##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

|                                              |  |                                                                                         
|--------------------------------------------- |  | ----------------------------------------------------------------------------------------
|[X]                                           |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|                                             
|For the quarterly period ended March 31, 2002
|                                             
|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
(State or other jurisdiction
of incorporation or organization)                                                                  |  | 94-3211970
(I.R.S. Employer
Identification No.)
|                                                                                                                                        
|400 South El Camino Real,
Suite 1100, San Mateo, California
(650) 343-9300
(Address of principal executive offices
and telephone number) |  | 94402-1708
(Zip Code)                          

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

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

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

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

Yes  X                      No_____

As of May 9, 2002, 27,624,112 shares of Common Stock ($.001 par value) and
10,097,800 shares of 7.75% Series A Convertible Preferred Stock ($.001 par
value, $25.00 per share liquidation preference) were outstanding.

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TABLE OF CONTENTS



|                              |                                                                                               |                                                |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------- |  |  |  |  |  | 
|Part I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | CONSOLIDATED BALANCE SHEETS                   
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME             
|                              |                                                                                               | CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS         
|                              |                                                                                               | Notes to Consolidated Financial Statements    
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   
|EXHIBIT INDEX                
|EXHIBIT 12.01                



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##### Table of Contents



INDEX
GLENBOROUGH REALTY TRUST INCORPORATED

|              |                                                                                         |                                                                                          |  |  |       |     
|------------- | --------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- |  |  | ----- | ----
|              |                                                                                         |                                                                                          |  |  |       |     
|              |                                                                                         |                                                                                          |  |  |       |     
|PART I        | FINANCIAL INFORMATION                                                                   |                                                                                          |  |  |       |     
|             
|Item 1.       | Consolidated Financial Statements of Glenborough
Realty Trust Incorporated (Unaudited): |                                                                                          |  |  |       |     
|              |                                                                                         | Consolidated Balance Sheets at March 31, 2002 and
December 31, 2001                      |  |  |       | 3   
|              |                                                                                         | Consolidated Statements of Income for the three
months ended March 31, 2002 and 2001     |  |  |       | 4   
|              |                                                                                         | Consolidated Statement of Stockholders Equity for
the three months ended March 31, 2002 |  |  |       | 5   
|              |                                                                                         | Consolidated Statements of Cash Flows for the
three months ended March 31, 2002 and 2001 |  |  |       | 6-7 
|              |                                                                                         | Notes to Consolidated Financial Statements                                               |  |  |       | 8-18
|Item 2.       | Managements Discussion and Analysis of Financial
Condition and Results of Operations   |                                                                                          |  |  | 19-25
|PART II       | OTHER INFORMATION                                                                       |                                                                                          |  |  |      
|Item 1.       | Legal Proceedings                                                                       |                                                                                          |  |  | 25   
|Item 4.       | Submission of Matters to a Vote of Security Holders                                     |                                                                                          |  |  | 25   
|Item 6.       | Exhibits and Reports on Form 8-K                                                        |                                                                                          |  |  | 25   
|SIGNATURES    |                                                                                         |                                                                                          |  |  |       | 26  
|EXHIBIT INDEX |                                                                                         |                                                                                          |  |  |       | 27  

2



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##### Table of Contents






Part I. FINANCIAL INFORMATION




Item 1. Financial Statements




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

|                                        |                                                                                                                                                    |                            |              |                                            |         |           |           |              |         |           |           | 
|--------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------ | ------------------------------------------ | ------- | --------- | --------- | ------------ | ------- | --------- | --------- | 
|                                        |                                                                                                                                                    |                            |              |                                            |         | March 31, |           | December 31,
|                                        |                                                                                                                                                    |                            |              |                                            |         | 2002      |           | 2001        
|                                        |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|ASSETS                                  |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|                                        | Rental properties, gross                                                                                                                           |                            | $            | 1,393,038                                  |         |           | $         | 1,338,022    |        
|                                        | Accumulated depreciation                                                                                                                           |                            |              | (157,476                                   | )       |           |           | (146,198     | )      
|                                        |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|                                        | Rental properties, net                                                                                                                             |                            |              | 1,235,562                                  |         |           |           | 1,191,824    |        
|                                        | Investments in land and development                                                                                                                |                            |              | 98,448                                     |         |           |           | 98,105       |        
|                                        | Investments in unconsolidated operating joint ventures                                                                                             |                            |              | 8,574                                      |         |           |           | 8,089        |        
|                                        | Mortgage loans receivable                                                                                                                          |                            |              | 39,540                                     |         |           |           | 39,061       |        
|                                        | Cash and cash equivalents                                                                                                                          |                            |              | 6,481                                      |         |           |           | 4,410        |        
|                                        | Other assets                                                                                                                                       |                            |              | 49,411                                     |         |           |           | 46,914       |        
|                                        |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|                                        |                                                                                                                                                    |                            | TOTAL ASSETS |                                            | $       | 1,438,016 |           |              | $       | 1,388,403 |          
|                                        |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|LIABILITIES AND STOCKHOLDERS EQUITY    |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|Liabilities:                            |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|                                        | Mortgage loans                                                                                                                                     |                            | $            | 621,065                                    |         |           | $         | 588,420      |        
|                                        | Unsecured bank line                                                                                                                                |                            |              | 84,576                                     |         |           |           | 64,594       |        
|                                        | Other liabilities                                                                                                                                  |                            |              | 22,641                                     |         |           |           | 22,730       |        
|                                        |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|                                        |                                                                                                                                                    | Total liabilities          |              |                                            | 728,282 |           |           |              | 675,744 |          
|                                        |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|Commitments and contingencies (Note 13) |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|Minority interest                       |                                                                                                                                                    |                            | 65,690       |                                            |         |           | 66,509    |             
|Stockholders Equity:                   |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|                                        | Common stock, $0.001 par value, 27,534,536 and 26,938,804
shares issued and outstanding at March 31, 2002 and
December 31, 2001, respectively      |                            |              | 28                                         |         |           |           | 27           |        
|                                        | Preferred stock, $0.001 par value, $25.00 liquidation
preference, 10,097,800 shares issued and outstanding at
March 31, 2002 and December 31, 2001 |                            |              | 10                                         |         |           |           | 10           |        
|                                        | Additional paid-in capital                                                                                                                         |                            |              | 765,714                                    |         |           |           | 762,050      |        
|                                        | Deferred compensation                                                                                                                              |                            |              | (903                                       | )       |           |           | (945         | )      
|                                        | Retained earnings (deficit)                                                                                                                        |                            |              | (120,805                                   | )       |           |           | (114,992     | )      
|                                        |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|                                        |                                                                                                                                                    | Total stockholders equity |              |                                            | 644,044 |           |           |              | 646,150 |          
|                                        |                                                                                                                                                    |                            |              |                                            |         |           |           |             
|                                        |                                                                                                                                                    |                            |              | TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY |         | $         | 1,438,016 |              |         | $         | 1,388,403 | 
|                                        |                                                                                                                                                    |                            |              |                                            |         |           |           |             

The accompanying notes are an integral part of these consolidated financial statements

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GLENBOROUGH REALTY TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended March 31, 2002 and 2001
(in thousands, except share and per share amounts)
(Unaudited)

|                                                                                            |                                                               |   |                |        |      |        |            |        |  |        | 
|------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | - | -------------- | ------ | ---- | ------ | ---------- | ------ |  | ------ | 
|                                                                                            |                                                               |   |                |        | 2002 |        | 2001      
|                                                                                            |                                                               |   |                |        |      |        |           
|REVENUE                                                                                     |                                                               |   |                |        |      |        |            |       
|                                                                                            | Rental revenue                                                |   | $              | 46,925 |      |        | $          | 43,904 | 
|                                                                                            | Fees and reimbursements from affiliates                       |   |                | 1,041  |      |        |            | 2,310  | 
|                                                                                            | Interest and other income                                     |   |                | 2,894  |      |        |            | 1,952  | 
|                                                                                            | Equity in earnings of unconsolidated
operating joint ventures |   |                | 58     |      |        |            | 52     | 
|                                                                                            |                                                               |   |                |        |      |        |            |       
|                                                                                            |                                                               |   | Total revenue  |        |      | 50,918 |            |        |  | 48,218 | 
|                                                                                            |                                                               |   |                |        |      |        |            |       
|EXPENSES                                                                                    |                                                               |   |                |        |      |        |            |       
|                                                                                            | Property operating expenses                                   |   |                | 14,497 |      |        |            | 14,093 | 
|                                                                                            | General and administrative                                    |   |                | 3,217  |      |        |            | 3,083  | 
|                                                                                            | Depreciation and amortization                                 |   |                | 12,397 |      |        |            | 10,838 | 
|                                                                                            | Interest expense                                              |   |                | 9,465  |      |        |            | 8,876  | 
|                                                                                            |                                                               |   |                |        |      |        |            |       
|                                                                                            |                                                               |   | Total expenses |        |      | 39,576 |            |        |  | 36,890 | 
|                                                                                            |                                                               |   |                |        |      |        |            |       
|Income before gain on sales of real estate
assets, minority interest and extraordinary
item |                                                               |   | 11,342         |        |      |        | 11,328     |       
|Net gain on sales of real estate assets                                                     |                                                               |   |               |        |      |        | 58         |       
|                                                                                            |                                                               |   |                |        |      |        |            |       
|Income before minority interest and
extraordinary item                                      |                                                               |   | 11,342         |        |      |        | 11,386     |       
|Minority interest                                                                           |                                                               |   | (651           | )      |      |        | (587       | )     
|                                                                                            |                                                               |   |                |        |      |        |            |       
|Net income before extraordinary item                                                        |                                                               |   | 10,691         |        |      |        | 10,799     |       
|Extraordinary item:                                                                         |                                                               |   |                |        |      |        |            |       
|Net loss on early extinguishment of debt                                                    |                                                               |   |               |        |      |        | (763       | )     
|                                                                                            |                                                               |   |                |        |      |        |            |       
|Net income                                                                                  |                                                               |   | 10,691         |        |      |        | 10,036     |       
|Preferred dividends                                                                         |                                                               |   | (4,891         | )      |      |        | (4,891     | )     
|                                                                                            |                                                               |   |                |        |      |        |            |       
|Net income available to Common Stockholders                                                 |                                                               | $ | 5,800          |        |      | $      | 5,145      |       
|                                                                                            |                                                               |   |                |        |      |        |            |       
|Basic Per Share Data:                                                                       |                                                               |   |                |        |      |        |            |       
|Net income before extraordinary item                                                        |                                                               | $ | 0.21           |        |      | $      | 0.22       |       
|Extraordinary item                                                                          |                                                               |   |               |        |      |        | (0.03      | )     
|                                                                                            |                                                               |   |                |        |      |        |            |       
|Net income available to Common Stockholders                                                 |                                                               | $ | 0.21           |        |      | $      | 0.19       |       
|                                                                                            |                                                               |   |                |        |      |        |            |       
|Basic weighted average shares outstanding                                                   |                                                               |   | 27,006,349     |        |      |        | 26,992,324 |       
|                                                                                            |                                                               |   |                |        |      |        |            |       
|Diluted Per Share Data:                                                                     |                                                               |   |                |        |      |        |            |       
|Net income before extraordinary item                                                        |                                                               | $ | 0.21           |        |      | $      | 0.22       |       
|Extraordinary item                                                                          |                                                               |   |               |        |      |        | (0.03      | )     
|                                                                                            |                                                               |   |                |        |      |        |            |       
|Net income available to Common Stockholders                                                 |                                                               | $ | 0.21           |        |      | $      | 0.19       |       
|                                                                                            |                                                               |   |                |        |      |        |            |       
|Diluted weighted average shares outstanding                                                 |                                                               |   | 30,540,254     |        |      |        | 30,476,401 |       
|                                                                                            |                                                               |   |                |        |      |        |            |       

