissions shall be prorated between
     Transferee and Transferor in proportion to the ratio between the portion of
     the new lease term  prior to the  Closing  Date and the  portion of the new
     lease term after the Closing Date.  Except as set forth in Schedule II.E.3,
     Transferor shall be responsible for the cost of tenant improvement work and
     leasing  commissions for all Leases (and amendments  thereto)  entered into
     prior to the Effective Date (regardless of when the same are payable),  and
     Transferor's obligations with respect thereto shall survive the Closing.

14.  Cooperation

     (a) Before  Closing.  Transferor and Transferee  shall cooperate and do all
     acts as may be reasonably required or requested by the other with regard to
     the  fulfillment  of any  Condition  Precedent or the  consummation  of the
     transactions  contemplated  hereby  including  execution of any  documents,
     applications  or  permits.   Transferor   hereby   irrevocably   authorizes
     Transferee  and its  agents  to make  all  inquiries  of any  third  party,
     including any governmental  authority, as Transferee may reasonably require
     to complete its due diligence.

     (b)  After  Closing.  For a  period  of  three  years  after  the  Closing,
     Transferor  will  give  Transferee   timely  and  complete  access  to  the
     historical  financial and property  records of  Transferor  relating to its
     acquisition, ownership and operation of the Property, and Transferor agrees
     that it will not destroy any of the records  during any such period of time
     without  the prior  written  consent of  Transferee.  During the first year
     after the Closing,  Transferor  will provide to  Transferee on a timely and
     complete basis such historical  financial  information  with respect to the
     acquisition,  ownership  and  operation of the Property as  Transferee  may
     reasonably  request in connection with

                                Page 140 of 199
<PAGE>

     any reports  which GLB is required to file with the  Securities  & Exchange
     Commission or the New York Stock Exchange.

15.  Non-Consummation of the Transaction.  If the transaction is not consummated
on or before the Closing Date, the following provisions shall apply:

     (a) No Default.  If the  transaction is not  consummated for a reason other
     than a default by one of the parties, then (i) Title Company and each party
     shall  return to the  depositor  thereof and all funds and items which were
     deposited  hereunder;  (ii)  Transferor  and  Transferee  shall  each  bear
     one-half of any Escrow cancellation  charges.  Any return of funds or other
     items by the  Title  Company  or any  party as  provided  herein  shall not
     relieve either party of any liability it may have for its wrongful  failure
     to close.

     (b) Default by  Transferor.  If the  transaction  is not  consummated  as a
     result of a default by Transferor, then Transferee may either (i) terminate
     this  Agreement  by  delivery  of  notice  of  termination  to  Transferor,
     whereupon  Transferor shall pay to Transferee any title,  escrow, legal and
     inspection  fees incurred by Transferee and any other expenses  incurred by
     Transferee  in  connection  with the  performance  of its review  under the
     Section  entitled   "Transferee's   Due  Diligence"   (including,   without
     limitation,  environmental and engineering consultants' fees and expenses),
     in which case neither  party shall have any further  rights or  obligations
     hereunder;  or (ii) continue this Agreement pending Transferee's action for
     specific performance and/or damages.

     (c) Default by  Transferee.  If the Closing does not occur as a result of a
     default  by  Transferee,   then  (i)   Transferee   shall  pay  all  escrow
     cancellation  charges,  (ii) Transferee shall pay to Transferor $100,000 as
     its full and complete  liquidated damages and its sole and exclusive remedy
     for Transferee's  default. THE PARTIES HAVE AGREED THAT TRANSFEROR'S ACTUAL
     DAMAGES,  IN THE  EVENT OF A  DEFAULT  BY  TRANSFEREE,  WOULD BE  EXTREMELY
     DIFFICULT  OR  IMPRACTICABLE  TO  DETERMINE.  THEREFORE,  BY PLACING  THEIR
     INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT $100,000 HAS BEEN AGREED UPON,
     AFTER  NEGOTIATION,  AS THE PARTIES'  REASONABLE  ESTIMATE OF  TRANSFEROR'S
     DAMAGES AND AS TRANSFEROR'S EXCLUSIVE REMEDY AGAINST TRANSFEREE,  AT LAW OR
     IN EQUITY,  IN THE EVENT OF A DEFAULT  UNDER THIS  AGREEMENT ON THE PART OF
     TRANSFEREE.

                     INITIALS:  Transferor _____   Transferee  _____

16.  Miscellaneous

     (a) Disclosure of  Transaction.  Prior to the Closing,  neither party shall
     publicly  announce  or  discuss  the  execution  of this  Agreement  or the
     transaction  contemplated

                                Page 141 of 199
<PAGE>

     hereby  except  in  accordance  with the  following.  Neither  party  shall
     publicly  announce  or  discuss  the  execution  of this  Agreement  or the
     transaction contemplated hereby unless: (i) the information disseminated by
     such party is  limited to the names of the  Transferor  and  Transferee;  a
     general description of the Property including size, type and location;  the
     amount and nature of the Consideration;  and Transferee's anticipated yield
     from the  acquisition  of the Property;  or (ii) the  announcing  party has
     obtained the prior written  consent of the other party,  which shall not be
     unreasonably withheld.

     (b) Possession. Possession of the Property shall be delivered to Transferee
     upon the Closing.

     (c) Notices.  Any notice,  consent or approval  required or permitted to be
     given under this Agreement  shall be in writing and shall be deemed to have
     been given upon (i) hand delivery,  (ii) one (1) day after being  deposited
     with Federal Express,  DHL Worldwide Express or another reliable  overnight
     courier service or transmitted by facsimile telecopy, or (iii) two (2) days
     after being  deposited in the United  States mail,  registered or certified
     mail, postage prepaid,  return receipt required, and addressed as indicated
     below,  or such other address as either party may from time to time specify
     in writing to the other.

     If to Transferee:                          If to Transferor:
     Glenborough Realty Trust Incorporated      Ronald E. Soderling, Trustee
     400 South El Camino Real, 11th Floor       4040 Barranca Parkway, Suite 210
     San Mateo, CA  94402-1708                  Irvine, CA 92604-5766
     Attention: Stephen Saul

     with a copy to:                            with a copy to:
     Glenborough Realty Trust Incorporated      Bryan Cave LLP
     400 South El Camino Real, 11th Floor       18881 Van Karman, Suite 1500
     San Mateo, CA 94402-1708                   Irvine, CA 92612-1582
     Attention: G. Lee Burns, Jr.               Attention: Steven H. Sunshine

     (d)  Brokers  and  Finders.  Transferee  has  agreed  to pay to  Provine  &
     Associates a brokerage  fee  pursuant to the terms of a separate  agreement
     between  Transferee  and Provine &  Associates.  Except as set forth in the
     preceding sentence, neither party has had any contact or dealings regarding
     the Property, or any communication in connection with the subject matter of
     this  transaction.  through any real estate  broker or other person who can
     claim a right  to a  commission  or  finder's  fee in  connection  with the
     contemplated  herein.  In the event  that any  broker or finder  perfects a
     claim  for a  commission  or  finder's  fee  based  upon any such  contact,
     dealings  or  communication,  the party  through  whom the broker or finder
     makes its claim shall be responsible  for said  commission or fee and shall
     indemnify   and  hold  harmless  the  other  party  from  and  against  all
     liabilities,  losses, costs and expenses (including  reasonable  attorneys'
     fees)

                                Page 142 of 199
<PAGE>

     arising in connection with such claim for a commission or finder's fee. The
     provisions of this Subsection shall survive the Closing.

     (e) Joint and Several Liability.  If Transferor consists of two (2) or more
     parties,  each of  such  parties  (and  each of  their  respective  general
     partners if applicable) shall be liable for Transferor's  obligations under
     this Agreement,  and all documents executed in connection herewith, and the
     liability of such parties shall be joint and several.

     (f) Successors and Assigns. Subject to the following,  this Agreement shall
     be  binding  upon,  and inure to the  benefit  of,  the  parties  and their
     respective successors,  heirs, administrators and assigns. Transferee shall
     have the right,  with notice to  Transferor  (but without the  necessity of
     Transferor's  consent),  to assign its right,  title and interest in and to
     this  Agreement  to one or more  assignees  at any time  before the Closing
     Date; provided,  however that such assignee(s) shall assume all obligations
     of  Transferee,  and such  assignment  and  assumption  shall  not  release
     Transferee  from any obligation  hereunder.  Transferor  shall not have the
     right to assign its interest in this Agreement. Notwithstanding anything in
     the foregoing to the contrary,  from and after the first anniversary of the
     Closing Date, Transferor shall have the right from time to time to transfer
     any or all of its right, title and interest in the OP Units.

     (g) Amendments.  Except as otherwise provided herein, this Agreement may be
     amended or modified only by a written instrument executed by Transferor and
     Transferee.

     (h) Governing Law. This  Agreement has been  negotiated and executed in San
     Mateo  County,  California  and  the  substantive  laws  of  the  State  of
     California,  without  reference  to its conflict of laws  provisions,  will
     govern the validity, construction, and enforcement of this Agreement.

     (i) Merger of Prior  Agreements.  This Agreement and the Addenda,  Exhibits
     and Schedules hereto  constitute the entire  agreement  between the parties
     and supersede all prior agreements and  understandings  between the parties
     relating to the subject matter hereof.

     (j) Arbitration of Disputes.  Any  controversy,  claim ,  counterclaim,  or
     disputes  between or among the parties hereto arising out of or relating to
     the interpretation, application, breach or enforcement of this Agreement or
     any related agreements or instruments  ("Subject  Documents")  ("Dispute"),
     shall,  at the  option  of any  party,  and at  that  party's  expense,  be
     submitted to mediation,  using either the American Arbitration  Association
     (AAA) or Judicial  Arbitration  and Mediation  Services,  Inc.  (JAMS).  If
     mediation is not used, or if it is used and it fails to resolve the Dispute
     within 30 days from the date AAA or JAMS is engaged, then the Dispute shall
     be  determined  by  neutral  binding  arbitration  in  accordance  with the
     Commercial  Arbitration  Rules then in effect of either JAMS or AAA (at the
     option of the party

                                Page 143 of 199
<PAGE>

     initiating the arbitration)  and Title 9 of the U.S. Code,  notwithstanding
     any other choice of law  provision(s)  herein or in the Subject  Documents.
     Any  controversy  concerning  whether  a  Dispute  is  arbitrable  shall be
     determined by the arbitrator(s). The parties agree that related arbitration
     proceedings  may be  consolidated.  The  arbitrator  shall prepare  written
     reasons for the award.  The parties hereto agree that the arbitrator  shall
     be  empowered  to grant  equitable,  as well as legal,  relief,  including,
     without  limitation,  the  power to  compel  specific  performance  of this
     Agreement.  The parties  further  consent that the  initiation of mediation
     and/or arbitration  pursuant to these provisions shall constitute an action
     or the equivalent for purposes of determining a party's right to file a lis
     pendens in the  official  records of the  jurisdiction  where the  Property
     is/are located. The parties consent that judgment on the award rendered may
     be entered in any state court sitting in the state of California,  and that
     any mediation and/or arbitration shall take place in Irvine, California.

     NOTICE:  BY  INITIALING  IN THE SPACE  BELOW YOU ARE  AGREEING  TO HAVE ANY
     DISPUTE  ARISING  OUT OF  THE  MATTERS  INCLUDED  IN  THE  "ARBITRATION  OF
     DISPUTES"   PROVISION  DECIDED  BY  NEUTRAL   ARBITRATION  AS  PROVIDED  BY
     CALIFORNIA  LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT  POSSESS TO HAVE
     THE DISPUTE  LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE
     BELOW YOU ARE  GIVING UP YOUR  JUDICIAL  RIGHTS TO  DISCOVERY  AND  APPEAL,
     UNLESS  THOSE  RIGHTS ARE  SPECIFICALLY  INCLUDED  IN THE  "ARBITRATION  OF
     DISPUTES" PROVISION.  IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING
     TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER AUTHORITY OF THE
     CALIFORNIA  CODE OF CIVIL  PROCEDURE.  YOUR  AGREEMENT TO THIS  ARBITRATION
     PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE
     TO SUBMIT DISPUTES  ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION
     OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION.

                  ____________                          ____________
                  Transferor                             Transferee

     (k)  Enforcement.  If either party fails to perform any of its  obligations
     under this Agreement or if a dispute arises between the parties  concerning
     the meaning or interpretation of any provision of this Agreement,  then the
     defaulting  party or the party not prevailing in such dispute shall pay any
     and all costs and  expenses  incurred by the other party on account of such
     default  and/or  in  enforcing  or  establishing   its  rights   hereunder,
     including,  without  limitation,  arbitration or court costs and attorneys'
     fees  and  disbursements.  Any such  attorneys'  fees  and  other  expenses
     incurred  by either  party in  enforcing a judgment in its favor under this
     Agreement shall be recoverable separately from and in addition to any other
     amount  included in such judgment,  and

                                Page 144 of 199
<PAGE>

     such  attorneys' fees obligation is intended to be severable from the other
     provisions of this Agreement and to survive and not be merged into any such
     judgment.

     (l) Time of the Essence. Time is of the essence of this Agreement.

     (m)  Severability.  If any provision of this Agreement.  or the application
     thereof to any person, place, or circumstance,  shall be held by a court of
     competent jurisdiction to be invalid,  unenforceable or void, the remainder
     of this Agreement and such  provisions as applied to other persons,  places
     and circumstances shall remain in full force and effect.

     (n) Marketing.  Transferor agrees not to market or show the Property to any
     other prospective purchasers during the term of this Agreement.

     (o)  Confidentiality.  Transferee  and  Transferor  shall each  maintain as
     confidential any and all material or information about the other or, in the
     case of Transferee and its agents, employees,  consultants and contractors,
     about the Property,  and shall not disclose such  information  to any third
     party,   except,  in  the  case  of  information  about  the  Property  and
     Transferor,  to  Transferee's  investment  bankers,  lender or  prospective
     lenders,   insurance  and  reinsurance  firms,   attorneys,   environmental
     assessment  and  remediation  service  firms  and  consultants,  as  may be
     reasonably  required for the  consummation of the transaction  contemplated
     hereunder and/or as required by law.

     (p) Counterparts.  This Agreement may be executed in counterparts,  each of
     which shall be deemed an original,  but all of which taken  together  shall
     constitute one and the same instrument.

     (q) Addenda,  Exhibits and Schedules.  All addenda,  exhibits and schedules
     referred to herein are, unless otherwise  indicated,  incorporate herein by
     this reference as though set forth herein in full.

     (r) Construction.  Headings at the beginning of each section and subsection
     are solely for the  convenience  of the  parties  and are not a part of the
     Agreement. Whenever required by the context of this Agreement, the singular
     shall include the plural and the  masculine  shall include the feminine and
     vice  versa.  This  Agreement  shall  not be  construed  as if it had  been
     prepared by one of the parties,  but rather as if both parties had prepared
     the same.  In the  event  the date on which  Transferor  or  Transferee  is
     required  to take any  action  under the terms of this  Agreement  is not a
     business  day,  the action shall be taken on the next  succeeding  business
     day.

     (s) Property  Condition.  Except for the  Representations and Warranties of
     Transferor  specifically  set forth herein,  the Property is being sold and
     conveyed by Transferee to Transferor "AS IS, WHERE IS, WITH ALL FAULTS", in
     such  condition  as the  same  may  be on the  Closing  Date,  without  any
     representations  and

                                Page 145 of 199
<PAGE>

     warranties  by  the  Transferor  as to  any  conditions  of  the  Property,
     including,   without  limitation,   surface  and  subsurface  environmental
     conditions,  whether latent or patent,.  Except for the Representations and
     Warranties of Transferor specifically set forth herein, Transferor makes no
     guarantee,  warranty  or  representation,  express  or  implied,  as to the
     quality,  character,  or condition of the Property (or any part thereof) or
     the fitness of the Property (or any part thereof) for any use or purpose or
     any  representation as to the nonexistence of any toxic or hazardous waste.
     Except  for  any  claim  related  to  a  breach  of  Transferor's   express
     representations  and warranties,  Transferee shall have no claim, in law or
     in equity,  based upon the  condition of the Property or the failure of the
     Property to meet any standards.  In no event shall Transferor be liable for
     any incidental,  special,  exemplary or consequential  damages,  including,
     without limitation, loss of profits or revenue,  interference with business
     operations,  loss of tenants,  lenders,  investors,  buyers,  diminution in
     value  of the  Property,  or  inability  to use  the  Property,  due to the
     condition  of  the  Property,  absent  a  breach  of  Transferor's  express
     Representations and Warranties contained herein.  Transferee represents and
     warrants to Transferor  that upon  expiration of the Due Diligence  Period,
     Transferee  will have had ample  opportunity  to make a proper  inspection,
     examination and  investigation  of the Property to familiarize  itself with
     its condition and that it will do so to its satisfaction. Transferee agrees
     that,  upon  acceptance  of the  condition of the Property  hereunder,  and
     except for its reliance on the representations and warranties of Transferor
     contained  herein,  it shall  purchase  and  accept  title to the  Property
     including  any and all  environmental  conditions.  In the  event  that any
     hazardous  substances are  discovered on, at or under the Property,  except
     for any claim for breach of any  representation  or warranty of  Transferee
     specifically  made  herein,  Transferee  shall not  maintain  any action or
     assert any claim against  Transferor,  its successors and their  respective
     members,  employees  and  agents  arising  out of or  relating  to any such
     hazardous substances,  including,  without limitation, any for contribution
     or  the   generation,   use,   handling,   treatment,   removal,   storage,
     decontamination,  cleanup, transport or disposal thereof. The provisions of
     this  Section  shall  survive  the  Closing  or  any  termination  of  this
     Agreement.

