<PAGE>   1
                       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, 2001

                                       OR

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

                        COMMISSION FILE NUMBER: 001-14162


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

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

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

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

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

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

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

                                Yes [X]   No [ ]

As of May 11, 2001, 26,989,534 shares of Common Stock ($.001 par value) and
10,097,800 shares of 7.75% Series A Convertible Preferred Stock ($.001 par
value) were outstanding.





                                       1


<PAGE>   2

                                      INDEX
                      GLENBOROUGH REALTY TRUST INCORPORATED

<TABLE>
<CAPTION>
                                                                                       PAGE NO.
<S>                                                                                    <C>
PART I FINANCIAL INFORMATION

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

         Consolidated Balance Sheets at March 31, 2001 and December 31, 2000              3

         Consolidated Statements of Income for the three months ended
         March 31, 2001 and 2000                                                          4

         Consolidated Statement of Stockholders' Equity for the three months
         ended March 31, 2001                                                             5

         Consolidated Statements of Cash Flows for the three months ended
         March 31, 2001 and 2000                                                        6-7

         Notes to Consolidated Financial Statements                                     8-17

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                                     18-23

PART II  OTHER INFORMATION

Item 1.  Legal Proceedings                                                                23

Item 4.  Submission of Matters to a Vote of Security Holders                              23

Item 6.  Exhibits and Reports on Form 8-K                                                 23

SIGNATURES                                                                                24

EXHIBIT INDEX                                                                             25


</TABLE>





                                        2


<PAGE>   3


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                                                         March 31,        December 31,
                                                                           2001              2000
                                                                        -----------       -----------
<S>                                                                     <C>               <C>
ASSETS
      Rental properties, gross                                          $ 1,242,453       $ 1,208,566
      Accumulated depreciation                                             (122,836)         (115,061)
                                                                        -----------       -----------
      Rental properties, net                                              1,119,617         1,093,505
      Investments in Land and Development                                    75,645            86,286
      Investments in Operating Joint Ventures                                 9,199             9,119
      Mortgage loan receivable                                               38,011            37,250
      Cash and cash equivalents                                              22,570           102,195
      Other assets                                                           42,666            42,803
                                                                        -----------       -----------
            TOTAL ASSETS                                                $ 1,307,708       $ 1,371,158
                                                                        ===========       ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
      Mortgage loans                                                    $   451,928       $   450,624
      Unsecured term debt                                                    35,822           125,000
      Unsecured bank line                                                    63,705            31,053
      Other liabilities                                                      26,288            26,871
                                                                        -----------       -----------
         Total liabilities                                                  577,743           633,548
                                                                        -----------       -----------
Commitments and contingencies                                                    --                --
Minority interest                                                            68,076            68,754
Stockholders' Equity:
      Common stock, 26,989,534 and 26,991,770  shares issued
         and outstanding at March 31, 2001 and
         December 31, 2000, respectively                                         27                27
      Preferred stock, 10,097,800 shares issued and outstanding at
          March 31, 2001 and December 31, 2000                                   10                10
      Additional paid-in capital                                            763,137           763,974
      Deferred compensation                                                  (1,086)           (1,143)
      Retained earnings (deficit)                                          (100,199)          (94,012)
                                                                        -----------       -----------
         Total stockholders' equity                                         661,889           668,856
                                                                        -----------       -----------
               TOTAL LIABILITIES AND STOCKHOLDERS'
                  EQUITY                                                $ 1,307,708       $ 1,371,158
                                                                        ===========       ===========
</TABLE>