The accompanying notes are an integral part of these consolidated financial statements

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GLENBOROUGH REALTY TRUST INCORPORATED
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
For the three months ended March 31, 2002
(in thousands)
(Unaudited)

|                                                            |  |              |        |                 |  |            |    |           |  |          |        |              |  |           |    |       |  |   |         |   |  |   |      |   |  |   |          |   |  |   |         |  
|----------------------------------------------------------- |  | ------------ | ------ | --------------- |  | ---------- | -- | --------- |  | -------- | ------ | ------------ |  | --------- | -- | ----- |  | - | ------- | - |  | - | ---- | - |  | - | -------- | - |  | - | ------- | -
|                                                            |  | Common Stock |        | Preferred Stock |  | Additional |    |           |  |          |        | Retained     |  |           |    |      
|                                                            |  |              |        |                 |  | Paid-in    |    | Deferred  |  | Earnings |        |              |  |          
|                                                            |  | Shares       |        | Par Value       |  | Shares     |    | Par Value |  | Capital  |        | Compensation |  | (Deficit) |    | Total
|                                                            |  |              |        |                 |  |            |    |           |  |          |        |              |  |           |    |      
|Balance at December 31, 2001                                |  |              | 26,939 |                 |  | $          | 27 |           |  |          | 10,098 |              |  | $         | 10 |       |  | $ | 762,050 |   |  | $ | (945 | ) |  | $ | (114,992 | ) |  | $ | 646,150 |  
|Exercise of stock options                                   |  |              | 628    |                 |  |            | 1  |           |  |          |       |              |  |           |   |       |  |   | 4,289   |   |  |   |     |   |  |   |         |   |  |   | 4,290   |  
|Conversion of Operating
Partnership units into
common stock |  |              |       |                 |  |            |   |           |  |          |       |              |  |           |   |       |  |   | 109     |   |  |   |     |   |  |   |         |   |  |   | 109     |  
|Common stock repurchases                                    |  |              | (32    | )               |  |            |   |           |  |          |       |              |  |           |   |       |  |   | (734    | ) |  |   |     |   |  |   |         |   |  |   | (734    | )
|Amortization of deferred
compensation                       |  |              |       |                 |  |            |   |           |  |          |       |              |  |           |   |       |  |   |        |   |  |   | 42   |   |  |   |         |   |  |   | 42      |  
|Unrealized loss on
marketable securities                    |  |              |       |                 |  |            |   |           |  |          |       |              |  |           |   |       |  |   |        |   |  |   |     |   |  |   | (29      | ) |  |   | (29     | )
|Dividends                                                   |  |              |       |                 |  |            |   |           |  |          |       |              |  |           |   |       |  |   |        |   |  |   |     |   |  |   | (16,475  | ) |  |   | (16,475 | )
|Net income                                                  |  |              |       |                 |  |            |   |           |  |          |       |              |  |           |   |       |  |   |        |   |  |   |     |   |  |   | 10,691   |   |  |   | 10,691  |  
|                                                            |  |              |        |                 |  |            |    |           |  |          |        |              |  |           |    |       |  |   |         |   |  |   |      |   |  |   |          |   |  |   |         |  
|Balance at March 31, 2002                                   |  |              | 27,535 |                 |  | $          | 28 |           |  |          | 10,098 |              |  | $         | 10 |       |  | $ | 765,714 |   |  | $ | (903 | ) |  | $ | (120,805 | ) |  | $ | 644,044 |  
|                                                            |  |              |        |                 |  |            |    |           |  |          |        |              |  |           |    |       |  |   |         |   |  |   |      |   |  |   |          |   |  |   |         |  

The accompanying notes are an integral part of these consolidated financial statements

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GLENBOROUGH REALTY TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2002 and 2001
(in thousands)
(Unaudited)

|                                                     |                                                                                   |                                                               |                                                      |         |        |         |         |          |        |         |  
|---------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------- | ---------------------------------------------------- | ------- | ------ | ------- | ------- | -------- | ------ | ------- | -
|                                                     |                                                                                   |                                                               |                                                      |         | 2002   |         | 2001   
|                                                     |                                                                                   |                                                               |                                                      |         |        |         |        
|Cash flows from operating activities:                |                                                                                   |                                                               |                                                      |         |        |         |         |         
|                                                     | Net income                                                                        |                                                               | $                                                    | 10,691  |        |         | $       | 10,036   |       
|                                                     | Adjustments to reconcile net income to net cash provided
by operating activities: |                                                               |                                                      |         |        |         |         |          |       
|                                                     |                                                                                   | Depreciation and amortization                                 |                                                      |         | 12,397 |         |         |          | 10,838 |        
|                                                     |                                                                                   | Amortization of loan fees, included in
interest expense       |                                                      |         | 484    |         |         |          | 387    |        
|                                                     |                                                                                   | Accrued interest on mortgage loans receivable                 |                                                      |         | (479   | )       |         |          | (761   | )      
|                                                     |                                                                                   | Minority interest in income from operations                   |                                                      |         | 651    |         |         |          | 587    |        
|                                                     |                                                                                   | Equity in earnings of unconsolidated operating
joint ventures |                                                      |         | (58    | )       |         |          | (52    | )      
|                                                     |                                                                                   | Net gain on sales of real estate assets                       |                                                      |         |       |         |         |          | (58    | )      
|                                                     |                                                                                   | Net loss on early extinguishment of debt                      |                                                      |         |       |         |         |          | 763    |        
|                                                     |                                                                                   | Amortization of deferred compensation                         |                                                      |         | 42     |         |         |          | 57     |        
|                                                     |                                                                                   | Changes in certain assets and liabilities, net                |                                                      |         | (508   | )       |         |          | (1,746 | )      
|                                                     |                                                                                   |                                                               |                                                      |         |        |         |         |         
|                                                     |                                                                                   |                                                               | Net cash provided by operating activities            |         |        | 23,220  |         |          |        | 20,051  |  
|                                                     |                                                                                   |                                                               |                                                      |         |        |         |         |         
|Cash flows from investing activities:                |                                                                                   |                                                               |                                                      |         |        |         |         |         
|                                                     | Net proceeds from sales of real estate assets                                     |                                                               |                                                      |        |        |         |         | 19,971   |       
|                                                     | Additions to real estate assets                                                   |                                                               |                                                      | (54,967 | )      |         |         | (37,526  | )     
|                                                     | Deposits on prospective acquisitions                                              |                                                               |                                                      |        |        |         |         | (958     | )     
|                                                     | Investments in land and development                                               |                                                               |                                                      | (4,545  | )      |         |         | (8,751   | )     
|                                                     |                                                                                   |                                                               |                                                      |         |        |         |         |         
|                                                     |                                                                                   |                                                               | Net cash used for investing activities               |         |        | (59,512 | )       |          |        | (27,264 | )
|                                                     |                                                                                   |                                                               |                                                      |         |        |         |         |         
|Cash flows from financing activities:                |                                                                                   |                                                               |                                                      |         |        |         |         |         
|                                                     | Proceeds from borrowings                                                          |                                                               |                                                      | 65,789  |        |         |         | 92,022   |       
|                                                     | Repayment of borrowings                                                           |                                                               |                                                      | (13,162 | )      |         |         | (147,244 | )     
|                                                     | Distributions to minority interest holders                                        |                                                               |                                                      | (1,345  | )      |         |         | (1,265   | )     
|                                                     | Dividends paid to common and preferred stockholders                               |                                                               |                                                      | (16,475 | )      |         |         | (16,223  | )     
|                                                     | Exercise of stock options                                                         |                                                               |                                                      | 4,290   |        |         |         | 298      |       
|                                                     | Repurchases of common stock                                                       |                                                               |                                                      | (734    | )      |         |         |         |       
|                                                     |                                                                                   |                                                               |                                                      |         |        |         |         |         
|                                                     |                                                                                   |                                                               | Net cash provided by (used for) financing activities |         |        | 38,363  |         |          |        | (72,412 | )
|                                                     |                                                                                   |                                                               |                                                      |         |        |         |         |         
|Net increase (decrease) in cash and cash equivalents |                                                                                   |                                                               | 2,071                                                |         |        |         | (79,625 | )       
|Cash and cash equivalents at beginning of period     |                                                                                   |                                                               | 4,410                                                |         |        |         | 102,195 |         
|                                                     |                                                                                   |                                                               |                                                      |         |        |         |         |         
|Cash and cash equivalents at end of period           |                                                                                   | $                                                             | 6,481                                                |         |        | $       | 22,570  |         
|                                                     |                                                                                   |                                                               |                                                      |         |        |         |         |         

continued

The accompanying notes are an integral part of these consolidated financial statements