     (t) Tax Free Exchange. As an accommodation to Transferee, Transferor agrees
     to cooperate with Transferee to accomplish an I.R.C. Section 1031 like kind
     tax deferred exchange, provided that the following terms and conditions are
     met; (i) Transferee  shall give Transferor  notice of any desired  exchange
     not later  than two (2) days prior to the  Closing  Date;  (ii)  Transferor
     shall in no way be liable for any additional  costs,  fees and/or  expenses
     relating to the  exchange;  (iii) in no way shall the Closing be contingent
     or otherwise  subject to the consummation of the exchange,  and the Closing
     shall  timely  occur  despite any  failure,  for what ever  reason,  of the
     parties to the exchange to effect the same; and (iv)  Transferor  shall not
     be required to make any  representations  or warranties nor assume or incur
     any  obligations or personal  liability  whatsoever in connection  with the
     exchange transaction.

                                Page 146 of 199
<PAGE>

     The 1031  Exchange  Transaction  in  question  will  involve  funds held by
     exchange  facilitators  for the benefit of  Glenborough  Fund III,  Limited
     Partnership ("Fund III"). Transferor agrees to convey a proportionate share
     of the equitable and beneficial  ownership of the Property to Fund III, and
     Transferee and Fund III direct that legal title be transferred  directly to
     Glenborough Fund V, Limited Partnership, a Delaware limited partnership.

     IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as of the
Effective Date.


Transferor


________________________
Ronald E. Soderling, Trustee,
or his successor in Trust U/D/T
dated February 20, 1996, and any
amendments thereto.

Date:    June _______, 1997


Transferee

Glenborough Properties, L.P.,
a California limited partnership

By       Glenborough Realty Trust Incorporated
         a Maryland corporation
         its General Partner


         By       __________________________________
                  its:

Date:    June  _______, 1997

As to  its  limited  obligations  hereunder  and in the  Addenda,  Exhibits  and
Schedules Glenborough Realty Trust Incorporated a Maryland corporation

By:      _________________________
         its:


                                Page 147 of 199
<PAGE>

             Summary Description of Addenda, Exhibits and Schedules
                                 Not Attached to
                         Contribution Agreement between
                          Ronald E. Soderling, Trustee,
                                       And
                          Glenborough Properties, L.P.


                                     Addenda


I        Definitions.

II       Transferor's Representations and Warranties.

III      Due Diligence Materials to be Delivered by Transferor to Transferee.

IV       Description of  Method of Delivery of Certain Documents by Transferor
         After Closing.

V        Additional Provisions Governing the Delivery of OP Units by
         Glenborough Properties, L.P. to Ronald E.Soderling, Trustee.

                                    Exhibits

A        Form of Deed.

B        Form of Assignment and Assumption of Leases.

C        Form of Warranty Bill of Sale.

D        Form of Assignment and Assumption of Service Contracts,
         Warranties and Guaranties, and Other Intangible Property.

E        Certificate of Transferor Other Than an Individual (FIRPTA Affidavit).

F        Form of Tenant Estoppel Certificate .

G        Form of Notice to Tenants regarding Transfer.

H        Form of Closing Certificate of Transferor.

I        Form of Closing Proration Statement.

J        Form of Lease for Suite 210 at the Property to be executed by an
         Affiliate of Transferor at Closing.

                                Page 148 of 199
<PAGE>

K        Form of  Registration  Rights  Agreement  to be  executed by Closing
         governing  the rights of the parties thereto relating to the SEC
         Registration of any Shares to be held by Transferor.

L        Form  of  Subscription  Documents  to be  executed  by  Transferor  
         verifying  Transferor's  status  as an Accredited Investor for 
         Securities Laws Purposes.


                                    Schedules
1.       Description of Land.

2.       Permitted Title Exceptions at Closing.

3.       List of Title Policy Endorsements required by Transferee.

4.       Listing of Personal Property transferred to Transferee.

5.       Listing of Existing Contracts regarding Property Operation.

6.       Description of Other Interests being transferred to Transferee.

7.       Listing of Environmental Reports delivered to Transferee.

8.       Rent Roll.

9.       Tenant Delinquency Report.

10.      Description of Existing Secured Loans encumbering the Property.

11.      Related Transactions that were a condition to closing.

II.C.1.  Transferor's Listing of Property Defects.

II.C.2.  Transferor's Listing of Violations of Laws and Regulations concerning 
         property operation.

II.C.3.  Transferor's Description of Regulatory or Condemnation Proceedings.

II.D.3.  Transferor's Description of Lease Exceptions and Tenant Defaults.

II.D.7.  Transferor's Description of Pending Brokerage Fees Due to Third 
         Parties.

II.E.2.  Transferor's Description of Litigation involving the Property.

II.E.3.  Transferor's  Description  of  Tenant  Improvements  Costs  and  
         Leasing  Commissions  that  remain  the Transferor's Responsibility.


                                Page 149 of 199
<PAGE>

                         Agreement of Purchase and Sale

                                     between

                    CIGNA Income Realty-I Limited Partnership
                                       and
           Connecticut General Equity Properties-I Limited Partnership
                                       and
                            Westford Office Venture,

                                   as Sellers,

                                       and

                          Glenborough Properties, L.P.,

                                  as Purchaser

                                Page 150 of 199
<PAGE>

                         Agreement Of Purchase And Sale

     This  AGREEMENT  OF PURCHASE  AND SALE is made by and between  CIGNA Income
Realty-I  Limited   Partnership,   a  Delaware  limited   partnership   ("CIR"),
Connecticut  General  Equity  Properties-I  Limited  Partnership,  a Connecticut
limited partnership ("CGEP"), and Westford Office Venture, a Connecticut general
partnership  ("WOV")  (each,  individually  a "Seller,"  and  collectively,  the
"Sellers"),  and Glenborough Properties,  L.P., a California limited partnership
("Purchaser"), as of the "Effective Date" (as defined below).

1.   Property

     Each Seller hereby agrees to sell, and Purchaser  hereby agrees to buy, all
of the  following  property:  (a) the real  property  described  in Schedule 1.1
hereto and indicated on said Schedule 1.1 as being sold by such Seller, together
with all and singular  easements,  covenants,  agreements,  rights,  privileges,
tenements,  hereditaments and appurtenances thereunto now or hereafter belonging
or appertaining  thereto (each, a "Land Parcel," and collectively,  the "Land");
(b) any and all buildings (collectively, the "Buildings") and other improvements
of every  kind  located  in, on and over each Land  Parcel  (with  respect  to a
particular  Land  Parcel,  "Individual  Improvements,"  and  collectively,   the
"Improvements");  (c) all  tenant  leases  relating  to  each of the  Individual
Improvements,  being the  leases  referred  to  respectively  on the Rent  Rolls
attached hereto as Schedule 1.2 and all guarantees  thereof,  (each Land Parcel,
together with the Individual Improvements and the tenant leases related thereto,
is referred to herein as an "Individual Real Property"; all such Individual Real
Properties are referred to herein,  collectively,  as the "Real Property");  and
(d) all fixtures,  equipment,  and other  personal  property,  both tangible and
intangible, including, but not limited to, the contracts listed in Schedule 1.3,
excluding only the leasing brokerage agreements,  property management agreements
and other  contracts that  Purchaser  elects to exclude by written notice to the
Sellers  pursuant to Section 6.5 hereof,  and the following items, to the extent
of the respective Seller' s right, title and interest thereto, and to the extent
assignable  by  such  Seller  without  obtaining  the  consent  thereto  by  any
third-party: all general intangibles relating to design, development, operation,
management  and  use of each  Individual  Real  Property,  all  certificates  of
occupancy,  zoning  variances,   building,  use  or  other  permits,  approvals,
authorizations,  licenses and consents obtained from any governmental  authority
in  connection  with the  development,  use,  operation  or  management  of each
Individual Real Property,  any telephone numbers and listings used in connection
with the operation of each  Individual  Real  Property and the leasing  thereof,
goodwill in connection with each  Individual Real Property,  any data concerning
tenants of each  Individual  Real  Property  to the  extent  related to the Real
Property, all soils tests,  engineering reports,  architectural drawings,  plans
and  specifications  relating  to all or any  portion  of each  Individual  Real
Property, all payment and performance

                                Page 151 of 199
<PAGE>

bonds or warranties or guarantees  relating to each  Individual  Real  Property,
trade  names,   fictitious   business  names,  and  other  source  and  business
identifiers,  including, but not limited to, the names set forth on Schedule 1.4
hereto,  owned  by  each  Seller  and  contained  in or  related  to  any of the
Individual Improvements being sold by such Seller (with respect to an Individual
Real Property,  "Individual Personal Property," and collectively,  the "Personal
Property")  (collectively,  an  Individual  Real  Property  and  the  Individual
Personal  Property  related  thereto  are  sometimes  referred  to  herein as an
"Individual Property;" collectively, the Real Property and the Personal Property
are sometimes referred to herein as the "Property").

     It shall be a condition to  Purchaser'  s obligation  hereunder to purchase
any  Individual  Property  that each Seller  shall  consummate  the Closing with
respect to all of its Individual Properties.

2.   Purchase Price and Deposits

     The purchase price which the Purchaser  agrees to pay and the Sellers agree
to accept for the Property  shall be the sum of  Forty-Four  Million Two Hundred
Four Thousand Dollars  ($44,204,000)  (hereinafter  referred to as the "Purchase
Price"),  subject to  adjustment  as  provided  in Section 5 hereof,  payable as
follows:

     (a) An earnest  money  deposit (the  "Deposit")  of Four Hundred  Forty-Two
Thousand  Forty Dollars  ($442,040),  in cash, to be deposited by Purchaser with
Chicago Title Company at its office  located at 700 South Flower  Street,  Suite
900, Los Angeles, California 90017 (the "Escrow Holder"), upon delivery of three
(3) executed  copies of this Agreement to Escrow Holder,  such amount to be held
in escrow by Escrow Holder, and deposited in an interest-bearing account; and

     (b) The balance of the  Purchase  Price shall be paid at time of Closing by
wire transfer of immediately  available Federal funds through the Escrow Holder,
with the  transfer  of funds to the  Sellers to be  completed  on the day of the
Closing.

     Schedule 2.1 hereto  indicates the portion of the Purchase Price  allocated
to each  Individual  Property  (each,  an  "Allocated  Portion  of the  Purchase
Price");  provided,  however,  that such  allocation is intended  solely for the
purposes of Paragraphs 6.4, 7.1 and 7.2 hereof and Exhibit A-3 hereto, and shall
not be binding on the parties for any other purpose whatsoever.

     The Deposit and all interest earned thereon shall be paid to the Sellers at
the Closing as a credit against the Purchase Price.  Purchaser shall provide the
Escrow Holder with its tax identification  number, and all interest shall be for
Purchaser' s account for tax purposes.

                                Page 152 of 199
<PAGE>

     In  addition  to the  Deposit,  Purchaser  shall  deposit  three  (3) fully
executed copies of this Agreement with the Escrow Holder  immediately  after all
parties have executed it. The date of such deposit shall be  acknowledged by the
Escrow Holder on all copies, and such date shall be the "Effective Date" of this
Agreement. The Escrow Holder shall retain one copy of this Agreement and deliver
one copy hereof to each of Purchaser and the Sellers.

3.   Failure to Close

     If the Sellers  have  complied  with all of the  covenants  and  conditions
contained  herein and are ready,  willing  and able to convey  the  Property  in
accordance  with this Agreement and Purchaser fails to consummate this Agreement
and take title by reason of a default on  Purchaser'  s part,  then the  parties
hereto  recognize  and agree that the damages that the Sellers will sustain as a
result  thereof  will  be  substantial,  but  difficult  if  not  impossible  to
ascertain.  Therefore,  the parties  agree that,  in the event of  Purchaser'  s
default as aforesaid,  the Sellers shall,  as their sole remedy,  (a) retain the
Deposit plus interest earned thereon,  and (b) be entitled to recover from Buyer
cash in the amount of Four Hundred Forty-Two Thousand Forty Dollars  ($442,040),
as liquidated damages, and no party shall have any further rights or obligations
with  respect  to any other  under  this  Agreement,  except  for the  surviving
covenants  (hereinafter defined). the Sellers acknowledge and agree that the sum
of (A)  the  Deposit  plus  interest  earned  thereon,  and (B)  $442,040,  is a
reasonable  estimate of and bears a reasonable  relationship to the damages that
would be  suffered  and  costs  incurred  by the  Sellers  as a result of having
withdrawn  the  Property  from sale and the failure of Closing to occur due to a
default by Purchaser  under this Agreement and (2) Purchaser  seeks to limit its
liability  under this Agreement to the amount of the sum of (A) the Deposit plus
interest  earned  thereon,  and (B)  $442,040,  in the event this  Agreement  is
terminated and the transaction contemplated by this Agreement does not close due
to a default by Purchaser hereunder.


                             Purchaser              Sellers

              Initials:      __________           ___________


                                                  ___________


                                                  ___________


                                Page 153 of 199
<PAGE>

4.   Closing and Transfer of Title

     4.1 Closing

     The parties hereto agree to conduct a closing of this sale (the  "Closing")
at 8:00 A.M. P.S.T., on or before February 17, 1997; provided,  however, that if
CIR and CGEP have not  obtained  the Limited  Partner  Approvals  (as defined in
Paragraph  15.14) by February  10,  1997,  then,  subject to the  provisions  of
Paragraph 15.14, the date of the Closing shall be extended until the fifth (5th)
calendar  day after such  Limited  Partner  Approvals  have been  obtained  (the
"Closing Date"),  in the office of the Escrow Holder located at 700 South Flower
Street,  Suite 900, Los Angeles  90017,  or at such other place as may be agreed
upon by the parties hereto.  This Agreement shall terminate if transfer of title
is not completed by the Closing Date (unless such failure to close is due to the
Sellers'  default,  the date for Closing is extended  pursuant to any  provision
hereof,  including,  without limitation,  the matters described in Sections 6.3,
6.4, 6.5 and Section 7 hereof,  or the date for Closing is extended by agreement
of the parties, which agreement shall be confirmed in writing).