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

                                        3



<PAGE>   4

                      GLENBOROUGH REALTY TRUST INCORPORATED
                        CONSOLIDATED STATEMENTS OF INCOME
               For the three months ended March 31, 2001 and 2000
               (in thousands, except share and per share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              2001               2000
                                                          ------------       ------------
<S>                                                       <C>                <C>
REVENUE
      Rental revenue                                      $     43,904       $     63,161
      Fees and reimbursements from affiliates                    2,310                468
      Interest and other income                                  1,952              1,216
      Equity in earnings of Associated Company                      --                 46
      Equity in earnings (losses) of unconsolidated
            operating joint ventures                                52                (31)
      Net gain (loss) on sales of real estate assets                58               (695)
                                                          ------------       ------------
         Total revenue                                          48,276             64,165
                                                          ------------       ------------
EXPENSES
      Property operating expenses                               14,093             21,557
      General and administrative                                 3,083              2,309
      Depreciation and amortization                             10,838             15,129
      Interest expense                                           8,876             16,347
                                                          ------------       ------------
         Total expenses                                         36,890             55,342
                                                          ------------       ------------
Income from operations before minority interest and
 extraordinary item                                             11,386              8,823
Minority interest                                                 (587)              (306)
                                                          ------------       ------------
Net income before extraordinary item                            10,799              8,517
Extraordinary item:
Net loss on early extinguishment of debt                          (763)              (466)
                                                          ------------       ------------
Net income                                                      10,036              8,051
Preferred dividends                                             (4,891)            (5,488)
                                                          ------------       ------------
Net income available to Common Stockholders               $      5,145       $      2,563
                                                          ============       ============
Basic Per Share Data:
Net income before extraordinary item                      $       0.22       $       0.10
Extraordinary item                                               (0.03)             (0.02)
                                                          ------------       ------------
Net income available to Common Stockholders               $       0.19       $       0.08
                                                          ============       ============
Basic weighted average shares outstanding                   26,992,324         30,355,685
                                                          ============       ============
Diluted Per Share Data:
Net income before extraordinary item                      $       0.22       $       0.10
Extraordinary item                                               (0.03)             (0.02)
                                                          ------------       ------------
Net income available to Common Stockholders               $       0.19       $       0.08
                                                          ============       ============
Diluted weighted average shares outstanding                 30,476,401         34,096,464
                                                          ============       ============
</TABLE>



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

                                        4




<PAGE>   5

                      GLENBOROUGH REALTY TRUST INCORPORATED
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                    For the three months ended March 31, 2001
                                 (in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                 Common Stock            Preferred Stock
                                             ---------------------     -------------------
                                                                                             Additional                Retained
                                                                                             Paid-in      Deferred     Earnings
                                              Shares     Par Value     Shares    Par Value   Capital      Compensation (Deficit)
                                             --------    ---------     -------   ---------   ----------   ------------ ---------
<S>                                          <C>         <C>           <C>       <C>        <C>           <C>          <C>
Balance at December 31, 2000                   26,982    $      27      10,098   $      10   $ 763,974    $  (1,143)   $ (94,012)

Exercise of stock options                          10           --          --          --         298           --           --

Cancellation of stock grants                       (3)          --          --          --          --           --           --

Conversion of Operating Partnership units
     into common stock                              1           --          --          --      (1,135)          --           --

Amortization of deferred compensation              --           --          --          --          --           57           --

Dividends                                          --           --          --          --          --           --      (16,223)

Net income                                         --           --          --          --          --           --       10,036
                                            ---------    ---------   ---------   ---------   ---------    ---------    ---------

Balance at March 31, 2001                      26,990    $      27      10,098   $      10   $ 763,137    $  (1,086)   $(100,199)
                                            =========    =========   =========   =========   =========    =========    =========
</TABLE>

<TABLE>
<CAPTION>
                                                Total
                                                ------
<S>                                         <C>
Balance at December 31, 2000                $ 668,856

Exercise of stock options                         298

Cancellation of stock grants                       --

Conversion of Operating Partnership units
     into common stock                         (1,135)

Amortization of deferred compensation              57

Dividends                                     (16,223)

Net income                                     10,036
                                            ---------

Balance at March 31, 2001                   $ 661,889
                                            =========