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GLENBOROUGH REALTY TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS  continued
For the three months ended March 31, 2002 and 2001
(in thousands)
(Unaudited)

|                                                                        |                                                                                                             |  |      |       |      |  |   |        |  
|----------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | - | ------ | -
|                                                                        |                                                                                                             |  | 2002 |       | 2001
|                                                                        |                                                                                                             |  |      |       |     
|Supplemental disclosure of cash flow information:                       |                                                                                                             |  |      |       |      |  |   |       
|                                                                        | Cash paid for interest (net of capitalized interest
of $983 and $1,532 in 2002 and 2001, respectively)      |  | $    | 8,883 |      |  | $ | 9,183  |  
|                                                                        |                                                                                                             |  |      |       |      |  |   |       
|Supplemental disclosure of Non-Cash Investing and Financing
Activities: |                                                                                                             |  |      |       |      |  |   |       
|                                                                        | Acquisition of real estate assets from development
alliances and unconsolidated operating joint ventures    |  | $    |      |      |  | $ | 19,365 |  
|                                                                        |                                                                                                             |  |      |       |      |  |   |       
|                                                                        | Transfer from investments in land and development to
investments in unconsolidated operating joint ventures |  | $    | 427   |      |  | $ |       |  
|                                                                        |                                                                                                             |  |      |       |      |  |   |       
|                                                                        | Note receivable from sale of investment in development                                                      |  | $    | 3,775 |      |  | $ |       |  
|                                                                        |                                                                                                             |  |      |       |      |  |   |       
|                                                                        | Conversion of Operating Partnership units into common
stock, at market value on date of issuance            |  | $    | 109   |      |  | $ | (1,135 | )
|                                                                        |                                                                                                             |  |      |       |      |  |   |       
|                                                                        | Unrealized loss on marketable securities                                                                    |  | $    | (29   | )    |  | $ |       |  
|                                                                        |                                                                                                             |  |      |       |      |  |   |       

The accompanying notes are an integral part of these consolidated financial statements

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GLENBOROUGH REALTY TRUST INCORPORATED

Notes to Consolidated Financial Statements
March 31, 2002

Note 1. ORGANIZATION

Glenborough Realty Trust Incorporated (the Company) was incorporated in the
State of Maryland on August 26, 1994. The Company commenced operations on
January 1, 1996. 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 common and preferred stock of the Company (the Common Stock and
the Preferred Stock, respectively) are listed on the New York Stock Exchange
(NYSE) under the trading symbols GLB and GLB Pr A, respectively.

As of March 31, 2002, 27,534,536 shares of Common Stock and 10,097,800 shares
of Preferred Stock were issued and outstanding. Common and preferred shares
authorized are 188,000,000 and 12,000,000, respectively. Assuming the issuance
of 3,068,463 shares of Common Stock issuable upon redemption of 3,068,463
partnership units in the Operating Partnership (as defined below), there would
be 30,602,999 shares of Common Stock outstanding as of March 31, 2002. In 1999
and 2000, the Companys Board of Directors authorized the repurchase of up to
approximately 8.2 million shares of common stock and approximately 1.7 million
shares of preferred stock. As of March 31, 2002, 6,179,316 shares of Common
Stock and 1,402,200 shares of Preferred Stock have been repurchased at a total
cost of approximately $124 million.

The Companys Preferred Stock has a $25.00 per share liquidation preference and
is convertible at any time at the option of the holder thereof into shares of
Common Stock at an initial conversion price of $32.83 per share of Common Stock
(equivalent to a conversion rate of 0.7615 shares of Common Stock for each
share of Series A Convertible Preferred Stock), subject to adjustment in
certain circumstances. Except in certain instances relating to the preservation
of the Companys status as a REIT, the 73/4% Series A Convertible Preferred
Stock is not redeemable prior to January 16, 2003. On and after January 16,
2003, the Series A Preferred Stock may be redeemed at the option of the
Company, in whole or in part, initially at 103.88% of the liquidation
preference per share, and thereafter at prices declining to 100% of the
liquidation preference on and after January 16, 2008, plus in each case
accumulated, accrued and unpaid dividends, if any, to the redemption date.

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

The Company, through its majority owned subsidiaries, is engaged primarily in
the ownership, operation, management, leasing, acquisition, expansion and
development of various income-producing properties. The Companys principal
consolidated subsidiary, in which it holds a 1% general partner interest and a
88.97% limited partner interest at March 31, 2002, is Glenborough Properties,
L.P. (the Operating Partnership). Each of the holders of the remaining
interests in the Operating Partnership (OP Units) has the option to redeem
its OP Units and to receive, at the option of the Company, in exchange for each
OP Unit, either (i) one share of common stock of the Company, or (ii) cash
equal to the fair market value of one share of common stock of the Company. As
of March 31, 2002, the Operating Partnership, directly and through the
subsidiaries in which it and the Company own 100% of the ownership interests,
controls a portfolio of 81 real estate projects.

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
The accompanying financial statements present the consolidated financial
position of the Company and its subsidiaries as of March 31, 2002 and December
31, 2001, and the consolidated results of operations and cash flows of the
Company and its subsidiaries for the three months ended March 31, 2002 and
2001. All significant intercompany transactions, receivables and payables have
been eliminated in consolidation.

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GLENBOROUGH REALTY TRUST INCORPORATED

Notes to Consolidated Financial Statements
March 31, 2002

In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal accruals) necessary to
present fairly the financial position and results of operations of the Company
as of March 31, 2002, and for the period then ended.

Reclassifications
Certain prior year balances have been reclassified to conform with the current
year presentation, with no effect on consolidated results of operations.

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

New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board (FASB) approved for
issuance SFAS No. 141, Business Combinations. SFAS No. 141 requires that all
business combinations initiated after June 30, 2001, use the purchase method of
accounting. The pooling-of-interests method of accounting is prohibited except
for transactions initiated before July 1, 2001. This standard did not have a
material impact on the Companys consolidated financial position or results of
operations.

In June 2001, the FASB approved for issuance SFAS No. 142, Goodwill and Other
Intangible Assets. The provisions of SFAS No. 142 were effective January 1,
2002, for the Company. Under SFAS No. 142, goodwill and intangible assets with
indefinite lives will not be amortized but will be tested for impairment
annually using a fair value approach, except in certain circumstances, and
whenever there is an impairment indicator. Other intangible assets will
continue to be valued and amortized over their estimated lives. This standard
did not have a material impact on the Companys consolidated financial position
or results of operations.

In June 2001, the FASB approved for issuance SFAS No. 143, Accounting for
Asset Retirement Obligations. SFAS No. 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred and that the associated asset retirement costs be
capitalized as part of the carrying value of the related long-lived asset. SFAS
No. 143 will be effective January 1, 2003 for the Company. Management does not
expect this standard to have a material impact on the Companys consolidated
financial position or results of operations.

In August 2001, the FASB approved for issuance SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 broadens the
presentation of discontinued operations to include more transactions and
eliminates the need to accrue for future operating losses. Additionally, SFAS
No. 144 prohibits the retroactive classification of assets as held for sale and
requires revisions to the depreciable lives of long-lived assets to be
abandoned. SFAS No. 144 was effective January 1, 2002 for the Company.
Management is currently assessing the impact of this new standard on the
Companys consolidated financial position and results of operations.

Rental Properties
Rental properties are stated at cost, net of accumulated depreciation, unless
circumstances indicate that cost, net of accumulated depreciation, cannot be
recovered, in which case, the carrying value of the property is reduced to
estimated fair value. Estimated fair value: (i) is based upon the Companys
plans for the continued operation of each property; and (ii) is computed using
estimated sales price, as determined by prevailing market values for comparable
properties and/or the use of capitalization rates multiplied by annualized net
operating income based upon the age, construction and use of the building. The
fulfillment of the Companys plans related to each of its properties is
dependent upon, among other things, the presence of economic conditions which
will enable the Company to continue to hold and operate the properties prior to
their eventual sale. Due to uncertainties inherent in
9Table of Contents

GLENBOROUGH REALTY TRUST INCORPORATED

Notes to Consolidated Financial Statements
March 31, 2002

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             

Expenditures for maintenance and repairs are charged to operations as incurred.
Maintenance expenditures include planned major maintenance activities such as
painting, paving, HVAC and roofing repair costs. The Company expenses costs as
incurred and does not accrue in advance of planned major maintenance
activities. Significant renovations or betterments that extend the economic
useful lives of assets are capitalized.