     4.2 Closing Procedure

     With  respect  to each  Individual  Property,  the  Seller  that  owns such
Individual Property shall execute and deliver or cause to be delivered either to
Escrow  Holder or  Purchaser  on or before the Closing (or such  earlier date as
specifically  provided  below for any  particular  item),  each of the following
items:

     (a) a deed, in the appropriate  form attached hereto as Exhibit A-1 through
A-4,  depending  on the state where the  Individual  Property  is located,  duly
acknowledged  and proper for recording,  conveying such  Individual  Property to
Purchaser,  subject,  however,  to  (i)  (A)  such  easements,  rights  of  way,
encumbrances,  liens,  covenants,  restrictions,  or other  matters of record as
shall have been  approved by  Purchaser  pursuant to Section  6.4,  and (B) such
matters shown on the Survey (as defined in Section 6.3) of such  Individual Real
Property as shall have been approved by Purchaser  pursuant to Section 6.3, (ii)
taxes not yet due and  payable,  (iii) the rights of lessees  and  licensees  of
space in the Individual Improvements included in such Individual Property at the
time of  Closing  (to the  extent  shown  on the Rent  Roll for such  Individual
Improvements,  which Rent Roll shall have been approved by Purchaser),  and (iv)
any encumbrances created or permitted by the terms of this Agreement approved by
such Seller and Purchaser;

     (b) a Bill of Sale in the form  attached  hereto as  Exhibit B, dated as of
the date of Closing  conveying  to  Purchaser  any and all  Individual  Personal
Property pertaining to such Individual Real Property;

                                Page 154 of 199
<PAGE>

     (c) an Assignment and  Assumption of Leases in the form attached  hereto as
Exhibit C dated the date of  Closing,  assigning  all of the  landlord' s right,
title and  interest in and to any tenant and other  leases  covering  all or any
portion of such Individual Real Property;

     (d) Tenant Notification  Agreements (the "Tenant Notices"),  dated the date
of the  Closing  of such  Individual  Property  and  complying  with  applicable
statutes  in order to relieve  such  Seller of  liability  for  tenant  security
deposits  (provided the security deposits are paid to Purchaser),  notifying the
tenants of such Individual Real Property that such Individual  Property has been
sold to Purchaser  and  directing  the tenants to pay rentals to  Purchaser  (or
Purchaser' s designated agent);

     (e) the  originals of all leases and such  Seller' s complete  tenant files
with respect to current tenants of such Individual Real Property,  including all
subleases,   lease   modifications,   license  agreements,   tenant  improvement
construction  contracts,  move-in leases,  financial  statements on all tenants,
credit reports on all tenants,  names and phone numbers of tenant contacts,  and
other  correspondence  with tenants,  all to the extent in such Seller' s or its
property  manager' s possession,  all agreements for the payments of any leasing
commissions which have not been paid in full, and, to the extent in such Seller'
s possession or under such Seller' s control, as-built plans and specifications,
maintenance and service and any other contracts that are to be assumed, and such
Seller' s complete  files with  respect to the  maintenance  of such  Individual
Property,  including correspondence with service providers to the extent in such
Seller' s or its  property  manager' s  possession,  all  licenses,  permits and
certificates  of  occupancy  of such  Individual  Property  or  such  Individual
Improvements  to the  extent  the same  are in such  Seller'  s or its  property
manager' s possession or control;

     (f) at least five (5) days prior to Closing,  tenant estoppel  certificates
on the form attached  hereto as Exhibit D and  consistent  with the  information
contained  in the  respective  Rent  Rolls,  executed  by such  tenants  of such
Individual Real Properties as are set forth on Schedule 4.1 attached hereto;

     (g) such Seller' s certification as to those matters which would be covered
in a tenant estoppel certificate for any lease for which an estoppel certificate
is not obtained from a tenant prior to Closing;

     (h) an updated Rent Roll for such Individual Real Property,  in the form of
the Rent Rolls  attached  hereto as Schedule 1.2, dated within fifteen (15) days
of the date of the Closing;

     (i) Federal and, to the extent applicable,  State affidavits that Seller in
not  a  "foreign  person"  in  the  forms  attached  as  Exhibit  E-1  and  E-2,
respectively;

                                Page 155 of 199
<PAGE>

     (j) a  master  key or  duplicate  key for  all  locks  in  such  Individual
Improvements;

     (k) to the  extent  in the  possession  of such  Seller  or such  Seller' s
property management company,  all maintenance  records,  all engineering records
and reports (e.g., soils,  compaction,  concrete tests,  structural,  mechanical
systems), and any environmental  studies,  sprinkler or other life safety system
reports or testing certifications with respect to such Individual Real Property;

     (l) a list of the amount of all tenant security deposits;

     (m) accounts  receivable  report as of a date no earlier than  December 10,
1996;

     (n) any letters of intent (executed or otherwise) with prospective tenants;

     (o) historical  financials,  including balance sheets and income statements
for prior three (3) years;

     (p) year-to-date operating statements;

     (q) to the  extent  in the  possession  of such  Seller  or such  Seller' s
property management company,  copies of real estate tax bills (including special
assessments) for prior five (5) years, including evidence of payment;

     (r) all  site or plot  plans  for  such  Individual  Real  Property  in the
possession of such Seller or its property manager;

     (s) any  unrecorded  reciprocal  easement  agreements  with respect to such
Individual  Real  Property  in the  possession  of such  Seller or its  property
manager;

     (t) to the  extent  in the  possession  of such  Seller  or such  Seller' s
property management company, any warranties or guaranties in effect with respect
to such Individual Real Property or any component thereof (e.g. roof, HVAC);

     (u) to the  extent  in the  possession  of such  Seller  or such  Seller' s
property  management  company,  copies of utility bills for the Property for the
past three (3) years;

     (v)  copies of all  billings  to  tenants  for the past three (3) years for
utilities,  taxes, insurance and other CAM charges, together with the supporting
calculations of the same; and

     (w)  complete  and correct  copies of all  consents  described in Paragraph
10.2(e).

                                Page 156 of 199
<PAGE>

     With  respect to items (e),  (j) and (m)  through  (w) listed  above,  each
Seller shall be deemed to have delivered such items to Purchaser with respect to
a  particular  Individual  Property  owned by such  Seller  when such Seller has
caused such items to be  packaged  and,  after two (2)  business  days'  written
notice to  Purchaser,  made  available for Purchaser to pick up at the office of
the property manager for such Individual  Property (which property manager shall
be  identified  by name and  address  in such  written  notice of such  Seller).
Notwithstanding any of the foregoing,  Purchaser agrees that with respect to the
Individual  Real  Property  identified  on Schedule  1.1 as  Westford  Corporate
Center,  items (e), (j) and (m) through (w) shall be deemed timely  delivered if
delivered to Purchaser within two (2) business days after the Closing.

     4.3 Purchaser' s Performance

     At the Closing,  Purchaser will cause the Purchase Price to be delivered to
the Escrow Holder,  will execute and deliver the Tenant Notices,  the Assignment
and  Assumption  of  Leases,  and the Bill of Sale  for  each of the  Individual
Properties.

     4.4 Evidence of Authority; Miscellaneous

     Both parties will deliver to the Escrow Holder and each other such evidence
or documents as may  reasonably  be required by the Escrow  Holder or any hereto
evidencing  the power and  authority  of the Sellers and  Purchaser  and the due
authority  of, and  execution  and  delivery  by, any person or persons  who are
executing any of the documents required hereunder in connection with the sale of
the Property.  Both parties will execute and deliver such other documents as are
reasonably required to effect the intent of this Agreement.

5.   Prorations of Rents, Taxes, etc.

     Real estate taxes for the year of Closing and any bond or assessment  which
is a lien  against any  Individual  Real  Property  (or which is pending and may
become a lien  against any  Individual  Real  Property)  shall be prorated as of
12:01 A.M. on Closing Date either using actual tax or assessment  figures or, if
actual figures are not  available,  then using as a basis for said proration the
most recent assessed value of such  Individual  Real Property  multiplied by the
current tax or assessment  rate,  with a subsequent  cash  adjustment to be made
between  Purchaser  and the  respective  Seller  when  actual tax or  assessment
figures are  available.  Personal  property  taxes,  annual  permit,  license or
inspection fees, sewer charges,  amounts payable under any contract or agreement
that will be  continued  after the  Closing,  and other  expenses  normal to the
operation and  maintenance of the Property shall also be prorated as of the date
of Closing.  Rents that have been collected for the month of the Closing and for
subsequent  months will be prorated at the Closing,  effective as of the date of
the  Closing.  Such  rents  shall be  deemed  to  include,

                                Page 157 of 199
<PAGE>

without limitation,  percentage rents, escalation charges for real estate taxes,
parking  charges,  common  area  expenses,  marketing  fund  charges,  operating
expenses,  maintenance escalation rents or charges,  cost-of-living increases or
other  charges of a similar  nature,  if any,  and any  additional  charges  and
expenses  payable under tenant leases (whether such collection  occurs prior to,
on or after the date of the Closing).  After the Closing,  Purchaser  shall have
the exclusive  right to enforce claims for rents and all other  obligations  due
and owing under the Leases and terminate  any Leases as  Purchaser,  in its sole
discretion,  deems  appropriate.  With regard to rents that are delinquent as of
the date of the  Closing,  (i) no proration  will be made at the  Closing,  (ii)
Purchaser  will make a good faith  effort after the Closing to collect the rents
in the  usual  course of  Purchaser'  s  operation  of the  Property,  and (iii)
Purchaser  will apply all rents  collected  first to the  current  rents and the
excess  amount,  if any,  shall be  applied to the  delinquent  rent owed to the
Sellers.  It is  agreed,  however,  that  Purchaser  will  not be  obligated  to
institute any lawsuit or other  collection  procedures or terminate any lease to
collect  delinquent rents.  Rents collected by Purchaser after the Closing Date,
to which a Seller is entitled,  shall be promptly  paid to such  Seller.  To the
extent  delinquent rents or other amounts are collected by Purchaser,  Purchaser
may  deduct  from  the  amount  owed  to the  Sellers  an  amount  equal  to the
out-of-pocket  third-party  collection  costs actually  incurred by Purchaser in
collecting such rents and other amounts. As of the Closing Date, Purchaser shall
be  entitled  to a credit  for any tenant  deposits  under the  leases,  and the
Sellers  shall retain the same.  Final  readings on all gas,  water and electric
meters shall be made as of the date of Closing,  if possible.  If final readings
are not possible,  gas, water and electricity  charges will be prorated based on
the most recent period for which costs are  available.  Any Seller that has made
any deposits with utility  companies  shall be entitled to seek a refund of such
deposits and shall be solely  responsible  for  recovering  the same.  Purchaser
shall be responsible for making all arrangements for the continuation of utility
services.  After the Closing,  Purchaser will assume full responsibility for all
security  deposits and advance  rental  deposits of current  tenants of the Real
Property  currently  held by the  Sellers,  which  items will be itemized by the
Sellers  and  transferred  and  credited to  Purchaser  at the  Closing.  At the
Closing,  the Sellers shall deliver to Purchaser all letters of credit and other
collateral  given  to  any  Seller  or any  of  such  Seller'  s  affiliates  or
predecessors-in-interest  pursuant  to any  of the  leases,  less  any  portions
thereof  applied  in  accordance  with the  respective  lease  (together  with a
statement regarding such applications).

     If any  tenants  for any  Individual  Real  Property  are  required  to pay
percentage  rents,  escalation  charges for real estate taxes,  parking charges,
marketing fund charges,  operating  expenses,  maintenance  escalation  rents or
charges,   cost-of-living  increases  or  other  charges  of  a  similar  nature
("Additional  Rents") and such Additional Rents are not finally adjusted between
the landlord and tenant under any lease until after the Closing,  then Purchaser
shall  submit  to the  applicable  Seller  within  sixty  (60) days  after  such
Additional Rents are finally adjusted with any

                                Page 158 of 199
<PAGE>

tenant, a supplemental  statement (the  "Supplemental  Statement") to the extent
such  Additional  Rents have been finally  adjusted  between  Purchaser and such
tenant,  containing a calculation  of the prorations of such  Additional  Rents,
prepared  based on the  principles set forth in this Section 5, provided that in
making such  adjustment,  (i) the parties  shall  exclude any  Additional  Rents
arising from increased real property taxes for such  Individual Real Property to
the extent such increase is the result of Purchaser' s purchase of the Property,
and (ii) no amount of  Additional  Rent found to be owing to Purchaser  from any
tenant shall be offset against any amount of Additional Rent found to be owed by
Purchaser to any other  tenant  unless such amount owed to Purchaser is actually
collected by Purchaser.  To the extent the Supplemental Statement indicates that
one party is entitled to any amounts under this paragraph, the other party shall
pay such sum to such party  within  thirty  (30) days after the  delivery of the
Supplemental Statement.

     Notwithstanding  anything to the contrary  contained in this Section 5, (i)
if the amount of the real property taxes and assessments payable with respect to
any Individual Real Property for any period prior to Closing is determined to be
more than the  amount  of such  real  property  taxes  and  assessments  that is
prorated  herein  (in the  case of the  current  year)  or that  was paid by the
applicable  Seller (in the case of any prior year), due to a reassessment of the
value of such Individual  Real Property or otherwise,  such Seller and Purchaser
shall promptly  adjust the proration of such real property taxes and assessments
after the determination of such amounts,  and such Seller shall pay to Purchaser
any  increase  in the  amount  of  such  real  property  taxes  and  assessments
applicable to any period prior to Closing;  provided,  however, that such Seller
shall not be required to pay to Purchaser any portion of such increase  which is
payable by tenants of such  Individual  Real  Property  under  their  respective
leases;  and (ii) if the  amount  of the real  property  taxes  and  assessments
payable with  respect to any  Individual  Real  Property for any period prior to
Closing is determined to be less than the amount of such real property taxes and
assessments  that is prorated  herein (in the case of the current  year) or that
was paid by the  applicable  Seller (in the case of any prior  year),  due to an
appeal  of the  taxes  by such  Seller,  a  reassessment  of the  value  of such
Individual Real Property or otherwise,  such Seller and Purchaser shall promptly
adjust the  proration  of such real  property  taxes and  assessments  after the
determination  of such amounts,  and (a) Purchaser  shall pay to such Seller any
refund received by Purchaser  representing such a decrease in the amount of such
real property taxes and  assessments  applicable to any period prior to Closing;
provided,  however,  that Purchaser  shall not be required to pay to such Seller
any portion of such refund which is payable to tenants of such  Individual  Real
Property  under their  respective  leases;  and (b) Seller  shall be entitled to
retain any refund  received by such Seller  representing  such a decrease in the
amount of such real  property  taxes and  assessments  applicable  to any period
prior to Closing;  provided,  however,  that such Seller  shall pay to Purchaser
that  portion of any such refund  that is payable to tenants of such  Individual
Real Property under their respective leases.

                                Page 159 of 199
<PAGE>

     A separate closing statement shall be prepared for each Individual Property
by Escrow Holder,  and approved by Buyer and the respective  Seller,  showing in
detail the  prorations for such  Individual  Property.  All prorations  shall be
based on a 365-day year.

6.   Purchaser Inspections, Contingencies, and Elections

     6.1 Document Inspection

     With respect to each  Individual  Real Property,  the Seller that owns such
Individual  Real Property shall deliver to Purchaser for Purchaser' s review the
following items at the following times:

     (a)  promptly  after the  Effective  Date,  current  operating  and capital
budgets;

     (b) promptly after the Effective Date, copies of all service,  maintenance,
management or other operations  contracts and copies of all correspondence  with
such service providers, to the extent in such Seller' s or its property manager'
s possession;

     (c)  promptly  after the  Effective  Date,  a list of any tenants with rent
pre-paid more than 30 days in advance; and

     (d) promptly  after the  Effective  Date,  the most recent  leasing  status
report from leasing broker,  and monthly  thereafter until the Closing,  updated
versions of the same.

     Purchaser  acknowledges that before execution of this Agreement each Seller
has made  available for Purchaser' s review the standard lease form used by such
Seller with respect to its respective Individual Real Properties.

     Purchaser  agrees  that if for any reason the  Closing is not  consummated,
Purchaser  will  immediately  return to the Sellers all  materials  furnished to
Purchaser pursuant to this Section 6.1.

     Purchaser   acknowledges  and  agrees  that  notwithstanding  the  Sellers'
obligations  under this Section 6.1 to make the items listed in this Section 6.1
available for  Purchaser' s inspection,  such  obligations of the Sellers do not
create any  condition  to  Purchaser'  s  obligations  hereunder to purchase the
Property.

     Purchaser  shall have the right to inspect each Seller' s files relating to
such Seller' s Individual Real Properties  before and after the Closing for such
period of time as is necessary  for  Purchaser to prepare an "8-K" filing and an
"8-K/A" filing relating to this  transaction  with the United States  Securities
and Exchange Commission;  provided,  however, that such period of time shall not
extend beyond

                                Page 160 of 199
<PAGE>

the  ninetieth  (90th)  calendar day  following  the Closing.  Each Seller shall
cooperate  generally with Purchaser in preparing such "8-K" and "8-K/A" filings;
provided,  however,  that such cooperation of the Sellers shall not be deemed to
imply any  representation  or warranty by any Seller  regarding  the adequacy or
accuracy of any information included in such filings.

     6.2 Physical Inspection

     In addition to the items set forth in Section  6.1,  the Sellers have made,
and prior to the Closing  will  continue to make,  the  Property  available  for
inspection by Purchaser and Purchaser  shall,  at Purchaser' s risk, be entitled
to conduct an engineering and a Phase I  environmental  audit of each Individual
Real Property and in connection therewith, to undertake such physical inspection
of such Individual Real Property as Purchaser deems appropriate. Such inspection
shall be conducted at reasonable times upon reasonable oral or written notice to
the applicable  Seller' s property manager.  Such Seller shall have the right to
designate a  representative  to accompany  Purchaser' s employees,  agents,  and
independent  contractors  on any such  inspections.  Notwithstanding  any of the
foregoing,  Purchaser shall not be entitled to conduct a Phase II  environmental
audit of any  Individual  Property  without  the prior  written  consent  of the
applicable Seller, which consent shall not be unreasonably  withheld or delayed.
Consent to any Phase II  environmental  audit shall be expressly  conditioned on
the applicable Seller' s approval,  not to be unreasonably  withheld or delayed,
of (i) the person or persons  proposed by Purchaser  to perform such audit,  and
(ii) the nature and extent of the actions to be taken in the performance of such
audit.

     Purchaser hereby agrees to pay,  protect,  defend,  indemnify and save each
Seller  harmless  against  all  liabilities,   obligations,   claims  (including
mechanic' s lien claims), damages, penalties, causes of action, judgments, costs
and expenses  (including,  without  limitation,  attorneys'  fees and  expenses)
imposed upon,  incurred by or asserted against such Seller in connection with or
arising  out of the entry upon any  Individual  Real  Property by  Purchaser'  s
employees,  agents or independent contractors and the actions of such persons on
such Individual Real Property.  In the event any part of any Individual Property
is damaged or excavated  by  Purchaser,  its  employees,  agents or  independent
contractors,  Purchaser  agrees  in the  event  its  purchase  hereunder  is not
consummated,  to make such  additional  payments  to the  Seller  that owns such
Individual  Property as may be  reasonably  required  to return such  Individual
Property to its condition  immediately prior to such damage or excavation or, at
such  Seller' s option,  to cause such work  reasonably  required to return such
Individual  Property  to its  condition  immediately  prior  to such  damage  or
excavation to be done.  Notwithstanding  any  provision to the contrary  herein,
Purchaser' s obligations under this subparagraph shall survive the expiration or
termination of this Agreement, and shall survive Closing.