</TABLE>



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

                                        5






<PAGE>   6


                      GLENBOROUGH REALTY TRUST INCORPORATED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               For the three months ended March 31, 2001 and 2000
                                 (in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                       2001         2000
                                                                                     ---------    ---------
<S>                                                                                  <C>          <C>
Cash flows from operating activities:
      Net income                                                                     $  10,036    $   8,051
      Adjustments to reconcile net income to net cash provided by operating
         activities:
            Depreciation and amortization                                               10,838       15,129
            Amortization of loan fees, included in
               interest expense                                                            387          639
            Minority interest in income from operations                                    587          306
            Equity in earnings of Associated Company                                        --          (46)
            Equity in (earnings) losses of unconsolidated operating joint ventures         (52)          31
            Net (gain) loss on sales of real estate assets                                 (58)         695
            Net loss on early extinguishment of debt                                       763          466
            Amortization of deferred compensation                                           57           28
            Changes in certain assets and liabilities, net                              (1,746)      (7,342)
                                                                                      --------      -------
               Net cash provided by operating activities                                20,812       17,957
                                                                                      --------      -------
Cash flows from investing activities:
      Net proceeds from sales of real estate assets                                     19,971       20,181
      Additions to real estate assets                                                  (37,526)      (7,013)
      Deposits on prospective acquisitions                                                (958)          --
      Investments in Land and Development, net                                          (8,751)        (102)
      Investments in Operating Joint Ventures                                               --       (3,789)
      Additions to mortgage loans receivable                                            (1,253)        (959)
      Principal receipts on mortgage loans receivable                                      492        1,141
      Repayments of notes receivable                                                        --          992
      Distributions from Associated Company                                                 --          191
                                                                                      --------      -------
               Net cash provided by (used for) investing activities
                                                                                       (28,025)      10,642
                                                                                      --------      -------
Cash flows from financing activities:
      Proceeds from borrowings                                                          92,022      130,239
      Repayment of borrowings                                                         (147,244)     (39,274)
      Retirement of Series A Senior Notes (less loss on
      retirement of $466 in 2000)                                                           --      (87,526)
      Distributions to minority interest holders                                        (1,265)      (1,520)
      Dividends to stockholders                                                        (16,223)     (18,431)
      Exercise of stock options                                                            298           --
      Repurchases of common stock                                                           --      (16,335)
      Repurchases of preferred stock                                                        --       (1,388)
                                                                                      --------      -------
            Net cash used for financing activities                                     (72,412)     (34,235)
                                                                                      --------      -------
</TABLE>

                                    continued



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

                                        6



<PAGE>   7



                      GLENBOROUGH REALTY TRUST INCORPORATED
                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
               For the three months ended March 31, 2001 and 2000
                                 (in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                            2001         2000
                                                                                         ---------    ---------
<S>                                                                                      <C>          <C>
Net decrease in cash and cash equivalents                                                  (79,625)      (5,636)

Cash and cash equivalents at beginning of period                                           102,195        6,482
                                                                                         ---------    ---------
Cash and cash equivalents at end of period                                               $  22,570    $     846
                                                                                         =========    =========

Supplemental disclosure of cash flow information:

      Cash paid for interest (net of capitalized interest of $1,532 and $788 in
            2001 and 2000, respectively)                                                 $   9,183    $  16,823
                                                                                         =========    =========
Supplemental disclosure of Non-Cash Investing and Financing Activities:
      Assumption of first trust deed notes payable in acquisition of real estate         $      --    $   4,300
                                                                                         =========    =========
      Disposition of real estate involving buyer's assumption of first trust deed
            notes payable                                                                $      --    $  20,571
                                                                                         =========    =========
      Acquisition of real estate assets from development alliances                       $  19,365    $      --
                                                                                         =========    =========
      Conversion of Operating Partnership units into common stock, at current
            market value of common stock                                                 $  (1,135)   $     145
                                                                                         =========    =========

</TABLE>





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


                                       7


<PAGE>   8


                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2001


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, 2001, 26,989,534 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. Under the Company's
Common and Preferred Stock repurchase authorizations which were approved by the
Company's Board of Directors in 1999, 6,086,816 shares of Common Stock and
1,402,200 shares of Preferred Stock have been repurchased as of March 31, 2001.