Investments in Land and Development
The Company, through mezzanine loans and equity contributions, invests in
various development alliances with projects currently under development. The
interest on advances and other direct project costs incurred by the Company are
capitalized to the investments during the period in which the projects are
under development. See Note 4 for further discussion.

Investments in Unconsolidated Operating Joint Ventures
The Companys investments in operating joint ventures are accounted for using
the equity method. The Company does not hold a controlling interest in any
operating joint venture. See Note 5 for further discussion.

Mortgage Loans Receivable
The Company monitors the recoverability of its mortgage loans 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
receivable is recognized as revenue as it accrues during the period the loan is
outstanding. Mortgage loans receivable will be evaluated for impairment if it
becomes evident that the borrower is unable to meet its debt service
obligations in a timely manner and cannot satisfy its payments using sources
other than the operations of the property securing the loan. If it is concluded
that such circumstances exist, then such loan will be considered to be impaired
and its recorded amount will be reduced to the estimated 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 its mortgage loans receivable will be different than the recorded
amounts. See Note 6 for further discussion.

Cash and 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
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 and certificates of deposit with financial institutions. The
carrying amount of cash and cash equivalents as well as the mortgage loans
receivable described above, approximates fair value.

Derivative Financial Instruments
The Company may use derivative financial instruments in the event that it
believes such instruments will be an effective hedge against fluctuations in
interest rates on a specific borrowing. Derivative financial instruments such
as forward rate agreements or interest rate swaps may be used in this capacity.
To the extent such instruments do not
10Table of Contents

GLENBOROUGH REALTY TRUST INCORPORATED

Notes to Consolidated Financial Statements
March 31, 2002

qualify as hedges, they will be accounted for on a mark-to-market basis and recorded in earnings each period as
appropriate.

At March 31, 2002, the Company was not a party to any open interest rate
protection agreements other than the interest rate cap contract entered into in
December 2001 as discussed in Note 8.

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

Minority Interest
Minority interest represents the 10.03% and 10.23% limited partner interests in
the Operating Partnership not held by the Company at March 31, 2002 and
December 31, 2001, respectively.

Revenues
The Company recognizes rental revenue on a straight-line basis at amounts that
it believes it will collect on a tenant by tenant basis. The estimation process
may result in higher or lower levels from period to period as the Companys
collection experience and the credit quality of the Companys tenants changes.
Actual amounts collected could be lower or higher than the amounts recognized
on a straight-line basis if specific tenants are unable to pay rent that the
Company has previously recognized as revenue, or if other tenants remain whom
the Company previously believed would not.

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

Reimbursements from tenants for real estate taxes and other recoverable
operating expenses are recognized as revenue in the period the applicable
expenses are incurred. Differences between estimated and actual amounts are
recognized in the subsequent year.

For the three months ended March 31, 2002 and 2001, no tenants represented 10%
or more of rental revenue of the Company.

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

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 90% of its
REIT taxable income to its shareholders. REITs are subject to a number of
organizational and operational requirements. If the Company fails to qualify as
a REIT in any taxable year, the Company will be subject to Federal income tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate tax rates. Even if the Company qualifies for taxation as a
REIT, the Company may be subject to certain state and local taxes on its income
and property and to Federal income and excise taxes on its undistributed
income.

Reference to 2001 Audited Financial Statements
These unaudited financial statements should be read in conjunction with the
Notes to Consolidated Financial Statements included in the 2001 audited
financial statements.

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GLENBOROUGH REALTY TRUST INCORPORATED

Notes to Consolidated Financial Statements
March 31, 2002

Note 3. RENTAL PROPERTY

In the first quarter of 2002, the Company acquired First Financial Plaza, a
six-story, 223,000 square foot multi-tenant office building located in Encino,
California. The total acquisition cost of approximately $47.6 million was
funded with a new $32.55 million loan (as discussed in Note 8) and the
remainder in cash.

Note 4. INVESTMENTS IN LAND AND DEVELOPMENT

The Company is independently developing approximately 436,000 square feet of
commercial property in California, Colorado, New Jersey and Maryland. As of
March 31, 2002, the Company had invested approximately $44.7 million in these
projects. Additionally, the Company has approximately 119 acres of land with a
book value of approximately $20 million as of March 31, 2002. This land has
potential for future development of approximately 1,355,000 square feet of
office space. The Company is obligated to fund approximately $5.4 million to
these developments in 2002. The loans secured by certain of these development
properties contain recourse provisions to the Company in the aggregate amount
of $26.5 million, however, some of the loans were not fully drawn as of March
31, 2002.

The Company is currently involved in a number of alliances for the development
of approximately 1.2 million square feet of commercial and mixed-use properties
in California and Colorado. The alliances grant the Company certain rights to
purchase the properties upon completion of development. As of March 31, 2002,
the Company had invested approximately $33.8 million in these alliances and had
acquired properties from them aggregating approximately $114.2 million. The
Company has no further contractual obligations for the future funding of these
developments; however, the Company will likely be funding a portion of their
working capital needs until such time as other financing is obtained. Under
these alliances, the Company has provided an aggregate of $37.9 million in debt
guarantees, however, some of the loans were not fully drawn as of March 31,
2002.

Note 5. INVESTMENTS IN UNCONSOLIDATED OPERATING JOINT VENTURES

The Companys investments in unconsolidated operating joint ventures are
accounted for using the equity method. The Company records earnings on its
investments equal to its ownership interest in the ventures earnings (losses).
Distributions are recorded as a reduction of the Companys investment.

The Companys investments in unconsolidated operating joint ventures consist of
the following as of March 31, 2002 and December 31, 2001 (dollars in
thousands):

|                     |  |           |    |          |  |                           |  |          |         |      |  |            |  |   |       |  |  |   |       |  |  |   |       | 
|-------------------- |  | --------- | -- | -------- |  | ------------------------- |  | -------- | ------- | ---- |  | ---------- |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                     |  | Ownership |    | Property |  | Square                    |  | Property |         |      |  |            |  |   |       | 
|Joint Venture        |  | Interest  |    | Location |  | Footage                   |  | Type     |         | 2002 |  | 2001      
|                     |  |           |    |          |  |                           |  |          |         |      |  |           
|Rincon Center I & II |  |           | 10 | %        |  | San
Francisco,
California |  |          | 757,000 |      |  | Mixed-
Use |  | $ | 4,062 |  |  | $ | 4,045 | 
|2000 Corporate Ridge |  |           | 10 | %        |  | McLean,                   |  |          | 256,000 |      |  | Office     |  |   | 4,081 |  |  |   | 4,044 | 
|                     |  |           |    |          |  | Virginia                  |  |          |         |      |  |            |  |   |       |  |  |   |       |  |  |  
|Gateway
Retail I     |  |           | 50 | %        |  | Denver,Colorado           |  |          | 11,000  |      |  | Retail     |  |   | 431   |  |  |   |      | 
|                     |  |           |    |          |  |                           |  |          |         |      |  |            |  |   |       |  |  |   |       |  |  |   |       | 
|                     |  |           |    |          |  |                           |  |          |         |      |  |            |  |   |       |  |  | $ | 8,574 |  |  | $ | 8,089 | 
|                     |  |           |    |          |  |                           |  |          |         |      |  |            |  |   |       |  |  |   |       |  |  |   |       | 

During the first quarter of 2002, Gateway Retail I, an 11,000 square foot
retail property partially owned through one of the Companys development
alliances, commenced operations and was reclassified from Investments in Land
and Development. This property is being accounted for using the equity method.

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GLENBOROUGH REALTY TRUST INCORPORATED

Notes to Consolidated Financial Statements
March 31, 2002

Note 6. MORTGAGE LOANS RECEIVABLE

The Company holds a first mortgage of approximately $39.5 million, including
accrued interest, at March 31, 2002, secured by land at Gateway Park in Aurora,
Colorado. The loan bears interest at a fixed rate of 13% and matures in July
2005. Periodic payments of interest and principal are received on the loan from
proceeds of land parcel sales in the project. Gateway Park is a development
project where the Company and the Pauls Corporation have an alliance and where
the Company has also acquired property. In this arrangement, the Company has
rights under certain conditions and subject to certain contingencies to
purchase the properties upon completion of development and, thus,
through this arrangement, the Company could acquire up to 5 million square feet
of office and industrial space over the next ten years.