                                Page 161 of 199
<PAGE>

     Purchaser   acknowledges  and  agrees  that  notwithstanding  the  Sellers'
obligations under this Section 6.2 to make the Property available for inspection
by  Purchaser,  such  obligations  of the Sellers do not create any condition to
Purchaser' s obligations hereunder to purchase the Property.

     6.3 Survey Contingency

     Purchaser' s  obligation  to purchase the Property is subject to its review
and approval, within the ten (10) day period provided below, of a current survey
of each Individual Real Property by a registered surveyor certified to Purchaser
(each, a "Survey," and  collectively,  the "Surveys"),  which Surveys  Purchaser
shall  procure  within  thirty (30) days after the  Effective  Date,  or as soon
thereafter  as  practicable.   Each  Survey  shall  show  the  location  of  all
improvements,  structures,  driveways,  parking areas, easements, rights of way,
and any  encroachments  and shall specify  whether the subject  Individual  Real
Property  is within a 100-year  flood  plain or flood way,  and shall  contain a
certification  of the surveyor  satisfactory in form and substance to Purchaser.
Each Survey shall further set forth a legal description of the boundaries of the
subject Individual Real Property in accordance with local practices.

     With respect to each Survey, Purchaser shall have until ten (10) days after
its receipt of each Survey and the related  Title Report (as defined  below) and
copies  of all  items and  documents  referred  to  therein  for the  applicable
Individual  Property to approve or object in writing to such  Survey,  including
any  objection  to the  boundaries  set  forth in such  Survey  and to the legal
description.  Any such written notice shall state all of Purchaser' s objections
with specificity.  Upon receipt of such notice, the Seller that owns the subject
Individual  Real  Property  may,  but  shall  not be  obligated  to,  cure  such
objections.  If such Seller cures such  objections  within 15 days,  or, if such
objections are such that they cannot be cured within 15 days and such Seller has
commenced curing such objections and thereafter  diligently  proceeds to perfect
such cure (but in no event beyond 30 days unless agreed to by  Purchaser),  then
this Agreement shall continue in force and effect, and the Closing Date shall be
adjusted accordingly.  If such Seller is unable to, or chooses not to, cure such
objections  within the time  permitted,  this  Agreement  shall  terminate,  the
Sellers shall instruct the Escrow Holder to return the Deposit plus all interest
earned  thereon to  Purchaser,  and no party shall have any further  obligations
hereunder  except for the Surviving  Covenants.  Notwithstanding  the foregoing,
however,  Purchaser may waive such  objections  that such Seller is unable to or
chooses not to cure, and upon receipt by such Seller of such waiver in full from
Purchaser within 10 days of notice from such Seller that it is unable or chooses
not to cure such  objections,  this  Agreement  shall  remain in full  force and
effect with no reduction in the Purchase Price.

                                Page 162 of 199
<PAGE>

     If requested by the Sellers, Purchaser will confirm in writing whether this
survey  contingency  has been  satisfied  and,  if so,  the date on which it was
satisfied.

     6.4 Title Contingency

     Purchaser'  s  obligation  to  purchase  the  Property  is  subject  to its
approval,  within  the  time  period  set  forth  below,  with  respect  to each
Individual Real Property, of a preliminary title report for an A.L.T.A. Owner' s
Title Insurance  Policy (Form B, rev.  10/17/70) (each,  individually,  a "Title
Report," and collectively, the "Title Reports"), dated not earlier than December
1, 1996, issued by the Escrow Holder, and all items and documents referred to in
the Title Report.  Purchaser  shall procure each such Title Report and the items
and  documents  referred to therein  within thirty (30) days after the Effective
Date, or as soon  thereafter as  practicable.  Each Title Report will commit the
Escrow  Holder to issue to Purchaser at the Closing an Owner' s Title Policy (as
defined below)  relating to the Individual  Real Property that is the subject of
such Title  Report,  in the amount of the  applicable  Allocated  Portion of the
Purchase Price. Upon receipt of each Title Report and accompanying  documents by
Purchaser,  Purchaser  shall have until the date ten (10) days after  receipt of
all such items and the related  Survey to approve  such Title Report or to state
any objections in writing.  Such written notice of objection  shall state all of
Purchaser'  s objections  with  specificity.  Upon  receipt of such notice,  the
Seller that owns the subject  Individual  Real  Property  may,  but shall not be
obligated  to,  cure  such  objection(s);  provided  that such  Seller  shall be
obligated to remove any monetary liens of an ascertainable amount other than any
lien for taxes or assessments which are not yet due and payable.  If such Seller
cures such objections  within 15 days, or, if such objections are such that they
cannot  be cured  within  15 days and such  Seller  has  commenced  curing  such
objections  and thereafter  diligently  proceeds to perfect such cure (but in no
event  beyond  30 days  unless  otherwise  agreed  to by  Purchaser),  then this
Agreement  shall continue in full force and effect and the Closing Date shall be
adjusted  accordingly.  If such  Seller is unable  or  chooses  not to cure such
objections within the time permitted,  then this Agreement shall terminate,  the
Sellers shall instruct the Escrow Holder to return the Deposit plus all interest
earned  thereon to  Purchaser,  and no party shall have any further  obligations
hereunder  except for the Surviving  Covenants.  Notwithstanding  the foregoing,
however,  Purchaser  may waive  such  objections  that such  Seller is unable or
chooses not to cure within 10 days after receipt of a notice that such Seller is
unable or chooses not to cure such  objections,  and upon receipt by such Seller
of such waiver in full from Purchaser, this Agreement shall remain in full force
and effect with no reduction in the Purchase Price.

     If requested by the Sellers, Purchaser will confirm in writing whether this
title  contingency  has  been  satisfied  and,  if so,  the date on which it was
satisfied.

                                Page 163 of 199
<PAGE>

     As a condition precedent to Closing, the Escrow Holder shall deliver to the
Purchaser, for each Individual Real Property, an Owner' s Title Insurance Policy
(each,  an  "Owner'  s Title  Policy,"  and  collectively,  the  "Owner' s Title
Policies") dated no earlier than the date of the recording of the Deed conveying
the Individual Real Property insured by such Owner' s Title Policy,  in the full
amount of the applicable Allocated Portion of the Purchase Price,  insuring that
good and  indefeasible  fee simple  title to such  Individual  Real  Property is
vested in Purchaser,  together with such  endorsements  as shall be specified by
Purchaser in its title  approval  notice given pursuant to this Section 6.4, and
containing  no  exceptions  to  such  title  other  than  the  standard  printed
exceptions  (provided,  however,  that (i) the printed survey  exception must be
deleted,  except for matters shown on the applicable  Survey and either approved
by Purchaser or as to which  objection  has been waived by  Purchaser,  (ii) the
exception  as to ad valorem  taxes shall be limited to taxes for the current and
subsequent years,  (iii) there shall be no exception for creditors'  rights, and
(iv) the exception for tenants and parties in possession shall be limited to the
rights as tenants  only (with no options to purchase or rights of first  refusal
or first offer to sell such  Individual  Real Property to such tenants) of those
tenants, licensees, and occupants shown on the applicable Rent Roll delivered at
Closing), those items listed on Schedule "B" of the applicable Title Report that
either were approved by Purchaser or as to which  objection  has been  expressly
waived by Purchaser,  and encumbrances created or permitted by the terms of this
Agreement.  If the Escrow Holder cannot  deliver the Owner' s Title  Policies to
Purchaser as described herein, this Agreement shall terminate, the Sellers shall
instruct  the  Escrow  Holder to return the  Deposit  plus all  interest  earned
thereon to Purchaser,  and no party shall have any further obligations hereunder
except  for the  Surviving  Covenants,  except to the  extent  Escrow  Holder' s
inability  to deliver the Owner' s Title  Policies is due to any of the Sellers'
failure to cure any title objection which it has agreed to cure pursuant to this
Section 6.4.

     6.5 Election With Respect to Contracts and Agreements

     The Sellers agree to terminate,  effective on or before the day of Closing,
any and all leasing  brokerage  agreements  and property  management  agreements
relating to the Real Property or any Individual  Real Property.  With respect to
contracts and agreements  other than leasing  brokerage  agreements and property
management agreements,  each Seller shall provide to Purchaser,  within ten (10)
days after the Effective Date, with respect to each Individual Property owned by
such Seller,  a list of such other  contracts and agreements  pertaining to such
Individual  Real Property.  Purchaser shall have fifteen (15) days after receipt
of all such lists to deliver  written notice to the Sellers as to which, if any,
of the contracts and agreements described on such lists it elects to assume, and
which, if any, of such contracts and agreements it elects to reject.

                                Page 164 of 199
<PAGE>

7.   Loss due to Casualty or Condemnation

     7.1 Loss Due to Condemnation

     In the event any  condemnation is instituted or any Seller receives written
notice  that  any  condemnation  is  threatened  with  respect  to (i)  all or a
Substantial  Portion (as  hereinafter  defined) of any Individual  Real Property
which  condemnation  shall  or  would  render  a  Substantial  Portion  of  such
Individual Real Property  untenantable,  or (ii) any portion of the parking area
of any Individual Real Property,  such Seller shall give Purchaser prompt notice
of the same,  and Purchaser may, upon written notice to such Seller given within
10 days of receipt of notice of such  event,  cancel  this  Agreement,  in which
event this  Agreement  shall  terminate,  the Sellers shall  instruct the Escrow
Holder to return the Deposit plus all interest earned thereon to Purchaser,  and
no party shall have any rights or obligations hereunder except for the Surviving
Covenants.  In the event that Purchaser  does not elect to terminate,  or if the
condemnation  affects  less than a  Substantial  Portion and does not affect any
parking area,  then this  Agreement  shall remain in full force and effect,  and
such Seller  shall be entitled to all monies  received or collected by reason of
such  condemnation  prior to Closing.  In such  event,  the  transaction  hereby
contemplated  shall close in  accordance  with the terms and  conditions of this
Agreement  except that there will be an abatement of the Purchase Price equal to
the  amount  of the gross  proceeds  received  by such  Seller by reason of such
condemnation prior to Closing; provided,  however, that if any separate award is
made for costs and attorney' s fees,  such Seller shall be entitled to keep such
separate  award.  If such Seller  shall not have  received all monies owed it by
reason of such condemnation prior to the Closing,  then such Seller shall assign
any  interest it has in the pending  award to  Purchaser.  For  purposes of this
Section 7.1, a Substantial  Portion shall mean a condemnation  of any portion of
an Individual  Real  Property,  the value of which portion  exceeds five percent
(5%)  of the  Allocated  Portion  of  the  Purchase  Price  applicable  to  such
Individual Real Property.

     7.2 Loss Due to Casualty

     In the event of Substantial Loss or Damage (as hereinafter  defined) to any
Individual  Real Property by fire or other  casualty (not resulting from acts of
Purchaser),  any party may, or, if the fire or other casualty  results from acts
of Purchaser,  the applicable Seller may, upon written notice to the other party
given within 10 days of receipt of notice of such event,  cancel this  Agreement
in which event this Agreement  shall  terminate,  the Sellers shall instruct the
Escrow Holder to return the Deposit plus interest  earned  thereon to Purchaser,
and no party  shall  have any  rights or  obligations  hereunder  except for the
Surviving Covenants.  In the event that no party elects to terminate,  or if the
casualty results in less than  Substantial  Loss or Damage,  then this Agreement
shall  remain in full force and

                                Page 165 of 199
<PAGE>

effect and the Seller that owns such  Individual Real Property shall be entitled
to all  insurance  proceeds  received or  collected  by reason of such damage or
loss,  whereupon the transaction  hereby  contemplated shall close in accordance
with the terms and  conditions  of this  Agreement  except  that  there  will be
abatement of the Purchase Price equal to the amount of the gross proceeds,  plus
such Seller' s deductible,  or, in the case of an uninsured loss, by the cost to
repair such damage or loss,  provided that such abatement will be reduced by the
amount  expended  by such  Seller  in  accordance  with  Section  8  hereof  for
restoration  of such  Individual  Real  Property  following  the  casualty,  and
provided,  further,  that such abatement  will be further  reduced by the amount
that the  gross  proceeds  include  any  separate  award  for  costs  (including
preservation costs) and attorney' s fees.  Alternatively,  Purchaser may, in its
discretion,  have such Seller repair or replace the damaged Property,  and there
shall be no  abatement of the Purchase  Price in such case.  However,  Purchaser
shall not be entitled to require  such  Seller to effect  repair or  replacement
unless  the  repair or  replacement  will take no more than  three (3) months to
complete.  For purposes of this Section 7.2,  "Substantial Loss or Damage` shall
mean loss or damage to the parking  and/or any portion of any  Building the cost
for repair of which  exceeds five percent (5%) of the  Allocated  Portion of the
Purchase Price applicable to such Individual Real Property.

8.   Operation of the Property

     Between the time of  execution  of this  Agreement  and the  Closing,  each
Seller shall maintain its respective Individual Properties in good condition and
repair, reasonable wear and tear excepted, shall perform all work required to be
done under the terms of any lease or agreement  relating to any such  Individual
Property,  shall  timely  make  all  repairs,  maintenance  and  replacement  of
equipment or  improvements,  and shall keep such Individual  Properties  insured
against  casualties  on  commercially   reasonable  terms  and  in  commercially
reasonable  amounts,  the  same  as  though  such  Seller  were  retaining  such
Individual  Properties and at such Seller' s sole cost and expense;  except that
in the event of a fire or other casualty, damage or loss, such Seller shall have
no duty to repair said  damage  except as  otherwise  provided in Section 7.2 of
this Agreement.  However, such Seller may repair any such damage with Purchaser'
s prior, written approval and may, without Purchaser' s approval,  repair damage
where such repair is necessary in such Seller' s reasonable  opinion to preserve
and protect the health and safety of tenants of any such Individual  Property or
to preserve any such Individual Property from imminent risk of further damage or
if required to do so by such  Seller' s insurance  carrier.  Any such  emergency
repairs shall be reported to Purchaser within 24 hours of their commencement and
48 hours of their  completion.  

     Except as  provided  below,  from and after the  Effective  Date  until the
Closing Date, no Seller shall lease any portion of any Individual  Real Property
or amend or  terminate  any  existing  lease or enter into any other  agreements
affecting any

                                Page 166 of 199
<PAGE>

Individual  Property  that will survive the  Closing,  without  first  obtaining
Purchaser' s written approval,  which approval shall not be unreasonably  denied
or  delayed.  Purchaser  shall  have three (3)  business  days from the date any
Seller  provides  Purchaser  with  a copy  of any  new  lease,  modification  or
termination  of any existing  lease,  or any other new  agreement  affecting any
Individual  Property,  together  with any  information  reasonably  requested by
Purchaser  regarding such tenant or agreement,  to approve or reject such lease,
modification,  termination  or agreement.  If Purchaser  fails to respond within
said time period, it shall be deemed to have approved said lease,  modification,
termination or agreement,  as applicable.  Purchaser  shall bear the cost of all
tenant  improvement  allowances and leasing  commissions for leases entered into
after the Effective  Date until the Closing Date entered into by any Seller with
Purchaser'  s approval or deemed  approved by  Purchaser as provided for herein,
unless the sale of the  Property  is not  consummated  as  contemplated  herein.
Notwithstanding the foregoing, the Seller that owns the Individual Real Property
identified on Schedule 1.1 as the "Overlook"  project (the  "Overlook  Project")
may, with respect to any portion thereof, and without first obtaining Purchaser'
s written  approval,  enter into any standard  form lease at  prevailing  market
rates for a term not exceeding twelve (12) months,  and/or amend (but not extend
for a term  exceeding  twelve (12)  months) or  terminate  any  existing  lease,
provided that in each case such Seller shall exercise prudent business  judgment
as if it were retaining the Overlook  Project for itself and shall not grant any
concession except in accordance with prevailing market conditions.

     No  Seller  shall  actively  market  any  Individual  Property  for sale or
negotiate the possible sale of any Individual Property with any party other than
Purchaser, unless this Agreement is terminated as provided herein.

9.   Broker

     Purchaser and the Sellers represent to each other that they have dealt with
no agent or broker who in any way has  participated  as a procuring cause of the
sale of the Property, except K/B Realty Advisors ("Broker"). Purchaser shall pay
a commission to Broker at the Closing pursuant to a separate brokerage agreement
between  Purchaser  and Broker.  Purchaser and the Sellers each agree to defend,
indemnify and hold harmless the other for any and all judgments,  costs of suit,
attorneys'  fees,  and other  reasonable  expenses  which the other may incur by
reason of any action or claim against the other by any broker,  agent, or finder
with whom the indemnifying  party has dealt arising out of this Agreement or any
subsequent  sale  of  any  Individual  Property  to  Purchaser  except  for  the
above-described  commissions,  which shall be paid by  Purchaser at the Closing.
The  provisions of this Section 9 shall survive the Closing and any  termination
of this Agreement.