The Company's Preferred Stock 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 7 3/4%
Series A Convertible Preferred Stock is not redeemable prior to January 16,
2003. On and after January 16, 2003, the Series A Preferred Stock may be
redeemed at the option of the Company, in whole or in part, initially at 103.88%
of the liquidation preference per share, and thereafter at prices declining to
100% of the liquidation preference on and after January 16, 2008, plus in each
case accumulated, accrued and unpaid dividends, if any, to the redemption date.

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

The Company, through its majority owned subsidiaries, is engaged primarily in
the ownership, operation, management, leasing, acquisition, expansion and
development of various income-producing properties. The Company's major
consolidated subsidiary, in which it holds a 1% general partner interest and a
88.77% limited partner interest at March 31, 2001, 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, 2001, the Operating Partnership, directly and through the subsidiaries in
which it and the Company own 100% of the ownership interests, controls a
portfolio of 87 real estate projects.

Prior to October 2000, the Operating Partnership held 100% of the non-voting
preferred stock of Glenborough Corporation ("GC" or the "Associated Company). GC
was the general partner of several real estate limited partnerships and provided
asset and property management services for these partnerships. It also provided
partnership administration, asset management, property management and
development services to a group of unaffiliated partnerships, which include
three public partnerships sponsored by Rancon Financial Corporation, an
unaffiliated corporation which has real estate assets in the Inland Empire
region of Southern California (the "Rancon Partnerships").

Effective October 24, 2000, GC merged with the Company. In the merger, the
Company received the net assets of GC, including the contract to manage the
Rancon Partnerships, in exchange for its preferred stock of GC. In addition, the
Company redeemed GC's OP units and issued shares of common stock to GC's common
stock holders.





                                       8



<PAGE>   9
                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2001


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, 2001 and December
31, 2000, and the consolidated results of operations and cash flows of the
Company and its subsidiaries for the three months ended March 31, 2001 and 2000.
All significant intercompany transactions, receivables and payables have been
eliminated in consolidation.

In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal accruals) necessary to
present fairly the financial position and results of operations of the Company
as of March 31, 2001, and for the period then ended.

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

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
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities" was issued in June 1998. SFAS No.
133 was originally effective for fiscal years beginning after June 15, 1999,
with early adoption permitted. In June 1999, SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133 - an amendment of FASB Statement No. 133" was issued
which, among other things, deferred the final implementation to fiscal years
beginning after June 15, 2000. SFAS No. 133 provides comprehensive guidelines
for the recognition and measurement of derivatives and hedging activities and
specifically requires all derivatives to be recorded on the balance sheet at
fair value. Upon implementation, this pronouncement did not have a material
effect on the Company's consolidated financial position, results of operations
and financial statement presentation.

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

Depreciation is provided using the straight line method over the useful lives of
the respective assets. The useful lives are as follows:

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

                                       9
<PAGE>   10

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2001


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 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 ventures. See Note 5 for further discussion.

MORTGAGE LOAN RECEIVABLE
The Company monitors the recoverability of its mortgage loan receivable through
ongoing contact with the borrower to ensure timely receipt of interest and
principal payments, and where appropriate, obtains financial information
concerning the property. Interest on the mortgage loan is recognized as revenue
as it accrues during the period the loan is outstanding. The mortgage loan
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 property securing the
loan. If it is concluded that such circumstances exist, then the loan will be
considered to be impaired and its recorded amount will be reduced to the
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 loan receivable will be different
than the recorded amount.

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. As of March 31, 2001, approximately $19 million of tax-deferred
exchange proceeds were included in cash and cash equivalents on the accompanying
consolidated balance sheet.

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 loan
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 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, 2001, the Company was not a party to any open interest rate
protection agreements.

DEFERRED FINANCING AND OTHER FEES
Fees paid in connection with the financing and leasing of the Company's
properties are amortized over the term of the related notes payable or leases
and are included in other assets.

MINORITY INTEREST
Minority interest represents the 10.23% and 10.24% limited partner interests in
the Operating Partnership not held by the Company at March 31, 2001 and December
31, 2000, respectively.