Note 7. OTHER ASSETS

As of March 31, 2002 and December 31, 2001, other assets on the consolidated
balance sheets consist of the following (in thousands):

|                                              |  |      |        |      |  |   |        | 
|--------------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                                              |  | 2002 |        | 2001
|                                              |  |      |        |     
|Accounts receivable, net                      |  | $    | 1,257  |      |  | $ | 3,011  | 
|Straight-line rent receivable, net of reserve |  |      | 3,167  |      |  |   | 2,395  | 
|Prepaid expenses                              |  |      | 4,684  |      |  |   | 4,188  | 
|Impound accounts                              |  |      | 4,339  |      |  |   | 4,901  | 
|Note receivable                               |  |      | 3,775  |      |  |   |       | 
|Deferred leasing and financing costs, net     |  |      | 23,008 |      |  |   | 22,983 | 
|Investment in management contracts            |  |      | 2,811  |      |  |   | 2,963  | 
|Corporate office fixed assets, net            |  |      | 2,872  |      |  |   | 2,936  | 
|Marketable securities, at fair value          |  |      | 3,115  |      |  |   | 3,157  | 
|Other                                         |  |      | 383    |      |  |   | 380    | 
|                                              |  |      |        |      |  |   |        | 
|Total other assets                            |  | $    | 49,411 |      |  | $ | 46,914 | 
|                                              |  |      |        |      |  |   |        | 

Note 8. SECURED AND UNSECURED LIABILITIES

The Company had the following mortgage loans and bank lines outstanding as of
March 31, 2002 and December 31, 2001 (dollars in thousands):

|                                                                                                                                                                                                                                                                                                                                                                                      |  |      |         |      |  |   |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                                                                                                                                                                                                                                                                                                                                                                                      |  | 2002 |         | 2001
|                                                                                                                                                                                                                                                                                                                                                                                      |  |      |         |     
|Secured loans with various lenders, bearing
interest at fixed rates between 6.77% and
8.47%, with monthly principal and interest
payments ranging between $19 and $391 and
maturing at various dates through July 1,
2008. These loans are secured by properties
with an aggregate net carrying value of
$402,476 and $403,982 at March 31, 2002 and
December 31, 2001, respectively. |  | $    | 266,062 |      |  | $ | 267,728 | 
|                                                                                                                                                                                                                                                                                                                                                                                     
|Secured loans with various lenders, bearing
interest at variable rates ranging between
4.13% and 4.38% at March 31, 2002, and 4.12%
and 4.37% at December 31, 2001, and maturing
at various dates through March 31, 2004. These
loans are secured by properties with an
aggregate net carrying value of $220,092 and
$158,069 at March 31, 2002 and December 31,
2001, respectively.  |  |      | 134,106 |      |  |   | 99,247  | 

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GLENBOROUGH REALTY TRUST INCORPORATED

Notes to Consolidated Financial Statements
March 31, 2002

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |      |         |      |  |   |         | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | 2002 |         | 2001
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |      |         |     
|Secured loan with a bank, net of unamortized
discount of $2,033 and $2,110 at March 31,
2002 and December 31, 2001, respectively. The
loan has a fixed interest rate of 6.125%, a
November 10, 2008 maturity date, and requires
monthly principal and interest payments of
$754. This loan is secured by properties with
an aggregate net carrying value of $210,395
and $210,928 at March 31, 2002 and December
31, 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                          |  | $    | 115,756 |      |  | $ | 116,133 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Secured loan with an insurance company, net
of unamortized discount of $924 and $959 at
March 31, 2002 and December 31, 2001,
respectively. The loan has both a fixed rate
and a variable rate component. The fixed rate
component of $52,641 bears interest at
6.125%, matures on November 10, 2008, and
requires monthly principal and interest
payments of $343. An additional variable rate
financing of $52,500 was entered into in
December 2001 and bears interest at a
floating rate of 30-day LIBOR plus 3.25%
(5.13% and 5.12% at March 31, 2002 and
December 31, 2001, respectively), matures on
December 11, 2004, and requires monthly
interest-only payments. The loans are
cross-collateralized and are secured by
properties with an aggregate net carrying
value of $167,764 and $167,563 at March 31,
2002 and December 31, 2001, respectively. |  |      | 105,141 |      |  |   | 105,312 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |      |         |      |  |   |         | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Total mortgage loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |      | 621,065 |      |  |   | 588,420 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |      |         |      |  |   |         | 
|Unsecured $180,000 line of credit with a
group of commercial banks (Credit Facility)
with a variable interest rate of LIBOR plus
1.625% (3.50% at March 31, 2002 and December
31, 2001), monthly interest only payments and
a maturity date of June 10, 2003, with one
option to extend for 10 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |      | 84,576  |      |  |   | 64,594  | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |      |         |      |  |   |         | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Total secured and unsecured liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | $    | 705,641 |      |  | $ | 653,014 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |      |         |      |  |   |         | 

In the first quarter of 2002, in connection with the acquisition of First
Financial Plaza (as discussed in Note 3), the Company obtained a $32.55 million
loan. The loan has an initial maturity date of March 31, 2004, with a one-year
extension option, and bears interest at the floating rate of LIBOR plus 2.25%.
The interest rate on this loan at March 31, 2002, was 4.13%.

In the fourth quarter of 2001, the Company closed a $52.5 million secured loan
with an insurance company (Secured Financing). The Secured Financing bears
interest at a floating rate of 30-day LIBOR plus 3.25% (5.13% and 5.12% at
March 31, 2002 and December 31, 2001, respectively) and has an initial maturity
of December 11, 2004, with two one-year extension options. In connection with
the Secured Financing, the Company entered into an interest rate cap agreement
to hedge increases in 30-day LIBOR rates above a specified level. The agreement
is for a term concurrent with the Secured Financing, is indexed to a 30-day
LIBOR rate, is for a notional amount equal to the maximum amount available on
the Secured Financing, and caps 30-day LIBOR to a maximum of 6%. As of March
31, 2002 and December 31, 2001, the 30-day LIBOR rate was 1.88% and 1.87%,
respectively. The Company paid a $594,000 fee at the inception of the cap
agreement which is being amortized as additional interest expense over the life
of the agreement.

Outstanding borrowings under the Credit Facility increased from $64,594,000 at
December 31, 2001, to $84,576,000 at March 31, 2002. The increase was due to
draws totaling $30,882,000 for the acquisition of First

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GLENBOROUGH REALTY TRUST INCORPORATED

Notes to Consolidated Financial Statements
March 31, 2002

Financial Plaza (as discussed in Note 3), stock repurchases and development advances, offset by pay
downs totaling $10,900,000 generated from proceeds of stock option exercises and cash flow from
operations. The Credit Facility requires, among other things, the Company to be
in compliance with certain financial covenants and ratios. The Company has been
in compliance during the first quarter of 2002 and remains in compliance at
March 31, 2002.

Some of the Companys properties are held in limited partnerships and limited
liability companies in order to facilitate financing. All such entities are
owned 100% directly or indirectly by the Company.

The required principal payments on the Companys debt for the next five years
and thereafter, as of March 31, 2002, are as follows (in thousands). Included
in the year ending December 31, 2003, is the Credit Facility balance of $84,576
which has an initial maturity of June 10, 2003.

|             |  |   |         | 
|------------ |  | - | ------- | 
|Year Ending  |  |   |         | 
|December 31, |  |   |         | 
|             |  |   |         | 
|2002         |  | $ | 75,500  | 
|2003         |  |   | 157,451 | 
|2004         |  |   | 94,785  | 
|2005         |  |   | 24,916  | 
|2006         |  |   | 106,732 | 
|Thereafter   |  |   | 246,257 | 
|             |  |   |         | 
|Total        |  | $ | 705,641 | 
|             |  |   |         | 

Note 9. NET LOSS ON EARLY EXTINGUISHMENT OF DEBT

In connection with the pay down of the Companys unsecured term loan, the
Company recorded a net loss on early extinguishment of debt of $763,000 for the
three months ended March 31, 2001. This loss consists of the writeoff of
unamortized original issuance costs.

Note 10. RELATED PARTY TRANSACTIONS

Fee and reimbursement income earned by the Company from related parties totaled
$1,041,000 and $2,310,000 for the three months ended March 31, 2002 and 2001,
respectively, and consisted of property management fees, asset management fees
and other fee income.

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GLENBOROUGH REALTY TRUST INCORPORATED

Notes to Consolidated Financial Statements
March 31, 2002

Note 11. EARNINGS PER SHARE

Earnings per share are as follows (in thousands, except for weighted average
shares and per share amounts):

|                                                      |  |                    |            |      |  |   |            | 
|----------------------------------------------------- |  | ------------------ | ---------- | ---- |  | - | ---------- | 
|                                                      |  | Three months ended
|                                                      |  | March 31,         
|                                                      |  |                   
|                                                      |  | 2002               |            | 2001
|                                                      |  |                    |            |     
|Net income available to common
Stockholders  Basic   |  | $                  | 5,800      |      |  | $ | 5,145      | 
|Minority interest                                     |  |                    | 651        |      |  |   | 587        | 
|                                                      |  |                    |            |      |  |   |            | 
|Net income available to common
Stockholders  Diluted |  | $                  | 6,451      |      |  | $ | 5,732      | 
|                                                      |  |                    |            |      |  |   |            | 
|Weighted average shares:                              |  |                    |            |      |  |   |            | 
|Basic                                                 |  |                    | 27,006,349 |      |  |   | 26,992,324 | 
|Stock options                                         |  |                    | 465,442    |      |  |   | 411,081    | 
|Convertible Operating Partnership Units               |  |                    | 3,068,463  |      |  |   | 3,072,996  | 
|                                                      |  |                    |            |      |  |   |            | 
|Diluted                                               |  |                    | 30,540,254 |      |  |   | 30,476,401 | 
|                                                      |  |                    |            |      |  |   |            | 
|Basic earnings per share                              |  | $                  | 0.21       |      |  | $ | 0.19       | 
|Diluted earnings per share                            |  | $                  | 0.21       |      |  | $ | 0.19       | 

The preferred stock has been excluded from the calculation of diluted earnings
per share as it is anti-dilutive in all periods presented.