                                Page 167 of 199
<PAGE>

10.  Representations and Warranties

     10.1 Limitations on Representations and Warranties

     Purchaser  hereby  agrees  and  acknowledges  that,  except as set forth in
Section  10.2  below or in any  document  delivered  by any  Seller at  Closing,
neither  the  Sellers,  nor any of them,  nor any agent,  attorney,  employee or
representative  of the  Sellers  or any of  them  has  made  any  representation
whatsoever  regarding  the  subject  matter of this sale,  or any part  thereof,
including (without limiting the generality of the foregoing)  representations as
to  the  physical  nature  or  condition  of  any  Individual  Property  or  the
capabilities  thereof,  and that  Purchaser,  in  executing,  delivering  and/or
performing this Agreement,  does not rely upon any statement and/or  information
to whomever made or given, directly or indirectly,  orally or in writing, by any
individual,  firm or corporation on behalf of any Seller, except as set forth in
Section  10.2 below or in any  document  delivered  by such  Seller at  closing.
Purchaser agrees to take the Real Property and the Personal Property "as is," as
of the date hereof,  reasonable  wear and tear,  and minor damage  caused by the
removal  of any  personal  property  or  fixtures  not  included  in this  sale,
excepted.  Except as set  forth in  Section  10.2  below,  no  Seller  makes any
representation  or  warranty  as to the  physical  condition  of any  Individual
Property or the  suitability  thereof for any  purpose for which  Purchaser  may
desire to use it. Each Seller  hereby  expressly  disclaims  any  warranties  of
merchantability and/or fitness for a particular purpose and any other warranties
or  representations  as to the physical  condition of any  Individual  Property.
Purchaser,  by acceptance of the Deed for each Individual Property,  agrees that
it has inspected such Individual Property and accepts same "as is" and "with all
faults".

     10.2 Representations and Warranties

     Each Seller makes the following representations and warranties with respect
to itself and the  Individual  Properties  being  sold by it,  and  agrees  that
Purchaser' s obligations under this Agreement are conditioned upon the truth and
accuracy of such representations and warranties,  both as of this date and as of
the date of the Closing:

     (a) Such Seller (in the case of CIR or CGEP) is a limited partnership, duly
organized,  validly existing and in good standing under the laws of Delaware (in
the case of CIR) or Connecticut (in the case of CGEP), and qualified to transact
business  and in good  standing in each state in which any  Individual  Property
owned by such  Seller  is  located;  and such  Seller  (in the case of WOV) is a
general  partnership,  duly  organized  and validly  existing  under the laws of
Connecticut;

     (b) Such Seller has the requisite  partnership power and authority to enter
into this Agreement and convey the Individual Properties it owns to Purchaser;

                                Page 168 of 199
<PAGE>

     (c) Subject to Section 15.14 below,  this  Agreement has been duly executed
and delivered by such Seller;

     (d) Neither the execution and delivery of this Agreement,  the consummation
of the transactions  contemplated by this Agreement, nor the compliance with the
terms and  conditions  hereof  will (i)  violate or  conflict,  in any  material
respect,  with any  statute,  regulation,  rule,  injunction,  judgment,  order,
decree,  ruling,  charge or other  restrictions of any government,  governmental
agency or court to which  such  Seller is  subject,  or (ii) to the best of such
Seller' s knowledge,  result in any material  breach or the  termination  of any
lease,  agreement or other  instrument  or  obligation to which such Seller is a
party or by which any  Individual  Property owned by such Seller may be subject,
or cause a lien or other encumbrance to attach to any such Individual Property;

     (e) All material consents required from any governmental authority or third
party in connection  with the  execution and delivery of this  Agreement by such
Seller  or the  consummation  by such  Seller of the  transactions  contemplated
hereby (other than any  third-party  consents which may be required in order for
such  Seller  to  assign  any  licenses,  certificates  of  occupancy,  permits,
warranties,  guarantees  (other than tenant  guarantees) in connection  with the
Individual  Properties owned by such Seller) have been made or obtained or shall
have been made or obtained by the Closing Date.

     (f) To the best of such  Seller' s  knowledge,  such Seller has received no
notice  of  any  existing,   pending  or  threatened  litigation,   governmental
investigation,  administrative proceeding, condemnation or sale in lieu thereof,
or environmental,  zoning or other land use regulation  proceedings with respect
to any portion of any Individual  Real Property owned by such Seller,  except as
noted on Schedule 10.2.1 hereto;

     (g) Except for those tenants and licensees in possession of portions of the
Individual Real Properties  owned by such Seller under written leases or license
agreements  for  space  in such  Individual  Real  Properties,  as  shown in the
applicable  Rent Rolls,  there are no parties in possession  of, or claiming any
possession  to any  portion of any such  Individual  Real  Property  as lessees,
tenants at sufferance, licensees,  trespassers,  sublessees (to the best of such
Seller' s knowledge), or otherwise;

     (h) The updated Rent Rolls for the Individual Real Properties owned by such
Seller,  which shall be  delivered  at the  Closing,  will be true,  correct and
complete  as of the date set forth  thereon;  no tenant  will be entitled to any
rebates,  rent  concessions,  or  free  rent  (other  than as  reflected  in the
estoppels,  such Seller' s  certificates  delivered  pursuant to Section  4.2(g)
hereof, or, with respect to the Overlook Project,  in accordance with prevailing
market conditions at the time such

                                Page 169 of 199
<PAGE>

lease is entered  into) and no rents due under any of the tenant or other leases
will  have been  assigned,  hypothecated,  or  encumbered,  to any party  except
pursuant to documents to be released at Closing;

     (i)  There  are no  attachments  or  executions  affecting  any  Individual
Property owned by such Seller, general assignments for the benefit of creditors,
or voluntary or involuntary  proceedings in bankruptcy,  pending or, to the best
of such Seller' s knowledge, threatened against such Seller;

     (j)  During  the  period of such  Seller' s  ownership  of each  Individual
Property  owned by such Seller,  such Seller has not itself,  and to the best of
such  Seller' s  knowledge  no prior  owner or current or prior  tenant or other
occupant  of all or any part of any such  Individual  Property  at any time has,
used Hazardous Materials  (hereinafter  defined) on, from, or affecting any such
Individual  Property in any manner that violates federal,  state, or local laws,
ordinances,  rules,  or  regulations  governing  the  use,  storage,  treatment,
transportation,  generation,  or disposal of Hazardous Materials  (collectively,
the  "Environmental  Laws"), and to the best of Seller' s knowledge no Hazardous
Materials  have  been  disposed  of  on  such  Individual  Property.  "Hazardous
Materials"  shall  mean  any  flammable  substances,   explosives,   radioactive
materials, hazardous wastes, toxic substances, pollutants, pollution, or related
materials  regulated under any of the Environmental Laws (to the extent any such
substances, materials or wastes exceed permitted concentrations);

     Notwithstanding  anything  contained  herein  to the  contrary,  "Hazardous
Materials"  shall not include any ordinary use and  incidental  storage of small
and insignificant amounts of substances reasonably necessary for the regular and
ordinary maintenance of any Individual  Property,  or consumed in the repair and
ordinary use of common office business machines, nor to gasoline, oil, and other
automotive  fluids to the  extent  that they are  contained  in the  common  and
ordinary manner in motor vehicles visiting any Individual Real Property, in each
case  provided  that the same do not  constitute,  give rise to,  or create  any
substantial risk of any violation of any requirements of any Environmental Law.

     (k) Except as set forth on Schedule  10.2.2  hereto at the time of Closing,
there will be no  outstanding  written or oral contracts made by such Seller for
any improvements to any Individual Real Property owned by such Seller which have
not been  fully  paid for and  such  Seller  shall  cause to be  discharged  all
mechanics'  and  materialmen'  s liens  arising  from  any  labor  or  materials
furnished to any such  Individual  Real  Property  prior to the time of Closing.
Except as set forth on said Schedule 10.2.2, as of the Closing Date, such Seller
shall  have  completed  all   punch-list   items  with  respect  to  any  tenant
improvements  constructed by such Seller as landlord under the leases. Except as
set forth on said Schedule  10.2.2,  as of the Closing  Date,  such Seller shall
have paid in full any of landlord' s leasing

                                Page 170 of 199
<PAGE>

costs or obligations in connection with the leases,  including,  but not limited
to,  any  costs   incurred  by  such  Seller  in  connection   with  any  tenant
improvements.

     (l) Except as set forth on Schedule 10.2.3 hereto,  Seller has not received
any written notice that the use or operation of any Individual Property owned by
such  Seller  fails to  comply  in any  material  respect  with  any  applicable
restrictive covenant,  building code, environmental,  zoning or land use law, or
any other applicable  local,  state or federal law or regulation  (collectively,
"Laws").

     (m)  Such  Seller  has  not  received  notice  of any  special  improvement
district,   special  use  district  or  special  assessment  applicable  to  any
Individual Real Property owned by such Seller.

     10.3 Seller' s Knowledge

     Whenever the term "to the best of such Seller' s knowledge" is used in this
Agreement  or in any  representations  and  warranties  given  to  Purchaser  at
Closing,  such knowledge shall be (i) in the case of CIR and the Individual Real
Property  identified  on  Schedule  1.1 as  Woodlands  Tech  Center,  the actual
knowledge of John Carey,  who is the president of the general partner of CIR, or
Ruth Van  Winkle,  who is the asset  manager  assigned to such  Individual  Real
Property,  after  review  of the files of Cigna  Investments,  Inc.  (which  CIR
represents  to  Purchaser  are the  relevant  files  of CIR  applicable  to such
Individual Real Property) and inquiry of CIR' s property managers regarding such
Individual   Real   Property   and  each  of  the  matters   addressed   in  the
representations  and warranties  set forth in Section 10.2;  (ii) in the case of
CIR and the  Individual  Real  Property  identified  on Schedule 1.1 as Piedmont
Plaza Shopping Center, the actual knowledge of John Carey or Sean Williams,  who
is the asset manager assigned to such Individual Real Property,  after review of
the files of Cigna Investments,  Inc. (which CIR represents to Purchaser are the
relevant files of CIR applicable to such  Individual  Real Property) and inquiry
of CIR' s property managers  regarding such Individual Real Property and each of
the matters addressed in the representations and warranties set forth in Section
10.2;  (iii) in the case of CIR and the Individual  Real Property  identified on
Schedule 1.1 as the Overlook  Apartments,  the actual knowledge of John Carey or
Steven  Jacobs,  who is the  asset  manager  assigned  to such  Individual  Real
Property,  after  review  of the files of Cigna  Investments,  Inc.  (which  CIR
represents  to  Purchaser  are the  relevant  files  of CIR  applicable  to such
Individual Real Property) and inquiry of CIR' s property managers regarding such
Individual   Real   Property   and  each  of  the  matters   addressed   in  the
representations  and warranties  set forth in Section 10.2;  (iv) in the case of
CGEP and the  Individual  Real Property  identified on Schedule 1.1 as Woodlands
Plaza II,  the actual  knowledge  of John  Carey,  who is the  president  of the
general partner of CGEP, or Ruth Van Winkle,  who is the asset manager  assigned
to  such  Individual  Real  Property,   after  review  of  the  files  of  Cigna
Investments,  Inc. (which CGEP represents to Purchaser are the relevant files of
CGEP  applicable  to such  Individual  Real  Property)  and  inquiry  of CGEP' s
property  managers  regarding  such  Individual  Real  Property  and each of the
matters  addressed in the  representations  and  warranties set forth in Section
10.2,  (v) in the case of CGEP and the  Individual  Real Property  identified on
Schedule 1.1 as Lake Point I, II and III, the actual  knowledge of John Carey or
Annette  Sanders,  who is the asset  manager  assigned to such  Individual  Real
Property,  after  review of the files of Cigna  Investments,  Inc.  (which  CGEP

                                Page 171 of 199
<PAGE>

represents  to  Purchaser  are the  relevant  files of CGEP  applicable  to such
Individual  Real  Property) and inquiry of CGEP' s property  managers  regarding
such  Individual  Real  Property  and  each  of  the  matters  addressed  in the
representations  and  warranties set forth in Section 10.2, and (vi) in the case
of WOV and the Individual  Real Property  identified on Schedule 1.1 as Westford
Corporate  Center,  the actual  knowledge of John Carey, who is the president of
the general partner of each of the general  partners of WOV, or Peter Clark, who
is the asset manager  assigned to such Individual  Real Property  (together with
John Carey, Ruth Van Winkle,  Sean Williams,  Steven Jacobs and Annette Sanders,
collectively,  the  "Key  Personnel"),  after  review  of  the  files  of  Cigna
Investments,  Inc.  (which WOV represents to Purchaser are the relevant files of
WOV applicable to such  Individual Real Property) and inquiry of WOV' s property
managers  regarding  such  Individual  Real  Property  and  each of the  matters
addressed in the representations and warranties set forth in Section 10.2.

     No Seller shall have any duty to conduct any further  inquiry in making any
such representations and warranties,  and no knowledge of any other person shall
be  imputed to any Key  Personnel.  Purchaser  acknowledges  that no Seller is a
hands-on owner,  and each Seller employs  third-party  management to oversee the
daily operations of the Individual Properties owned by such Seller and that each
Seller has limited first-hand  information and knowledge pertaining to the daily
operations of the Individual Properties owned by such Seller.

     10.4 Survival

     All representations  and warranties  contained in Section 10.2 will survive
the  Closing  of this  transaction  (but only as to the  status of facts as they
exist  as of  the  Closing,  it  being  understood  that  no  Seller  makes  any
representations  or  warranties  which would  apply to changes or other  matters
occurring after the Closing);  provided that such representations and warranties
other than those set forth in Section 10.2 (a), (b),  (c),  (d), and (e),  shall
expire on the date one (1) year from the date of Closing,  and no action on such
representations and warranties may be commenced after such expiration.

                                Page 172 of 199
<PAGE>

11.  Indemnification

     11.1 The Sellers' Indemnification

     Each  Seller  on behalf of  itself,  its  affiliates,  its  successors  and
assigns,  and any independent  property  managers which such Seller has hired to
manage the  Individual  Properties  owned by such Seller  does  hereby  agree to
indemnify  and hold  Purchaser,  its  successors  and assigns  harmless from and
against all costs, charges and expenses related to the ownership, management and
operation  of such  Individual  Properties  prior to the Closing  Date,  but not
thereafter,  including,  costs (i) for any  labor  performed  on,  or  materials
furnished to such Individual  Properties prior to the Closing Date, (ii) for any
leasing  commissions  or other fees or  commissions  due in connection  with any
lease renewals or lease  extensions  which are entered into prior to the Closing
Date,  (iii) for compliance  with any laws,  requirements  or regulations of, or
taxes,  assessments or other charges due to any governmental authority, but only
to the extent any such liability is attributable to acts,  omissions,  events or
transactions  which first occurred  during such Seller' s period of ownership of
such  Individual  Properties,  and such  liability is caused by any Seller,  its
agents,  contractors  and/or its employees  only,  and not by any other party or
parties,  excluding any and all costs of compliance with  presently-existing and
future  environmental  laws, any environmental  remediation costs, and any costs
of, or awards of damages for, damage to the environment to natural resources, or
to any third  party  (collectively,  "Environmental  Compliance"),  it being the
intent of this Agreement, as between Purchaser and the Sellers, that neither the
Sellers nor Purchaser provide any contractual  indemnification  to Purchaser for
such  Environmental  Compliance,  but also that no party  intends to release any
other claims with respect to  Environmental  Compliance,  including claims under
CERCLA,  (iv) for any other  charges or expenses  whatsoever  pertaining to such
Individual Properties or to the ownership,  title, possession,  use or occupancy
of such  Individual  Properties  but only to the  extent any such  liability  is
attributable to acts,  omissions,  events or  transactions  which first occurred
during such Seller' s period of ownership of such Individual Properties,  and is
caused by such Seller, its agents,  contractors and/or its employees, or (v) for
any breach of the representations or warranties in Section 10.2 hereof.

     Notwithstanding   the  foregoing,   Purchaser  shall  not  be  entitled  to
indemnification  by  any  Seller  for  any  breach  of the  representations  and
warranties of such Seller contained in Section 10.2 hereof (excluding,  however,
such Seller' s representations and warranties set forth in Section 10.2(a), (b),
(c),   (d)  and  (e))  unless   Purchaser   makes  a  written   claim  for  such
indemnification within one (1) year from the Closing Date. Each Seller on behalf
of itself,  its  affiliates,  its  successors and assigns,  and any  independent
property  managers  which  such  Seller  has  hired  to  manage  the  Individual
Properties  owned  by such  Seller  does  hereby  agree  to  indemnify  and hold
Purchaser, its successors and assigns harmless from

                                Page 173 of 199
<PAGE>

and  against all  liabilities,  damages,  claims,  charges,  costs and  expenses
incurred in connection  with any third party claims  involving  such  Individual
Properties and which relate to acts,  omissions,  events or  transactions  which
occurred prior to the Closing.

     11.2 Purchaser' s Indemnification

     Purchaser on behalf of itself, its successors and assigns does hereby agree
to  indemnify  and  hold  each  Seller,  its  successors  and  assigns,  and any
independent  property  managers  which  such  Seller  has  hired to  manage  the
Individual Properties owned by such Seller, harmless from and against all costs,
charges and expenses relating to the ownership, management and operation of such
Individual  Properties from and after the Closing Date,  including costs (i) for
any labor  performed on, or materials  furnished to such  Individual  Properties
subsequent to the Closing Date,  (ii) for any leasing  commissions  disclosed to
Purchaser  prior to the date of this  Agreement and due in  connection  with any
lease  renewals or lease  extensions  which are entered into  subsequent  to the
Closing Date as described on Schedule  10.2.2 hereto,  (iii) for compliance with
any laws,  requirements  or  regulations  of, or  taxes,  assessments,  or other
charges due to any governmental authority (excluding Environmental  Compliance),
but only to the extent  that any such  liability  is  attributable  to any acts,
omissions,  events or  transactions  which first  occurred  during  Purchaser' s
period of ownership of such Individual Properties,  and such liability is caused
by either Purchaser,  its agents,  contractors and/or its employees only and not
by any  other  party or  parties,  or (iv) for any  other  charges  or  expenses
whatsoever pertaining to such Individual Properties or to the ownership,  title,
possession,  use or occupancy  of such  Individual  Properties,  but only to the
extent  any such  liability  is  attributable  to  acts,  omissions,  events  or
transactions  which first  occurred  during  Purchaser' s period of ownership of
such Individual Properties, and is caused by Purchaser, its agents, contractors,
and/or its employees.

     Purchaser on behalf of itself, its affiliates,  its successors and assigns,
and any independent property managers which Purchaser has hired to manage any of
the Individual  Properties  does hereby agree to indemnify and hold each Seller,
its successors and assigns harmless from and against all  liabilities,  damages,
claims,  charges, costs and expenses incurred in connection with any third party
claims  involving  any of the  Individual  Properties  and which relate to acts,
omissions, events or transactions which first occur following the Closing.

     The  provisions  of this Section 11 shall survive the Closing and shall not
be limited by the  provisions  of Section 10.4  (except  that nothing  contained
herein is intended to extend the  survivability  of Section  10.2(j)  beyond the
period set forth in Section 10.4).

                                Page 174 of 199
<PAGE>

     Except as specifically limited herein, nothing contained in this Section 11
is in any way intended to limit the rights of the Sellers or Purchaser to pursue
any  remedies  that may exist at law or in equity  against any  unrelated  third
parties with respect to any liabilities covered by this Section 11.

12.  Assignment

     This Agreement may not be assigned or transferred by Purchaser except to an
affiliate of  Purchaser.  No assignment  shall  relieve  Purchaser of any of its
obligations under this Agreement.

13.  Notices

     All notices  hereunder  or required by law shall be sent via United  States
Mail,  postage  prepaid,  certified  mail,  return  receipt  requested,  via any
nationally  recognized commercial overnight carrier with provisions for receipt,
or via telecopier  followed by written notice as provided for herein,  addressed
to the parties hereto at their  respective  addresses set forth below or as they
have theretofore specified by written notice delivered in accordance herewith:

                          Purchaser:  Glenborough Properties, L.P.
                                      400 South El Camino Real
                                      San Mateo, CA 94402-1708
                                      Attn:    Frank E. Austin, Esq.
                                      Fax#:    415.343.7438

                     With a copy to:  Morrison & Foerster LLP
                                      425 Market Street
                                      San Francisco, CA 94105
                                      Attn:    Craig B. Etlin, Esq.
                                      Fax#:    415.268.7522
                     
                            Sellers:  CIGNA Income Realty-I Limited Partnership
                                      Connecticut General Equity Properties-I
                                      Limited Partnership
                                      Westford Office Venture
                                      c/o CIGNA Investment Group
                                      900 Cottage Grove Road
                                      Hartford, CT 06152-2311
                                      Attn:    Real Estate Investment Department
                                               Asset Management, S-311
                                      Fax#:    860.726.6327

                                Page 175 of 199
<PAGE>

                     with a copy to:  CIGNA Corporation
                                      Investment Law Department
                                      Mortgage and Real Estate Group, S-215A
                                      900 Cottage Grove Road
                                      Hartford, CT 06152-2215
                                      Attn:  Lawrence A. Cox, Esq.
                                             Fax#:    860.726.8446

                     with a copy to:  Kelley Drye & Warren LLP
                                      101 Park Avenue
                                      New York, NY  10178
                                      Attn:  Robert D. Bickford, Jr., Esq.
                                      Fax#:    212.808.7897

     Delivery will be deemed  complete upon actual  receipt or refusal to accept
delivery.

14.  Expenses

     Each Seller  shall pay its own  attorney' s fees and the costs  incurred to
repay any liens  filed  against  any  Individual  Property  owned by such Seller
(other than taxes and assessments which are not yet due and payable).  Purchaser
shall pay its due diligence expenses, its own attorney' s fees, the costs of the
Surveys,  and any  transfer  taxes.  Escrow fees,  title  premiums and all other
closing costs with respect to each  Individual  Real Property shall be allocated
according to the custom of the county in which such  Individual Real Property is
located.

15.  Miscellaneous

     15.1 Successors and Assigns

     All the terms and conditions of this Agreement are hereby made binding upon
the executors,  heirs,  administrators,  successors and permitted assigns of all
parties hereto.

     15.2 Gender

     Words of any gender used in this  Agreement  shall be held and construed to
include any other  gender,  and words in the  singular  number  shall be held to
include the plural, and vice versa, unless the context requires otherwise.

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<PAGE>

     15.3 Captions

     The  captions  in this  Agreement  are  inserted  only for the  purpose  of
convenient  reference  and in no way  define,  limit or  prescribe  the scope or
intent of this Agreement or any part hereof.

     15.4 Construction

     No  provision  of this  Agreement  shall be construed by any Court or other
judicial  authority  against  any party  hereto by reason of such party' s being
deemed to have drafted or structured such provisions.

     15.5 Entire Agreement

     This Agreement constitutes the entire contract among the parties hereto and
supersedes all prior agreements and understandings  between the parties relating
to the subject  matter  hereof,  including,  without  limitation,  the Letter of
Intent  dated  December  10,  1996,  entered into by and between the Sellers and
Purchaser.  Aside  from  this  Agreement,  there  are no other  oral or  written
promises,  conditions,  representations,  understandings or terms of any kind as
conditions or inducements to the execution hereof and none have been relied upon
by any party.

     15.6 Recording

     The parties agree that this Agreement  shall not be recorded.  If Purchaser
causes this Agreement or any notice or memorandum  thereof to be recorded,  this
Agreement shall be null and void at the option of the Sellers.

     15.7 No Continuance

     Purchaser  acknowledges  that there  shall be no  assignment,  transfer  or
continuance of any of Seller' s insurance coverage or of any property management
contract.

     15.8 Time of Essence

     Time is of the essence in this transaction.

     15.9 Original Document

     This  Agreement  may be executed by all  parties in  counterparts  in which
event each shall be deemed an original.

                                Page 177 of 199
<PAGE>

     15.10 Governing Law

     This  Agreement  shall be governed by and construed in accordance  with the
laws of the State of New York. The parties  recognize that, since the Individual
Properties are located outside of the State of New York, it may be necessary for
the  parties to comply with  certain  aspects of the laws of the states in which
the  Individual  Properties  are located in order to consummate the purchase and
sale of the Individual  Properties  pursuant hereto. The parties agree to comply
with such other laws to the extent necessary to consummate the purchase and sale
of the Individual  Properties,  provided that it is the parties' intent that the
provisions of this Agreement be applied to each Individual  Property in a manner
which results in the greatest consistency possible. For this reason, the parties
have agreed that New York law shall govern with respect to the purchase and sale
of each Individual Property pursuant hereto to the greatest extent possible.

     15.11 Acceptance of Offer

     This Agreement  constitutes  the Sellers' offer to sell to Purchaser on the
terms set forth herein and must be accepted by  Purchaser  by signing  three (3)
copies  hereof  and  delivering  them to Escrow  Holder no later  than 5:00 P.M.
E.S.T. on January 17, 1997. If Purchaser has not accepted this Agreement by such
date, then this Agreement and the offer represented  hereby shall  automatically
be revoked and shall be of no further force or effect.

     15.12 Confidentiality

     Purchaser  and  the  Sellers  agree  that  all  documents  and  information
concerning  the Property  delivered  to  Purchaser,  the subject  matter of this
Agreement, and all negotiations will remain confidential prior to Closing. Prior
to closing,  Purchaser and the Sellers will disclose  such  information  only to
those parties required to know it, including,  without limitation,  employees of
any of the parties,  consultants  and  attorneys  engaged by any of the parties,
prospective  or existing  investors and lenders,  and Purchaser' s insurance and
reinsurance firms.

     15.13 Surviving Covenants

     Notwithstanding  any provisions  hereof to the contrary,  the provisions of
the Second  paragraph  of Section  6.2  hereof and the  provisions  of Section 9
hereof (collectively,  the "Surviving  Covenants") shall survive the closing and
any termination of this Agreement.

     15.14 Approval

     The Sellers'  obligations to perform their respective  duties hereunder are
contingent  upon the  obtaining  of (i) all  required  approvals  (the  "Limited
Partner

                                Page 178 of 199
<PAGE>

Approvals") of the  transaction by the  respective  limited  partners of CIR and
CGEP (the "Limited  Partners") in accordance with their  respective  partnership
agreements,  and (ii) the  approvals  of the boards of  directors of the general
partners of each of CIR and CGEP (the "Board Approvals"). CIR and CGEP will each
seek such approvals promptly after the Effective Date, and will notify Purchaser
promptly of the  decisions  of such Limited  Partners  and boards of  directors.
Without limiting the foregoing, CIR and CGEP shall (i) file proxy materials with
respect to the  Limited  Partner  Approvals  with the  Securities  and  Exchange
Commission within three (3) business days after the Effective Date, and (ii) use
reasonable  efforts to obtain the Limited Partner  Approvals  within twenty (20)
days after  distributing  such proxy materials to the Limited  Partners.  If the
Securities  and Exchange  Commission  does not complete its review of such proxy
materials within thirty (30) days after the Effective Date, or if Purchaser does
not receive written notice from both CIR and CGEP, within ninety (90) days after
the  Effective  Date,  that  all of the  Board  Approvals  and  Limited  Partner
Approvals have been obtained,  then Purchaser  shall have the right to terminate
this  Agreement  by  giving  written  notice  to the  Sellers,  which  right  to
terminate, if not previously exercised, shall itself terminate upon Purchaser' s
receipt  of  written  notice  from CIR and CGEP that such  Board  Approvals  and
Limited  Partner  Approvals  have been  obtained.  In the event  this  Agreement
terminates or is terminated  pursuant to this Paragraph 15.14, the Sellers shall
instruct  the  Escrow  Holder to return the  Deposit  plus all  interest  earned
thereon  to  Purchaser,  and no party  shall have any  further  rights or duties
hereunder except for the Surviving Covenants.

      Executed by Sellers this _____ day of January, 1997.

                     Sellers:  CIGNA Income Realty-I Limited Partnership,
                               a Delaware limited partnership

                               By:   Cigna Realty Resources, Inc.-Tenth,
                                     a Delaware corporation, its General Partner


                                            By:________________________________
                                                 John D. Carey
                                                 President

                                Page 179 of 199
<PAGE>

                                     Connecticut General Equity Properties-I
                                     Limited Partnership,
                                     a Connecticut limited partnership

                                     By:   Connecticut General Realty Resources,
                                           Inc.-Third,
                                           a Delaware corporation, its General
                                           Partner

                                                   By:_________________________
                                                          John D. Carey
                                                          President


                                Page 180 of 199
<PAGE>


                                   Westford Office Venture
                                   a Connecticut general partnership


                                   By:   CIGNA Income Realty-I Limited
                                         Partnership,
                                         a Delaware limited partnership

                                         By: Cigna Realty Resources, Inc.-Tenth,
                                             a Delaware corporation, its General
                                             Partner


                                              By:_______________________________
                                                  John D. Carey
                                                  President
                                              

                                   By:   Connecticut General Equity Properties-I
                                         Limited Partnership,
                                         a Connecticut limited partnership

                                         By:  Connecticut General Realty
                                              Resources, Inc.-Third, its General
                                              Partner


                                              By:_______________________________
                                                  John D. Carey
                                                  President

                                Page 181 of 199
<PAGE>


     Executed by Purchaser this _____ day of January, 1997.

                       Purchaser:  Glenborough Properties, L.P.,
                                   a California limited partnership

                                   By:   Glenborough Realty Trust Incorporated,
                                         a Maryland corporation, General Partner


                                         By:___________________________________

                                         Name:_________________________________

                                         Title:________________________________

     Receipt  of  original  copies of this  Agreement  executed  by  Seller  and
Purchaser is acknowledged this _____ day of , 1997.

                       Escrow Holder:  Chicago Title Company


                                         By:___________________________________

                                         Name:_________________________________

                                         Title:________________________________

                                Page 182 of 199
<PAGE>


                  Summary Description of Exhibits and Schedules
                                 Not Attached to
                     Agreement of Purchase and Sale between
                    CIGNA Income Realty-I Limited Partnership
                                       And
           Connecticut General Equity Properties-I Limited Partnership
                                       And
                            Westford Office Venture,

                                 As Sellers, and

                          Glenborough Properties, L.P.,

                                  As Purchaser


                                    Exhibits

A-1      Form of Deed (Arizona)

A-2      Form of Deed (Florida)

A-3      Form of Deed (Massachusetts)

A-4      Form of Deed (Missouri)

B        Bill of Sale

C        Assignment and Assumption of Leases

D        Form of Tenant Estoppel Certificate

E-1      Form of Seller's Affidavit of Non-Foreign Status

E-2      Form of Seller's Affidavit of Non-Foreign Status


                                Page 183 of 199
<PAGE>

                                    Schedules

1.1      Descriptions of Land Parcels
1.2      Rent Rolls
1.3      Contracts
1.4      Business Names
2.1      Allocation of Purchase Price
4.1      Tenant Estoppel Certificate Requirements
10.2.1   Pending Litigation
10.2.2   Tenant Improvements and Leasing Commissions to be borne by Purchaser
10.2.3   Violations of Law


                                Page 184 of 199
<PAGE>

                            UNSECURED LOAN AGREEMENT




                                     between




         GLENBOROUGH PROPERTIES, L.P., a California limited partnership



                                       and



                     WELLS FARGO BANK, NATIONAL ASSOCIATION






                          Executed as of June ___, 1997


                                Page 185 of 199
<PAGE>

                            UNSECURED LOAN AGREEMENT


THIS UNSECURED LOAN AGREEMENT ("Agreement") is executed as of June ___, 1997, by
and between  GLENBOROUGH  PROPERTIES,  L.P.,  a California  limited  partnership
("Borrower") and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Lender").


                                  R E C I T A L

Borrower  desires to borrow from Lender,  and Lender agrees to loan to Borrower,
the extension of credit for which provision is made herein.

NOW, THEREFORE, Lender and Borrower agree as follows:


                             ARTICLE 1. DEFINITIONS

1.1      DEFINED TERMS. The following  capitalized  terms generally used in this
         Agreement shall have the meanings defined or referenced below.  Certain
         other  capitalized  terms  used  only  in  specific  sections  of  this
         Agreement are defined in such sections.

         "Account" - means an account opened now or hereafter with Lender in the
         name of Borrower or Borrower's designee.

         "Agreement"  - shall  have the  meaning  ascribed  to such  term in the
         preamble hereto.

         "Bankruptcy  Code" - means the  Bankruptcy  Reform  Act of 1978 (11 USC
         Section 101-1330) as hereinafter amended or recodified.

         "Borrower" - means GLENBOROUGH  PROPERTIES,  L.P., a California limited
         partnership.

         "Business Day" - means a day of the week (but not a Saturday, Sunday or
         holiday)  on which the  offices  of Lender  are open to the  public for
         carrying on substantially  all of Lender's business  functions.  Unless
         specifically  referenced  in this  Agreement  as a  Business  Day,  all
         references to "days" shall be to calendar days.

         "Default" - shall have the meaning ascribed to such term in Section 0.

         " Extended Maturity Date" - means October 31, 1997.

         " Funding Date" - means the date the Loan proceeds are disbursed.

         "Guarantor"  -  GLENBOROUGH  REALTY  TRUST  INCORPORATED,   a  Maryland
         corporation.

                                Page 186 of 199
<PAGE>

         "Lender" - means WELLS FARGO BANK, NATIONAL ASSOCIATION.

         "Loan"  - means  the  principal  sum  that  Lender  agrees  to lend and
         Borrower  agrees to borrow pursuant to the terms and conditions of this
         Agreement: SIXTY MILLION AND NO/100THS DOLLARS ($60,000,000.00).

         "Loan  Documents"  -  means  those  documents,  as  hereafter  amended,
         supplemented, replaced or modified, properly executed and in recordable
         form, if necessary, listed in Exhibit A as Loan Documents.

         "Maturity Date" - means July 31, 1997.

         "Note" - means that  certain  Term Note of even date  herewith,  in the
         original principal amount of the Loan, executed by Borrower in favor of
         Lender, as hereafter amended, supplemented, replaced or modified.