Note 12. SEGMENT INFORMATION

During the three months ended March 31, 2002 and 2001, the Company owned a
portfolio of properties comprised primarily of two product types: office and
industrial. Each of these product types represents a reportable segment with
distinct uses and tenant types that require the Company to employ different
management strategies. Each segment contains properties located in various
regions and markets within the United States. The office portfolio consists
primarily of suburban office buildings. The industrial portfolio consists of
properties designed for warehouse, distribution and light manufacturing for
single-tenant or multi-tenant use.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company evaluates performance
of its property types based on net operating income derived by subtracting
rental expenses and real estate taxes (operating expenses) from rental
revenues. Significant information used by the Company for its reportable
segments as of and for the three months ended March 31, 2002 and 2001 is as
follows (in thousands):

|                            |  |        |        |            |  |       |       |       |  |   |       |  |  |   |        | 
|--------------------------- |  | ------ | ------ | ---------- |  | ----- | ----- | ----- |  | - | ----- |  |  | - | ------ | 
|2002                        |  | Office |        | Industrial |  | Other |       | Total
|                            |  |        |        |            |  |       |       |      
|Rental revenue              |  | $      | 34,844 |            |  | $     | 9,764 |       |  | $ | 2,317 |  |  | $ | 46,925 | 
|Property operating expenses |  |        | 12,349 |            |  |       | 2,255 |       |  |   | 1,217 |  |  |   | 15,821 | 
|                            |  |        |        |            |  |       |       |       |  |   |       |  |  |   |        | 
|Net operating income (NOI)  |  | $      | 22,495 |            |  | $     | 7,509 |       |  | $ | 1,100 |  |  | $ | 31,104 | 
|                            |  |        |        |            |  |       |       |       |  |   |       |  |  |   |        | 
|2001                        |  |        |        |            |  |       |       |       |  |   |       |  |  |   |        | 
|Rental revenue              |  | $      | 31,378 |            |  | $     | 9,859 |       |  | $ | 2,667 |  |  | $ | 43,904 | 
|Property operating expenses |  |        | 11,945 |            |  |       | 2,524 |       |  |   | 836   |  |  |   | 15,305 | 
|                            |  |        |        |            |  |       |       |       |  |   |       |  |  |   |        | 
|Net operating income (NOI)  |  | $      | 19,433 |            |  | $     | 7,335 |       |  | $ | 1,831 |  |  | $ | 28,599 | 
|                            |  |        |        |            |  |       |       |       |  |   |       |  |  |   |        | 

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GLENBOROUGH REALTY TRUST INCORPORATED

Notes to Consolidated Financial Statements
March 31, 2002

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

|                                                                                            |                                     |   |        |         |      |   |        |         |  
|------------------------------------------------------------------------------------------- | ----------------------------------- | - | ------ | ------- | ---- | - | ------ | ------- | -
|                                                                                            |                                     |   | 2002   |         | 2001
|                                                                                            |                                     |   |        |         |     
|Revenues                                                                                    |                                     |   |        |         |      |   |        |        
|Total revenue for reportable segments                                                       |                                     | $ | 46,925 |         |      | $ | 43,904 |        
|Other revenue(1)                                                                            |                                     |   | 3,993  |         |      |   | 4,314  |        
|                                                                                            |                                     |   |        |         |      |   |        |        
|Total consolidated revenues                                                                 |                                     | $ | 50,918 |         |      | $ | 48,218 |        
|                                                                                            |                                     |   |        |         |      |   |        |        
|Net Income                                                                                  |                                     |   |        |         |      |   |        |        
|NOI for reportable segments                                                                 |                                     | $ | 31,104 |         |      | $ | 28,599 |        
|Elimination of internal property management
fees                                            |                                     |   | 1,324  |         |      |   | 1,212  |        
|Unallocated amounts:                                                                        |                                     |   |        |         |      |   |        |        
|                                                                                            | Other revenue(1)                    |   |        | 3,993   |      |   |        | 4,314   |  
|                                                                                            | General and administrative expenses |   |        | (3,217  | )    |   |        | (3,083  | )
|                                                                                            | Depreciation and amortization       |   |        | (12,397 | )    |   |        | (10,838 | )
|                                                                                            | Interest expense                    |   |        | (9,465  | )    |   |        | (8,876  | )
|                                                                                            |                                     |   |        |         |      |   |        |        
|Income before gain on sales of real estate
assets, minority interest and extraordinary
item |                                     | $ | 11,342 |         |      | $ | 11,328 |        
|                                                                                            |                                     |   |        |         |      |   |        |        

|(1) |  | Other revenue includes fee income, interest and other income and equity
in earnings of unconsolidated operating joint ventures.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------

Note 13. COMMITMENTS AND CONTINGENCIES

Environmental Matters
The Company follows a policy of monitoring its properties for the presence of
hazardous or toxic substances. The Company is not aware of any environmental
liability with respect to the properties that would have a material adverse
effect on the Companys business, assets or results of operations. There can be
no assurance that such a material environmental liability does not exist. The
existence of any such material environmental liability could have an adverse
effect on the Companys results of operations and cash flow.

General Uninsured Losses
The Company, or in certain instances, tenants of the properties, carry
comprehensive liability, fire and extended coverage with respect to the
properties. This coverage has policy specification and insured limits
customarily carried for similar properties. However, certain types of losses
(such as from earthquakes and floods) may be either uninsurable or not
economically insurable. Further, certain of the properties are located in areas
that are subject to earthquake activity and floods. Should a property sustain
damage as a result of an earthquake or flood, the Company may incur losses due
to insurance deductibles, co-payments on insured losses or uninsured losses. In
addition, although the Companys existing policies of insurance covering
property damage do not exclude coverage for acts of terrorism, it is possible
that such an exclusion could be imposed by an insurance carrier either during
the current policy term upon satisfaction of certain notice requirements, or
upon future policy renewal, in which case any losses from acts of terrorism
might be uninsured. Should an uninsured loss occur, the Company could lose some
or all of its capital investment, cash flow and anticipated profits related to
one or more properties.

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

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GLENBOROUGH REALTY TRUST INCORPORATED

Notes to Consolidated Financial Statements
March 31, 2002

Note 14. SUBSEQUENT EVENT

In April 2002, the Company sold a 519-unit multifamily property located in
Carrollton, Texas, for a sale price of $36.5 million. The net proceeds from the
sale were used to payoff a $26.6 million loan secured by the property and to
pay down the Companys Credit Facility.

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

Background

Glenborough Realty Trust Incorporated (the Company) is a self-administered
and self-managed real estate investment trust (REIT) with a portfolio of 81
primarily office and industrial properties (the Properties, and each a
Property), including 3 operating joint ventures, as of March 31, 2002. The
portfolio encompasses approximately 14 million square feet in 17 metropolitan
markets. The Company is currently focusing on high-quality multi-tenant office
properties in the following core markets: Northern New Jersey, Washington D.C.,
Boston, Northern California, Chicago, Southern California and Denver. The
Company also participates in several alliances to develop property for both its
own portfolio and for sale to third parties.

The Company was incorporated in the State of Maryland on August 26, 1994 and
commenced operations on January 1, 1996. The Company elected to qualify as a
REIT under the Internal Revenue Code of 1986, as amended. The common and
preferred stock of the Company (the Common Stock and the Preferred Stock,
respectively) are listed on the New York Stock Exchange (NYSE) under the
trading symbols GLB and GLB Pr A, respectively.

Results of Operations

Comparison of the three months ended March 31, 2002 to the three months ended
March 31, 2001.

Rental Revenue. Rental revenue increased $3,021,000, or 7%, to $46,925,000 for
the three months ended March 31, 2002 from $43,904,000 for the three months
ended March 31, 2001. This change primarily resulted from property
acquisitions, net of dispositions, higher achieved rental rates on existing and
renewal leases, and an increase in straight-line rents, net of reserves.

Fees and Reimbursements from Affiliates. Fees and reimbursements from
affiliates consist primarily of property management fees, asset management fees
and lease commissions paid to the Company under property and asset management
agreements with the unconsolidated operating and development joint ventures and
the Rancon Partnerships. This revenue decreased $1,269,000, or 55%, to
$1,041,000 for the three months ended March 31, 2002, from $2,310,000 for the
three months ended March 31, 2001, primarily due to development, acquisition
and financing fees from several development projects and distributions from the
Rancon Partnerships, all received in the first quarter of 2001.

Interest and Other Income. Interest and other income increased $942,000, or
48%, to $2,894,000 for the three months ended March 31, 2002, from $1,952,000
for the three months ended March 31, 2001. The increase was primarily due to
interest income earned from the sale of a mezzanine loan related to a
development project in the first quarter of 2002, offset by interest income
earned on escrow deposits in the first quarter of 2001.

Equity in Earnings of Unconsolidated Operating Joint Ventures.Equity in
earnings of unconsolidated operating joint ventures did not change
significantly with an increase of $6,000, or 12%, to $58,000 for the three
months ended March 31, 2002, from $52,000 for the three months ended March 31,
2001.

Property Operating Expenses. Property operating expenses increased $404,000, or
3%, to $14,497,000 for the three months ended March 31, 2002, from $14,093,000
for the three months ended March 31, 2001, primarily due to property
acquisitions, net of dispositions, partially offset by reductions in snow
removal and utility expenses in the first quarter of 2002 as compared to the
same period in 2001.

General and Administrative Expenses. General and administrative expenses did
not change significantly with an increase of $134,000, or 4%, to $3,217,000 for
the three months ended March 31, 2002, from $3,083,000 for the three months
ended March 31, 2001.

Depreciation and Amortization. Depreciation and amortization increased
$1,559,000, or 14%, to $12,397,000 for the three months ended March 31, 2002,
from $10,838,000 for the three months ended March 31, 2001. This increase is
due to property acquisitions, net of dispositions, since March 31, 2001, and
depreciation of capital improvements completed in 2001.

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Interest Expense. Interest expense increased $589,000, or 7%, to $9,465,000
for the three months ended March 31, 2002, from $8,876,000 for the three months
ended March 31, 2001. This increase is primarily due to an increase in loan
balances due to property acquisitions offset by decreases in variable interest
rates.