         " Option to Extend" - means Borrower's option, subject to the terms and
         conditions  of  Section  2.9,  to extend  the term of the Loan from the
         Maturity Date to the Extended Maturity Date.

         " Original Maturity Date" - means the Maturity Date.

         "Other  Related  Documents"  -  means  those  documents,  as  hereafter
         amended, supplemented, replaced or modified from time to time, properly
         executed and in recordable  form, if necessary,  listed in Exhibit A as
         Other Related Documents.

         "Participant" - shall have the meaning ascribed to such term in Section
         0.

         "Prime Rate" - means a base rate of interest  which Lender  establishes
         from  time to time  and  which  serves  as the  basis  upon  which  the
         effective  rates of interest  are  calculated  for those  loans  making
         reference  thereto.  Any change in an effective rate due to a change in
         the Prime Rate shall  become  effective  on the day each such change is
         announced within Lender.

         "Term Note" - shall have the  meaning  ascribed to such term in Section
         0.

1.2      EXHIBITS  INCORPORATED.  Exhibits A and B attached  hereto,  are hereby
         incorporated into this Agreement.


                                 ARTICLE 2. LOAN

2.1      LOAN.  By and  subject  to the terms of this  Agreement  and each other
         document  identified  on  Exhibit A hereto as a Loan  Document,  Lender
         agrees to lend to Borrower and Borrower agrees to borrow from Lender up
         to  the  principal   sum  of  SIXTY   MILLION  AND  NO/100THS   DOLLARS
         ($60,000,000.00).

                                Page 187 of 199
<PAGE>

2.2      LOAN UNSECURED. This Loan is unsecured.

2.3      TERM NOTE.  The Loan shall be  evidenced  by a  promissory  note ("Term
         Note") in the form of Exhibit B attached.

2.4      INTEREST;  PAYMENTS. Except as otherwise provided in any Loan Document,
         interest  shall accrue upon the  outstanding  principal  balance of the
         Loan at the rate(s)  provided in the Term Note,  and such  interest and
         all  outstanding  principal  of the Loan shall be  payable as  required
         therein.

2.5      PURPOSE.  The  proceeds  of the Loan  shall be used for the  purpose of
         satisfying  that certain  $40,000,000.00  existing  loan from Lender to
         Borrower  as   evidenced   by,   among  other   things,   that  certain
         $40,000,000.00  Term Note dated April 25, 1997 from  Borrower to Lender
         and for the purpose of reducing the principal balance outstanding under
         the Credit Agreement (hereinafter defined).

2.6      MATURITY DATE. The Maturity Date of the Loan shall be July 31, 1997, on
         which date all sums due and owing  under this  Agreement  and the other
         Loan  Documents  shall be payable in full.  All  payments due to Lender
         under this Agreement,  whether at the Maturity Date or otherwise, shall
         be paid in immediately available funds.

2.7      CREDIT FOR PRINCIPAL  PAYMENTS.  Any payment made upon the  outstanding
         principal  balance of the Loan shall be credited as of the Business Day
         received,  provided  such  payment is  received by Lender no later than
         11:00  a.m.  (Pacific  Standard  Time  or  Pacific  Daylight  Time,  as
         applicable) and constitutes  immediately available funds. Any principal
         payment  received  after  said  time,  or  which  does  not  constitute
         immediately  available funds,  shall be credited upon such funds having
         become unconditionally and immediately available to Lender.

2.8      GUARANTY(S).  All  obligations  of  Borrower  to Lender  under the Loan
         Documents shall be guaranteed by GLENBOROUGH REALTY TRUST INCORPORATED,
         a Maryland  corporation and such guaranty(s)  shall be evidenced by and
         subject to the terms of a form of guaranty to be furnished by Lender.

2.9      OPTION TO EXTEND.  Borrower shall have the option to extend the term of
         the Loan  from the  Maturity  Date (for  purposes  of this  Section,  "
         Original  Maturity  Date"  ),  to  the  Extended  Maturity  Date,  upon
         satisfaction of each of the following conditions precedent:

              (a)  Borrower   shall  provide   Lender  with  written  notice  of
Borrower's  request to  exercise  the Option to Extend not more than  forty-five
(45) days but not less than  fifteen  (15) days prior to the  Original  Maturity
Date; and

              (b) As of the date of Borrower's  delivery of notice of request to
exercise the Option to Extend,  and as of the Original Maturity Date, no Default
shall have occurred and be continuing, and no event or condition which, with the
giving of notice or the  passage  of time or both,  would  constitute  a Default
shall have occurred and be continuing and Borrower shall so certify in writing.

                                Page 188 of 199
<PAGE>

ARTICLE 3.  DISBURSEMENT

CONDITIONS PRECEDENT.  Lender's obligation to make any disbursements or take any
other  action  under  the  Loan  Documents  shall  be  subject  at all  times to
satisfaction of each of the following conditions precedent:

Compliance. The representations and warranties contained herein shall be true on
and as of the date of the signing of this  Agreement and on the date such action
is to be  taken,  with  the same  effect  as  though  such  representations  and
warranties had been made on and as of such dates,  and on such dates no Default,
as defined in this  Agreement,  shall exist and no event or  circumstance  shall
have occurred or arisen which would constitute a Default but for any unsatisfied
requirement for the giving of notice or passage of time.

Documentation.  Prior to taking any such action  hereunder,  Borrower shall have
delivered to Lender all Loan  Documents and such other  documents,  instruments,
policies,  forms of evidence and other materials as Lender may request under the
terms of the Loan Documents.

Approval of Lender's Counsel.  All legal matters incidental to such action shall
be satisfactory to counsel of Lender.

ACCOUNT, PLEDGE AND ASSIGNMENT, AND DISBURSEMENT AUTHORIZATION.  The proceeds of
the Loan, when qualified for  disbursement,  shall be deposited into the Account
or otherwise  disbursed  to or for the benefit or account of Borrower  under the
terms of this Agreement;  provided,  however, that any direct disbursements from
the Loan  which  are made by means of wire  transfer,  shall be  subject  to the
provisions  of any funds  transfer  agreement  which is  identified in Exhibit A
hereto.  As  security  for  Borrower's  performance  under  the Loan  Documents,
Borrower hereby irrevocably pledges and assigns to Lender all monies at any time
deposited in the Account.


ARTICLE 4.  REPRESENTATIONS AND WARRANTIES

As a  material  inducement  to  Lender's  entry  into this  Agreement,  Borrower
represents  and  warrants  to  Lender  as of  the  date  hereof  and  continuing
thereafter that:

AUTHORITY/ENFORCEABILITY. If other than an individual, Borrower is in compliance
with all laws and  regulations  applicable  to its  organization,  existence and
transaction  of business  and has all  necessary  rights and powers to borrow as
contemplated by the Loan Documents.

BINDING OBLIGATIONS.  Borrower is authorized to execute, deliver and perform its
obligations  under the Loan Documents,  and such obligations  shall be valid and
binding obligations of Borrower.

FORMATION  AND  ORGANIZATIONAL  DOCUMENTS.  Borrower has delivered to Lender all
formation  and  organizational  documents of Borrower,  of the  partners,  joint
venturers or members of Borrower,  if any,

                                Page 189 of 199
<PAGE>

and of all  guarantors  of  the  Loan,  if  any,  and  all  such  formation  and
organizational  documents  remain  in full  force and  effect  and have not been
amended  or  modified  since  they were  delivered  to  Lender.  Borrower  shall
immediately provide Lender with copies of any amendments or modifications of the
formation or organizational documents.

NO VIOLATION.  Borrower's  execution,  delivery,  and performance under the Loan
Documents do not: (a) require any consent or approval  not  heretofore  obtained
under any partnership agreement, operating agreement, articles of incorporation,
bylaws or other  document;  (b) conflict with, or constitute a breach or default
or permit the acceleration of obligations under any agreement,  contract, lease,
or other  document by which the Borrower is bound or  regulated;  or (c) violate
any  statute,  law,  regulation  or  ordinance,  or any  order  of any  court or
governmental entity.

LITIGATION.  Except as  disclosed  to Lender in  writing,  there are no  claims,
actions,  suits, or proceedings pending, or to Borrower's knowledge  threatened,
against Borrower.

FINANCIAL  CONDITION.   All  financial  statements  and  information  heretofore
delivered  to Lender by Borrower,  including,  without  limitation,  information
relating to the financial condition of Borrower,  the partners,  joint venturers
or members of Borrower,  and/or any guarantors,  fairly and accurately represent
the financial condition of the subject thereof and have been prepared (except as
noted  therein) in accordance  with  generally  accepted  accounting  principles
consistently  applied.  Borrower acknowledges and agrees that Lender may request
and obtain additional information from third parties regarding any of the above,
including, without limitation, credit reports.

NO MATERIAL  ADVERSE  CHANGE.  There has been no material  adverse change in the
financial  condition of Borrower and/or  Guarantor since the dates of the latest
financial  statements  furnished to Lender and, except as otherwise disclosed to
Lender in writing,  Borrower has not entered into any material transaction which
is not disclosed in such financial statements.

ACCURACY. All reports, documents, instruments, information and forms of evidence
delivered to Lender  concerning the Loan or security for the Loan or required by
the Loan  Documents  are  accurate,  correct and  sufficiently  complete to give
Lender true and accurate  knowledge of their subject matter,  and do not contain
any misrepresentation or omission.

TAXES. Borrower has filed all required federal,  state, county and municipal tax
returns and has paid all taxes owed and payable,  and Borrower knows of no basis
for additional assessment with respect to any taxes.

NO SUBORDINATION.  There is no agreement,  indenture,  contract or instrument to
which  Borrower is a party or by which  Borrower may be bound that  requires the
subordination  in right of payment of any of Borrower's  obligations  subject to
this Agreement to any other obligation of Borrower.

PERMITS;  FRANCHISES.  Borrower  possesses,  and  will  hereafter  possess,  all
permits,  memberships,  franchises,  contracts  and  licenses  required  and all
trademark rights,  trade names,  trade name rights,  patents,  patent rights and
fictitious  name rights  necessary to enable it to conduct the business in which
it is now engaged without conflict with the rights of others.

OTHER  OBLIGATIONS.  Borrower is not in default on any  obligation  for borrowed
money,  any purchase money  obligation or any other material lease,  commitment,
contract, instrument or obligation.

                                Page 190 of 199
<PAGE>

ARTICLE 5.  COVENANTS OF BORROWER

Borrower covenants that so long as any credit remains available  hereunder,  and
until payment in full of all amounts owing under the Loan Documents:

OTHER INDEBTEDNESS.  Without the prior written consent of Lender, Borrower shall
not create, incur or permit to exist any liabilities  resulting from borrowings,
loans or advances,  whether  secured or  unsecured,  except the  liabilities  of
Borrower to Lender for money borrowed hereunder.  Borrower shall not encumber or
sell any or all of the Cigna  Properties  without the prior  written  consent of
Lender  unless the refinance or sale proceeds are used to payoff the Loan in its
entirety.

MERGER,  CONSOLIDATION,  SALE  OF  ASSETS.  Borrower  shall  not  merge  into or
consolidate  with any  corporation  or other  entity,  or sell,  lease,  assign,
transfer or otherwise  dispose of all or  substantially  all of its assets other
than in the  ordinary  course of business.  Borrower  agrees to apply all of the
proceeds raised through an additional equity offering done by or for the benefit
of the Borrower or the Guarantor towards the repayment of the Loan.

GUARANTEES.  Without the prior  written  consent of Lender,  Borrower  shall not
guarantee  or  become  liable in any way as a surety,  endorser  (other  than as
endorser of  negotiable  instruments  in the  ordinary  course of  business)  or
accommodation  endorser or otherwise for debt or obligations of any other person
or entity.

DIVIDENDS, DISTRIBUTIONS.  Without the prior written consent of Lender, Borrower
shall not declare or pay any dividend or distritution  either in cash,  stock on
Borrower's stock now or hereafter outstanding;  or redeem,  retire,  purchase or
otherwise  acquire any shares of any class of  Borrower's  stock or  partnership
interests now or hereafter outstanding.

EXPENSES.  Borrower  shall  immediately  pay  Lender  upon  demand all costs and
expenses  incurred by Lender in connection  with:  (a) the  preparation  of this
Agreement,  all other Loan  Documents and Other Related  Documents  contemplated
hereby; (b) the  administration of this Agreement,  the other Loan Documents and
Other Related  Documents for the term of the Loan;  and (c) the  enforcement  or
satisfaction  by Lender of any of Borrower's  obligations  under this Agreement,
the other Loan  Documents or the Other  Related  Documents.  For all purposes of
this Agreement,  Lender's costs and expenses shall include,  without limitation,
all legal fees and  expenses,  accounting  fees and auditor  fees. If any of the
services  described above are provided by an employee of Lender,  Lender's costs
and expenses for such services  shall be calculated in accordance  with Lender's
standard charge for such services.

ERISA  COMPLIANCE.  Borrower  shall at all times comply with the  provisions  of
ERISA with respect to any retirement or other employee  benefit plan to which it
is a party as employer,  and as soon as possible  after Borrower  knows,  or has
reason to know, that any Reportable  Event (as defined in ERISA) with respect to
any such plan of Borrower  has  occurred,  it shall  furnish to Lender a written
statement  setting forth details as to such Reportable Event and the action,  if
any, which Borrower proposes to take with respect thereto,  together with a copy
of the notice of such Reportable Event furnished to the Pension Benefit Guaranty
Corporation.

                                Page 191 of 199
<PAGE>

EXISTENCE.  If other than a natural  person or persons,  Borrower shall preserve
and maintain its existence  and all of its rights,  privileges  and  franchises;
conduct its business in an orderly,  efficient,  and regular manner;  and comply
with the requirements of all applicable laws, rules, regulations and orders of a
governmental authority.

TAXES AND OTHER  LIABILITIES.  Borrower shall pay and discharge when due any and
all  indebtedness,  obligations,  assessments and taxes, both real and personal,
owed by or relating to Borrower and Borrower's properties (including federal and
state income taxes),  except such as Borrower may in good faith contest or as to
which  a bona  fide  dispute  may  arise,  provided  provision  is  made  to the
satisfaction  of Lender  for  eventual  payment  thereof in the event that it is
found that the same is an obligation of Borrower.

NOTICE.  Borrower  shall  promptly  give notice in writing to Lender of: (a) any
litigation  pending or threatened  against  Borrower;  (b) the occurrence of any
breach or  default in the  payment or  performance  of any  obligation  owing by
Borrower to any person or entity,  other than Lender; (c) any change in the name
of Borrower, and in the case of a Borrower which is an organization,  any change
in its  identity or  organizational  structure;  (d) any  uninsured or partially
uninsured loss through fire, theft,  liability damage; or (e) any termination or
cancellation  of any  insurance  policy  which  Borrower is  required  herein to
maintain.

INSURANCE.  Borrower shall maintain and keep in force insurance of the types and
in amounts  customarily  carried  in lines of  business  similar to  Borrower's,
including but not limited to fire, extended coverage,  public liability,  damage
and workers'  compensation,  carried in companies and in amounts satisfactory to
Lender,  and deliver to Lender from time to time at Lender's  request  schedules
setting forth all insurance then in effect.

FACILITIES. Borrower shall keep all Borrower's properties useful or necessary to
Borrower's  business  in good repair and  condition,  and from time to time make
necessary  repairs,   renewals  and  replacements  thereto  so  that  Borrower's
properties shall be fully and efficiently preserved and maintained.


ARTICLE 6.  REPORTING COVENANTS

FINANCIAL  INFORMATION.  Borrower shall deliver to Lender, as soon as available,
but in no event later than one hundred twenty (120) days after Borrower's fiscal
year end, current financial statements (including, without limitation, an income
and expense  statement  and balance  sheet)  signed by chief  financial  officer
together  with any other  financial  information  requested  by  Lender  for the
following persons and entities:

Borrower,
                      Glenborough Realty Trust Incorporated

Within  twenty (20) days of Lender's  request,  Borrower  shall also  deliver to
Lender such quarterly and other financial  information  regarding any persons or
entities  in any way  obligated  on the Loan as Lender may  specify.  If audited
financial  information  is prepared,  Borrower shall deliver to Lender copies of
that information  within fifteen (15) days of its final  preparation.  Except as
otherwise agreed to by Lender, all such financial  information shall be prepared
in  accordance  with  generally  accepted  accounting  principles   consistently
applied.

                                Page 192 of 199
<PAGE>

Within  twenty (20) days of Lender's  request,  Borrower  shall also  deliver to
Lender, an updated rent roll and operating statement on the Cigna Properties.

BOOKS AND RECORDS.  Borrower shall maintain  complete books of account and other
records in accordance with generally accepted accounting principles consistently
applied,  and permit any  representative  of Lender,  at any reasonable time, to
inspect,  audit and examine such books and records,  to make copies of the same,
and to inspect the properties of Borrower.


ARTICLE 7.  DEFAULTS AND REMEDIES

DEFAULT.  The occurrence of any one or more of the following shall constitute an
event of default  (hereinafter,  "Default")  under this  Agreement and the other
Loan Documents:

Payment;  Performance.  Borrower's  failure to pay when due any sum,  to perform
when  due any  other  obligation,  or to  observe  any  covenant,  the  payment,
performance,  or  observance  of which is required  under the Note or any of the
other Loan Documents;  provided,  however, that wherever provision is made for a
time period during which  Borrower may  undertake to remedy such  failure,  then
such failure shall  constitute a Default only if it is not remedied  within that
time period; or

Performance of Other  Obligations.  The occurrence of a breach or default in the
payment or performance of any obligation  imposed by any instrument or agreement
(other than the Loan  Documents)  pursuant to which  Borrower has borrowed money
from, or incurred liability to, any person or entity including Lender; or

Attachment.  The  sequestration or attachment of, or any levy or execution upon,
any assets of Borrower which sequestration, attachment, levy or execution is not
released  expunged or dismissed  prior to the earlier of thirty (30) days or the
sale of the assets affected thereby; or

Representations  and  Warranties.  (i)  The  failure  of any  representation  or
warranty of Borrower in any of the Loan Documents and the  continuation  of such
failure for more than ten (10) days after written notice to Borrower from Lender
requesting that Borrower cure such failure;  or (ii) any material adverse change
in the  financial  condition  of Borrower  or any other  person or entity in any
manner obligated to Lender under the Loan Documents from the financial condition
represented to Lender as of the date hereof; or

Voluntary Bankruptcy;  Insolvency;  Dissolution. (i) The filing of a petition by
Borrower for relief under the  Bankruptcy  Code,  or under any other  present or
future state or federal law regarding bankruptcy, reorganization or other debtor
relief  law;  (ii) the filing of any  pleading  or an answer by  Borrower in any
involuntary  proceeding  under the  Bankruptcy  Code or other debtor  relief law
which  admits  the  jurisdiction  of  the  court  or  the  petition's   material
allegations  regarding  Borrower's  insolvency;  (iii) a general  assignment  by
Borrower for the benefit of  creditors;  or (iv)  Borrower  applying for, or the
appointment of, a receiver,  trustee, custodian or liquidator of Borrower or any
of its assets; or

Involuntary  Bankruptcy.  The failure of Borrower to effect a full  dismissal of
any  involuntary  petition under the  Bankruptcy  Code or under any other debtor
relief law that is filed  against  Borrower  or in any way  restrains  or limits
Borrower or Lender  regarding  the Loan prior to the earlier of the entry of any
court order

                                Page 193 of 199
<PAGE>

granting relief sought in such involuntary  petition,  or thirty (30) days after
the date of filing of such involuntary petition; or

Partners; Guarantors. The occurrence of any of the events specified in Article 0
(0) or 0 (0) as to any  person or entity  other than  Borrower,  which is in any
manner obligated to Lender under the Loan Documents; or

Death or  Incapacity of Borrower.  The death or  incapacity  of Borrower,  if an
individual; or

Change In Management or Control.  The  occurrence of any material  management or
organizational  change in Borrower or in the  partners,  venturers or members of
Borrower,  including,  without  limitation,  any  partnership,  joint venture or
member  dispute which Lender  determines,  in its sole and absolute  discretion,
shall have a material  adverse  effect on the Loan or on the ability of Borrower
or its  partners,  venturers or members to perform their  obligations  under the
Loan Documents; or

Default Under Credit Agreement.  The occurrence of an Event of Default under and
as  defined  in that  certain  credit  agreement  dated  July 11,  1996 " Credit
Agreement"  executed by  Glenborough  Properties,  L.P.,  a  California  limited
partnership,  in favor of Wells Fargo Bank, National  Association,  as Agent for
itself and other lenders, as lender.  Notwithstanding  anything to the contrary,
Lender  acknowledges  that  funding of the Loan shall  cause an Event of Default
under paragraph 9.07 of the Credit Agreement and Lender  acknowledges  that said
Event of Default shall not cause a Default hereunder.

ACCELERATION  UPON  DEFAULT;  REMEDIES.  Upon  the  occurrence  of  any  Default
specified  in this  Article,  Lender may, at its sole  option,  declare all sums
owing to Lender  under the Note,  this  Agreement  and the other Loan  Documents
immediately due and payable. Upon such acceleration,  Lender may, in addition to
all other remedies  permitted  under this Agreement and the other Loan Documents
and at law or equity,  apply any sums in the Account to the sums owing under the
Loan  Documents  and  any  and  all   obligations  of  Lender  to  fund  further
disbursements under the Loan shall terminate.

RIGHT OF CONTEST.  Borrower may contest in good faith any claim, demand, levy or
assessment by any person other than Lender which would constitute a Default,  if
Borrower pursues the contest  diligently and in a manner which Lender determines
will not be prejudicial to Lender nor impair the rights of Lender under the Loan
Documents.


ARTICLE 8.  MISCELLANEOUS PROVISIONS

INDEMNITY. Borrower hereby agrees to defend, indemnify and hold harmless Lender,
its  directors,  officers,  employees,  agents,  successors and assigns from and
against any and all losses, damages,  liabilities,  claims, actions,  judgments,
court  costs  and  legal  or  other  expenses  (including,  without  limitation,
attorneys'  fees and  expenses)  which  Lender may incur as a direct or indirect
consequence of: (a) the purpose to which Borrower applies the Loan proceeds; (b)
the failure of Borrower to perform any  obligations as and when required by this
Agreement or any of the other Loan Documents; (c) any failure at any time of any
of Borrower's  representations or warranties to be true and correct;  or (d) any
act or omission by Borrower,  or any constituent  partner or member of Borrower.
Borrower  shall  immediately  pay to Lender upon demand any amounts  owing under
this  indemnity,  together with interest from the date the  indebtedness  arises
until

                                Page 194 of 199
<PAGE>

paid at the rate of interest  applicable to the  principal  balance of the Note.
BORROWER'S DUTY TO INDEMNIFY LENDER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

FORM OF DOCUMENTS.  The form and substance of all  documents,  instruments,  and
forms of evidence to be delivered  to Lender  under the terms of this  Agreement
and any of the other Loan  Documents  shall be subject to Lender's  approval and
shall not be modified,  superseded or terminated in any respect without Lender's
prior written approval.

NOTICES. All notices,  demands, or other communications under this Agreement and
the other Loan  Documents  shall be in  writing  and shall be  delivered  to the
appropriate  party  at the  address  set  forth  on the  signature  page of this
Agreement  (subject to change  from time to time by written  notice to all other
parties to this  Agreement).  All  communications  shall be deemed  served  upon
delivery of, or if mailed,  upon the first to occur of receipt or the expiration
of three (3) days after the deposit in the United  States  Postal  Service mail,
postage  prepaid  and  addressed  to the  address of  Borrower  or Lender at the
address specified;  provided,  however, that non-receipt of any communication as
the result of any change of address of which the sending  party was not notified
or as the result of a refusal to accept delivery shall be deemed receipt of such
communication.

RELATIONSHIP OF PARTIES.  The relationship of Borrower and Lender under the Loan
Documents is, and shall at all times remain, solely that of borrower and lender,
and Lender neither undertakes nor assumes any responsibility or duty to Borrower
or to any third party,  except as expressly  provided in this  Agreement and the
other Loan Documents.

ATTORNEYS' FEES AND EXPENSES;  ENFORCEMENT. If any attorney is engaged by Lender
to enforce  or defend any  provision  of this  Agreement,  any of the other Loan
Documents or Other Related  Documents,  or as a consequence of any Default under
the  Loan  Documents,  with  or  without  the  filing  of any  legal  action  or
proceeding, Borrower shall immediately pay to Lender, upon demand, the amount of
all attorneys'  fees and expenses and all costs incurred by Lender in connection
therewith,  together  with  interest  thereon from the date of such demand until
paid at the rate of interest  applicable to the principal balance of the Note as
specified therein.

IMMEDIATELY  AVAILABLE FUNDS.  Unless otherwise  expressly  provided for in this
Agreement,  all amounts  payable by Borrower to Lender  shall be payable only in
United States currency, immediately available funds.

LENDER'S CONSENT. Wherever in this Agreement there is a requirement for Lender's
consent and/or a document to be provided or an action taken "to the satisfaction
of Lender",  it is  understood  by such phrase that Lender  shall  exercise  its
consent,  right or judgment in a reasonable  manner given the specific facts and
circumstance applicable at the time.

LOAN SALES AND PARTICIPATIONS;  DISCLOSURE OF INFORMATION.  Borrower agrees that
Lender may elect, at any time, to sell, assign or grant participations in all or
any portion of its rights and obligations under the Loan Documents, and that any
such  sale,  assignment  or  participation  may  be to  one  or  more  financial
institutions,  private  investors,  and/or  other  entities,  at  Lender's  sole
discretion ("Participant").  Borrower further agrees that Lender may disseminate
to any such actual or potential purchaser(s),  assignee(s) or participant(s) all
documents  and  information  (including,   without  limitation,   all  financial
information)  which has been or is hereafter provided to or known to Lender with
respect  to:  (a)  any  party  connected  with

                                Page 195 of 199
<PAGE>

the Loan (including,  without limitation, the Borrower, any partner or member of
Borrower,  any  constituent  partner or member of Borrower  and any  guarantor);
and/or (b) any lending  relationship  other than the Loan which  Lender may have
with  any  party  connected  with the  Loan.  In the  event  of any  such  sale,
assignment or  participation,  Lender and the parties to such transaction  shall
share in the rights and obligations of Lender as set forth in the Loan Documents
only as and to the extent they agree among  themselves.  In connection  with any
such sale,  assignment or  participation,  Borrower further agrees that the Loan
Documents  shall be sufficient  evidence of the  obligations of Borrower to each
purchaser,  assignee,  or  participant,  and upon  written  request  by  Lender,
Borrower shall enter into such amendments or modifications to the Loan Documents
as may be reasonably required in order to evidence any such sale,  assignment or
participation.  The indemnity  obligations  of Borrower under the Loan Documents
shall also apply with respect to any purchaser, assignee or participant.

WAIVER OF RIGHT TO TRIAL BY JURY0  WAIVER OF RIGHT TO TRIAL BY JURY.  EACH PARTY
TO THIS  AGREEMENT  HEREBY  EXPRESSLY  WAIVES  ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS,
INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b)
IN ANY WAY  CONNECTED  WITH OR  RELATED OR  INCIDENTAL  TO THE  DEALINGS  OF THE
PARTIES  HERETO OR ANY OF THEM WITH  RESPECT  TO THE LOAN  DOCUMENTS  (AS NOW OR
HEREAFTER  MODIFIED) OR ANY OTHER INSTRUMENT,  DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO,
IN EACH  CASE  WHETHER  SUCH  CLAIM,  DEMAND,  ACTION  OR CAUSE OF ACTION IS NOW
EXISTING  OR  HEREAFTER  ARISING,  AND  WHETHER  SOUNDING IN CONTRACT OR TORT OR
OTHERWISE;  AND EACH PARTY  HEREBY  AGREES  AND  CONSENTS  THAT ANY SUCH  CLAIM,
DEMAND,  ACTION OR CAUSE OF ACTION  SHALL BE  DECIDED BY COURT  TRIAL  WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS  SECTION  WITH ANY COURT AS WRITTEN  EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT  OTHERWISE HAVE TO TRIAL BY
JURY.

SEVERABILITY.  If any provision or obligation under this Agreement and the other
Loan Documents  shall be determined by a court of competent  jurisdiction  to be
invalid,  illegal or unenforceable,  that provision shall be deemed severed from
the  Loan  Documents  and  the  validity,  legality  and  enforceability  of the
remaining  provisions  or  obligations  shall remain in full force as though the
invalid,  illegal, or unenforceable  provision had never been a part of the Loan
Documents,  provided,  however, that if the rate of interest or any other amount
payable  under the Note or this  Agreement  or any other Loan  Document,  or the
right of collectibility therefore, are declared to be or become invalid, illegal
or unenforceable, Lender's obligations to make advances under the Loan Documents
shall not be enforceable by Borrower.

NO WAIVER;  SUCCESSORS. No waiver shall be implied from any failure of Lender to
take, or any delay by Lender in taking, action concerning any Default or failure
of condition, or from any previous waiver of any similar or unrelated Default or
failure of condition.  Any waiver or approval  hereunder  must be in writing and
shall be limited to its specific  terms.  The terms and provisions  hereof shall
bind and inure to the  benefit  of the  heirs,  successors  and  assigns  of the
parties.

TIME. Time is of the essence of each and every term of this Agreement.

                                Page 196 of 199
<PAGE>

HEADINGS. All article, section or other headings appearing in this Agreement and
any of the other Loan Documents are for  convenience of reference only and shall
be disregarded in construing this Agreement and any of the other Loan Documents.

GOVERNING LAW. This  Agreement  shall be governed by, and construed and enforced
in  accordance  with the laws of the State of  California,  except to the extent
preempted by Federal  laws.  Borrower and all persons and entities in any manner
obligated to Lender under the Loan Documents  consent to the jurisdiction of any
Federal or State Court within the State of  California  having  proper venue and
also  consent to service of process by any means  authorized  by  California  or
Federal Law.

INTEGRATION; INTERPRETATION. The Loan Documents contain or expressly incorporate
by  reference  the entire  agreement  of the parties with respect to the matters
contemplated therein and supersede all prior negotiations or agreements, written
or oral. The Loan Documents shall not be modified  except by written  instrument
executed by all  parties.  Any  reference  to the Loan  Documents  includes  any
amendments,  renewals  or  extensions  now or  hereafter  approved  by Lender in
writing.

JOINT AND SEVERAL LIABILITY. The liability of all persons and entities obligated
in any manner under this Agreement and any of the Loan Documents  shall be joint
and several.

COUNTERPARTS.  This Agreement,  any of the other Loan Documents  (except for the
Note), any Other Related Documents and any subsequent modifications, amendments,
waivers,  consents or supplements thereof, if any, may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to be
an original and all such  counterparts  together,  shall  constitute one and the
same instrument.

IN WITNESS  WHEREOF,  Borrower and Lender have executed this Agreement as of the
date appearing on the first page of this Agreement.


" LENDER" 

WELLS FARGO BANK,
NATIONAL ASSOCIATION



By:____________________________
Lezlie J.Beam
Its: Vice President


                                Page 197 of 199
<PAGE>

Lender's Address:                                With a copy to:
Real Estate Group (AU# 3201)                     WELLS FARGO BANK, NATIONAL
333 South Grand Avenue, 9th Floor                ASSOCIATION
Los Angeles, CA  90071                           Disbursement Center
Attention:  Cathryn Berg                         2120 East Park Place, Suite 100
                                                 El Segundo, CA  90245
                                                 Attention:  Manager


      " BORROWER" 
                                                 Borrower's Address:
GLENBOROUGH PROPERTIES, L.P., a                  400 South El Camino Real
California limited partnership                   San Mateo, CA 94402
 By:   GLENBOROUGH REALTY TRUST                  Attention: Stephen R. Saul
       INCORPORATED, a Maryland corporation,
       General Partner



By:__________________________________

 
Its:_________________________________


                                Page 198 of 199
<PAGE>

                                                                       EXHIBIT A

                                                                Loan No. 1856TOL

EXHIBIT A - DOCUMENTS


Exhibit A to UNSECURED LOAN AGREEMENT between  GLENBOROUGH  PROPERTIES,  L.P., a
California limited  partnership,  as "Borrower",  and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as "Lender", dated as of April 25, 1997.

LOAN  DOCUMENTS.   The  documents  numbered  1.1  through  1.7,  inclusive,  and
amendments,  modifications and supplements thereto which have received the prior
written  consent of Lender,  together with any documents  executed in the future
that are approved by Lender and that recite that they are "Loan  Documents"  for
purposes  of this  Agreement  are  collectively  referred  to herein as the Loan
Documents.

This Agreement.

The Term Note of even date herewith in the original principal amount of the Loan
made by Borrower payable to the order of Lender.

CoPartnership,  Joint Venture or Association  Borrowing Certificate of even date
herewith  executed  by  Glenborough  Realty  Trust   Incorporated,   a  Maryland
corporation, GPA, Ltd, a California limited partnership and Robert Batinovich.

Corporate  Resolution  Authorizing  Execution  of Guaranty and  Endorsement  and
Hypothecation of Property of even date herewith  certified by  _________________
as Secretary of Glenborough Realty Trust Incorporated, a Maryland corporation.

Corporate  Resolution  Authorizing  Partnership  Activity of even date  herewith
certified  by   _________________  as  Secretary  of  Glenborough  Realty  Trust
Incorporated, a Maryland corporation.

     1.6 Disbursement Authorization of even date herewith executed by Borrower.

     1.7  Opinion  of  Borrower's  in-house  legal  counsel  dated of even  date
herewith executed by Frank Austin on behalf of Borrower and Guarantor.


Other Related Documents (Which Are Not Loan Documents):

Repayment  Guaranty of even date herewith  executed by Glenborough  Realty Trust
Incorporated, a Maryland corporation as Guarantor in favor of Lender.

Funds  Transfer  Agreement  for  Disbursement  of Loan  Proceeds  of  even  date
herewith,  executed by and  between  Borrower  and Wells  Fargo  Bank,  National
Association.


                                Page 199 of 199
<PAGE>