Net Gain on Sales of Real Estate Assets.The net gain on sales of real estate
assets of $58,000 during the three months ended March 31, 2001, resulted from
the sale of two retail Properties from the Companys portfolio.

Net Loss on Early Extinguishment of Debt. Net loss on early extinguishment of
debt of $763,000 during the three months ended March 31, 2001, consisted of
losses due to the writeoff of unamortized original issuance costs in connection
with the paydown of the Companys unsecured term loan.

Liquidity and Capital Resources

Cash Flows

For the three months ended March 31, 2002, cash provided by operating
activities increased by $3,169,000 to $23,220,000 as compared to $20,051,000
for the same period in 2001, primarily due to an increase in net income before
depreciation and amortization of $2,311,000 resulting from property
acquisitions, net of dispositions, occurring over the last year. Cash used for
investing activities was $59,512,000 for the three months ended March 31, 2002,
as compared to $27,264,000 for the same period in 2001. The change is primarily
due to an increase in cash used for real estate acquisitions and a decrease in
dispositions of real estate assets. During the three months ended March 31,
2002, there were no Property sales as compared to 2 Properties sold during the
three months ended March 31, 2001. Cash from financing activities increased to
$38,363,000 of cash provided by financing activities for the three months ended
March 31, 2002, as compared to $72,412,000 of cash used for financing
activities for the same period in 2001. This change was primarily due to a
decrease in cash used for the repayment of debt and an increase in proceeds
from the exercise of stock options.

The Company expects to meet its short-term liquidity requirements generally
through its working capital, its Credit Facility (as defined below) and cash
generated by operations. The Company believes that its cash generated by
operations will be adequate to meet operating requirements and to make
distributions in accordance with REIT requirements in both the short and the
long-term. In addition to cash generated by operations, the Credit Facility
provides for working capital advances. However, there can be no assurance that
the Companys results of operations will not fluctuate in the future and at
times affect its ability to meet its operating requirements and the amount of
its distributions. If significant decreases in occupancy or rental rates
occurred at the Companys properties, this could have an adverse impact on the
Companys operating cash flows. Similarly, increases in interest rates could
have an adverse impact on the Companys operating cash flows.

The Companys principal sources of funding for acquisitions, development,
expansion and renovation of properties and stock repurchases include the
unsecured Credit Facility, permanent secured debt financing, public and private
equity and debt issuances, the issuance of partnership units in the Operating
Partnership, proceeds from property sales and cash flow provided by operations.

Investments in Land and Development

The Company is independently developing approximately 436,000 square feet of
commercial property in California, Colorado, New Jersey and Maryland. As of
March 31, 2002, the Company had invested approximately $44.7 million in these
projects. Additionally, the Company has approximately 119 acres of land with a
book value of approximately $20 million as of March 31, 2002. This land has
potential for future development of approximately 1,355,000 square feet of
office space. The Company is obligated to fund approximately $5.4 million to
these developments in 2002. The loans secured by certain of these development
properties contain recourse provisions to the Company in the aggregate amount
of $26.5 million, however, some of the loans were not fully drawn as of March
31, 2002.

The Company is currently involved in a number of alliances for the development
of approximately 1.2 million square feet of commercial and mixed-use properties
in California and Colorado. The alliances grant the Company certain rights to
purchase the properties upon completion of development. As of March 31, 2002,
the Company had invested approximately $33.8 million in these alliances and had
acquired properties from them aggregating approximately $114.2 million. The
Company has no further contractual obligations for the future funding of these
developments; however, the Company will likely be funding a portion of their
working capital needs until such time as other financing is obtained. Under
these alliances, the Company has

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provided an aggregate of $37.9 million in debt guarantees, however, some of the loans were not fully drawn as of March 31,
2002.

Investments in Unconsolidated Operating Joint Ventures
Investments in unconsolidated operating joint ventures increased from
$8,089,000 at December 31, 2001, to $8,574,000 at March 31, 2002. This increase
was primarily due to the reclassification of an 11,000 square foot retail
property partially owned through one of the Companys development alliances from Investments in
Development upon commencement of operations in the first quarter of 2002. In
addition, the increase was also due to the Companys equity interests in the
joint ventures earnings during the first quarter of 2002.

Mortgage Loans Receivable
Mortgage loans receivable increased from $39,061,000 at December 31, 2001, to
$39,540,000 at March 31, 2002. This increase was due to accrued interest on a
loan made by the Company under a development alliance, net of repayments.

Secured and Unsecured Financing
Mortgage loans payable increased from $588,420,000 at December 31, 2001, to
$621,065,000 at March 31, 2002. This increase resulted from a new $32,550,000
mortgage loan in connection with an acquisition (discussed below) and
$2,357,000 of draws on construction loans, offset by decreases of $2,262,000
due to scheduled principal payments on other debt.

In the first quarter of 2002, in connection with the acquisition of First
Financial Plaza, a 223,000 square foot multi-tenant office building located in
Encino, California, the Company obtained a $32.55 million loan. The loan has an
initial maturity date of March 31, 2004, with a one-year extension option, and
bears interest at the floating rate of LIBOR plus 2.25%. The interest rate on
this loan at March 31, 2002, was 4.13%.

In the fourth quarter of 2001, the Company closed a $52.5 million secured loan
with an insurance company (Secured Financing). The Secured Financing bears
interest at a floating rate of 30-day LIBOR plus 3.25% (5.13% and 5.12% at
March 31, 2002 and December 31, 2001, respectively) and has an initial maturity
of December 11, 2004, with two one-year extension options. In connection with
the Secured Financing, the Company entered into an interest rate cap agreement
to hedge increases in 30-day LIBOR rates above a specified level. The agreement
is for a term concurrent with the Secured Financing, is indexed to a 30-day
LIBOR rate, is for a notional amount equal to the maximum amount available on
the Secured Financing, and caps 30-day LIBOR to a maximum of 6%. As of March
31, 2002 and December 31, 2001, the 30-day LIBOR rate was 1.88% and 1.87%,
respectively. The Company paid a $594,000 fee at the inception of the cap
agreement which is being amortized as additional interest expense over the life
of the agreement.

Outstanding borrowings under the Credit Facility increased from $64,594,000 at
December 31, 2001, to $84,576,000 at March 31, 2002. The increase was due to
draws totaling $30,882,000 for the acquisition of First Financial Plaza (as
discussed above), stock repurchases and development advances, offset by pay
downs totaling $10,900,000 generated from proceeds of stock option exercises
and cash flow from operations. The Credit Facility requires, among other
things, the Company to be in compliance with certain financial covenants and
ratios. The Company has been in compliance during the first quarter of 2002 and
remains in compliance at March 31, 2002.

Some of the Companys properties are held in limited partnerships and limited
liability companies in order to facilitate financing. All such entities are
owned 100% directly or indirectly by the Company.

At March 31, 2002, the Companys total indebtedness included fixed-rate debt of
$434,459,000 and floating-rate debt of $271,182,000. The Companys ratio of
total debt to gross book assets was approximately 44% at March 31, 2002.

At March 31, 2002, approximately 38% of the Companys outstanding debt,
including amounts borrowed under the Credit Facility, was subject to variable
rates. The Company may, from time to time, enter into interest rate protection
agreements intended to hedge the cost of new borrowings. It is not the
Companys policy to engage in hedging activities for speculative purposes. At
March 31, 2002, the Company was not a party to any open interest rate
protection agreements other than the interest rate cap contract entered into in
December 2001 as discussed above.

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Equity Offerings
In January 1999, the Company filed a shelf registration statement with the SEC
(the January 1999 Shelf Registration Statement) to carry forward the
remaining $801.2 million in equity securities of the Company from a November
1997 shelf registration statement (declared effective by the SEC on December
18, 1997). The January 1999 Shelf Registration Statement was declared effective
by the SEC on January 25, 1999. Therefore, the Company has the capacity
pursuant to the January 1999 Shelf Registration Statement to issue up to $801.2
million in equity securities. The Company currently has no plans to issue
equity under this shelf registration.

Stock Repurchases
In 1999, the Companys Board of Directors authorized the Company to repurchase
up to 6.2 million shares of its outstanding Common Stock. This represented
approximately 20% of the Companys total outstanding Common Stock. In
connection with the sale of 36 multifamily Properties in December 2000, the
repurchase authorization was increased to approximately 8.2 million shares,
representing approximately 26% of Common Stock outstanding when the repurchase
program began. As of March 31, 2002, 6,179,316 common shares have been
repurchased for a total cost of approximately $103,045,000; this represents
approximately 75% of the expanded repurchase authorization and approximately
20% of Common Stock outstanding when the repurchase program began. In addition,
during 1999, the Company announced that its Board of Directors had approved the
repurchase of up to 15% of its Preferred Stock, or 1,725,000 shares. In May
2000, the Preferred Stock repurchase authorization was increased to 3,450,000
shares, representing approximately 30% of Preferred Stock outstanding when the
repurchase program began. As of March 31, 2002, 1,402,200 preferred shares
have been repurchased for a total cost of approximately $21,037,000; this
represents approximately 41% of the expanded repurchase authorization and
approximately 12% of Preferred Stock outstanding when the repurchase program
began. Future stock repurchases will be made from time to time in the open
market or otherwise and the timing will depend on market conditions and other
factors.

Critical Accounting Policies

Revenue recognized on a straight-line basis
The Company recognizes rental revenue on a straight-line basis at amounts that
it believes it will collect on a tenant by tenant basis. The estimation process
may result in higher or lower levels from period to period as the Companys
collection experience and the credit quality of the Companys tenants changes.
Actual amounts collected could be lower or higher than the amounts recognized
on a straight-line basis if specific tenants are unable to pay rent that the
Company has previously recognized as revenue, or if other tenants remain whom
the Company previously believed would not.

Carrying value of rental properties, investments in development and other
investment assets
The Companys rental properties, investments in development and other
investment assets such as operating joint ventures and mortgage loans
receivable are generally carried at the lower of cost or estimated fair value.
Certain development and operating joint ventures include the Companys share of
undistributed income or loss arising from the investment, and the mortgage
loans receivable include accrued interest. In addition, under the Companys
long-term development program, some interest, payroll and general and
administrative costs incurred in connection with this program may be
capitalized. The actual value of the Companys portfolio of property,
investments in development and other investments could be significantly higher
or lower than their carrying amounts.

The Companys status as a real estate investment trust (REIT)
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 90% 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. Management believes that the Company has complied with all requirements
to qualify as a REIT for the three months ended March 31, 2002 and 2001.
Accordingly, no provision for income taxes is included in its consolidated
financial statements.

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New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) approved for
issuance SFAS No. 141, Business Combinations. SFAS No. 141 requires that all
business combinations initiated after June 30, 2001, use the purchase method of
accounting. The pooling-of-interests method of accounting is prohibited except
for transactions initiated before July 1, 2001. This standard did not have a
material impact on the Companys consolidated financial position or results of
operations.

In June 2001, the FASB approved for issuance SFAS No. 142, Goodwill and Other
Intangible Assets. The provisions of SFAS No. 142 were effective January 1,
2002, for the Company. Under SFAS No. 142, goodwill and intangible assets with
indefinite lives will not be amortized but will be tested for impairment
annually using a fair value approach, except in certain circumstances, and
whenever there is an impairment indicator. Other intangible assets will
continue to be valued and amortized over their estimated lives. This standard
did not have a material impact on the Companys consolidated financial position
or results of operations.

In June 2001, the FASB approved for issuance SFAS No. 143, Accounting for
Asset Retirement Obligations. SFAS No. 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred and that the associated asset retirement costs be
capitalized as part of the carrying value of the related long-lived asset. SFAS
No. 143 will be effective January 1, 2003 for the Company. Management does not
expect this standard to have a material impact on the Companys consolidated
financial position or results of operations.

In August 2001, the FASB approved for issuance SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 broadens the
presentation of discontinued operations to include more transactions and
eliminates the need to accrue for future operating losses. Additionally, SFAS
No. 144 prohibits the retroactive classification of assets as held for sale and
requires revisions to the depreciable lives of long-lived assets to be
abandoned. SFAS No. 144 was effective January 1, 2002 for the Company.
Management is currently assessing the impact of this new standard on the
Companys consolidated financial position and results of operations.

Inflation

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

Funds from Operations and Cash Available for Distribution

Funds from Operations (FFO), as defined by NAREIT, represents net income
excluding gains (or losses) from sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint ventures will
be calculated to reflect FFO on the same basis. The Company believes that FFO
is helpful to investors as a measure of performance of an equity REIT because,
along with cash flow from operating activities, FFO provides investors with an
indication of our ability to incur and service debt, to make capital
expenditures and to fund other cash needs. FFO does not represent net income or
cash flows from operations as defined by GAAP, and should not be considered as
an alternative to net income (determined in accordance with GAAP) as an
indicator of the Companys operating performance or as an alternative to cash
flows from operating, investing and financing activities (determined in
accordance with GAAP) as a measure of liquidity. FFO does not necessarily
indicate that cash flows will be sufficient to fund all of the Companys cash
needs including principal amortization, capital improvements and distributions
to stockholders. Further, FFO as disclosed by other REITs may not be comparable
to the Companys calculation of FFO. The Company calculates FFO in accordance
with the White Paper on FFO approved by the Board of Governors of NAREIT in
October 1999.

Cash available for distribution (CAD) represents net income (loss) before
minority interests and extraordinary items, adjusted for depreciation and
amortization, including amortization of deferred financing costs, and gains
(losses) from the disposal of properties, less lease commissions and recurring
capital expenditures, and less straight-line rents for periods

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beginning after 2001. CAD should not be considered an alternative to net income (computed in
accordance with GAAP) as a measure of the Companys financial performance or as an alternative to cash flow from
operating activities (computed in accordance with GAAP) as a measure of the
Companys liquidity, nor is it necessarily indicative of sufficient cash flow
to fund all of the Companys cash needs. Further, CAD as disclosed by other
REITs may not be comparable to the Companys calculation of CAD.

The following table sets forth the Companys calculation of FFO and CAD for the
three months ended March 31, 2002 and 2001 (in thousands, except weighted
average shares and per share amounts):

|                                                                             |  |           |            |           |  |   |            |  
|---------------------------------------------------------------------------- |  | --------- | ---------- | --------- |  | - | ---------- | -
|                                                                             |  | March 31, |            | March 31,
|                                                                             |  | 2002      |            | 2001     
|                                                                             |  |           |            |          
|Income before minority interest, extraordinary
items and preferred dividends |  | $         | 11,342     |           |  | $ | 11,386     |  
|Preferred dividends                                                          |  |           | (4,891     | )         |  |   | (4,891     | )
|Net gain on sales of real estate assets                                      |  |           |           |           |  |   | (58        | )
|Depreciation and amortization(1)                                             |  |           | 12,077     |           |  |   | 10,579     |  
|Adjustment to reflect FFO of Unconsolidated
Operating Joint Ventures(2)      |  |           | 102        |           |  |   | 247        |  
|                                                                             |  |           |            |           |  |   |            |  
|FFO                                                                          |  | $         | 18,630     |           |  | $ | 17,263     |  
|                                                                             |  |           |            |           |  |   |            |  
|Amortization of deferred financing fees                                      |  |           | 484        |           |  |   | 387        |  
|Adjustment for straight line rents                                           |  |           | (772       | )         |  |   |           |  
|Capital expenditures                                                         |  |           | (4,392     | )         |  |   | (2,966     | )
|                                                                             |  |           |            |           |  |   |            |  
|CAD                                                                          |  | $         | 13,950     |           |  | $ | 14,684     |  
|                                                                             |  |           |            |           |  |   |            |  
|Distributions per share(3)                                                   |  | $         | 0.43       |           |  | $ | 0.42       |  
|                                                                             |  |           |            |           |  |   |            |  
|Diluted weighted average shares outstanding                                  |  |           | 30,540,254 |           |  |   | 30,476,401 |  
|                                                                             |  |           |            |           |  |   |            |  

|(1) |  | Excludes non-real estate depreciation and amortization.                                                                                                                                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Reflects the adjustments to FFO required to reflect the FFO of the
unconsolidated operating joint ventures allocable to the Company. The
Companys investments in the joint ventures are accounted for using the
equity method of accounting.
|   
|   
|   
|   
|(3) |  | The distributions for the three months ended March 31, 2002, were paid on
April 15, 2002.                                                                                                                                                    

Forward Looking Statements; Factors That May Affect Operating Results

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

Factors which may cause the Companys results to differ include the inability
to complete anticipated future acquisitions, defaults or non-renewal of leases,
increased interest rates and operational costs, failure to obtain necessary
outside financing, difficulties in identifying properties to acquire and in
effecting acquisitions, failure to qualify as a real estate investment trust
under the Internal Revenue Code of 1986, environmental uncertainties, risks
related to natural disasters, financial market fluctuations, changes in real
estate and zoning laws, increases in real property tax rates and other factors
discussed under the caption Forward Looking Statements; Factors That May
Affect Operating Results in the Managements Discussion and Analysis of
Financial Condition and Results of Operations section of the Companys Annual
Report on Form 10-K for the year ended December 31, 2001, and other risk
factors set forth in the Companys other Securities and Exchange Commission

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filings. In addition, past performance of the Companys Common Stock is not
necessarily indicative of results that will be obtained in the future from an
investment in the Companys Common Stock. Furthermore, the Company makes
distributions to stockholders if, as, and when declared by its Board of Directors, and expects to continue
its policy of paying quarterly distributions; however, there can be no
assurance that distributions will continue or be paid at any specific level.

Risk Factors

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




PART II. OTHER INFORMATION




Item 1. Legal Proceedings

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




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

There were no matters submitted to a vote of security holders during the quarter ended March 31, 2002.




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:                                                               
|   
|    |  | None.                                                                              

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SIGNATURES

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

GLENBOROUGH REALTY TRUST INCORPORATED

By: Glenborough Realty Trust Incorporated,

|                   |  |                                                                                                
|------------------ |  | -----------------------------------------------------------------------------------------------
|Date: May 10, 2002 |  | /s/ Andrew Batinovich
Andrew Batinovich
Director, President and
Chief Operating Officer        
|                  
|Date: May 10, 2002 |  | /s/ Stephen Saul
Stephen Saul
Chief Financial Officer
(Principal Financial Officer)            
|                  
|Date: May 10, 2002 |  | /s/ Brian Peay
Brian Peay
Vice President,
Finance and Accounting
(Principal Accounting Officer)

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EXHIBIT INDEX

|           |  |                                                                                                                                       
|---------- |  | --------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No |  | Exhibit Title                                                                                                                         
|           |  |                                                                                                                                       
|11.01      |  | Statement re: Computation of Per Share Earnings is shown in Note 11 of
the Consolidated Financial Statements of the Company in Item 1.
|          
|12.01      |  | Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings
to Fixed Charges and Preferred Dividends.                     

27