                                       10
<PAGE>   11

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2001


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

For the three months ended March 31, 2001 and 2000, no tenants represented 10%
or more of rental revenue of the Company.

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

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

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

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

INCOME TAXES
The Company has made an election to be taxed as a REIT under Sections 856
through 860 of the Code. As a REIT, the Company generally will not be subject to
Federal income tax to the extent that it distributes at least 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 2000 AUDITED FINANCIAL STATEMENTS
These unaudited financial statements should be read in conjunction with the
Notes to Consolidated Financial Statements included in the 2000 audited
financial statements.

NOTE 3. RENTAL PROPERTY

Acquisitions
In the first quarter of 2001, the Company acquired Creekside Business Park
(using 1031 proceeds from the recently completed multifamily portfolio sale), a
171,000 square foot office property located in Dublin, California. The total
acquisition cost was approximately $30 million.

Dispositions
In the first quarter of 2001, the Company sold two retail properties known as
Westbrook Commons and Woodfield Center, located in Westchester, Illinois and
Indianapolis, Indiana, respectively, for an aggregate sale price of $20.3
million. Proceeds from the sale of Westbrook Commons, of approximately
$14,827,000, were used to pay down the Company's Credit Facility (as defined in
Note 8). Proceeds from the sale of Woodfield Center, of approximately
$4,842,000, will be used to fund future tax-deferred exchange acquisitions.


                                       11
<PAGE>   12

                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2001


NOTE 4. INVESTMENTS IN LAND AND DEVELOPMENT

The Company is independently developing approximately 416,000 square feet of
commercial property in California, Colorado and New Jersey. In the first quarter
of 2001, the Company placed in service one office property and one industrial
property aggregating $25 million. As of March 31, 2001, the Company had invested
approximately $26.9 million in the remaining projects. Additionally, the Company
has approximately 1.7 million of proposed square feet, aggregating approximately
$10.1 million, available for future development as of March 31, 2001. The loans
secured by certain development properties contain recourse provisions to the
Company in the event of default.

The Company is currently involved in a number of alliances for the development
of approximately 418,000 square feet of commercial properties and 1,146
multifamily units in California, Colorado and Texas. The alliances grant the
Company certain rights to purchase the properties upon completion of development
over the next five years. As of March 31, 2001, the Company had invested
approximately $21.3 million in these alliances and had acquired properties from
these alliances aggregating approximately $52 million. As of March 31, 2001, the
Company has provided guarantees on $32.2 million of related debt.

Additionally, in 2000, the Company formed a new joint venture with the Pauls
Corporation ("Pauls"), Glenborough Pauls Development LLC ("Development LLC").
The Company and Pauls each own an equal 50% interest in Development LLC. The
Company accounts for its investment in Development LLC using the equity method.
In the fourth quarter of 2000, Development LLC acquired two sites aggregating
33.5 acres in the San Francisco Bay Area for mixed use development. As of March
31, 2001, the Company had advanced approximately $17.3 million to Development
LLC and had provided guarantees on $21.8 million of related debt.

Subsequent to March 31, 2001, through one of its development alliances, the
Company acquired Santa Fe Ranch, a 357 unit multifamily property in Irving,
Texas and Canyons I, a 349 unit multifamily property in Fort Worth, Texas. The
total aggregate acquisition cost was approximately $53 million.

NOTE 5. INVESTMENTS IN OPERATING JOINT VENTURES

The Company's investments in 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 operating joint ventures consist of the following
as of March 31, 2001 and December 31, 2000 (dollars in thousands):

<TABLE>
<CAPTION>
                         Ownership        Property            Square     Property
Joint Venture            Interest         Location            Footage    Type         2001       2000
--------------------     ---------     -----------------   ------------  --------    -------    ------
<S>                      <C>           <C>                 <C>           <C>         <C>       <C>
Rincon Center I & II       10%         San Francisco,         686,000    Mixed-Use    $4,008    $3,952
                                       California
Rockwall I & II            10%         Rockville,             334,000    Office        1,327     1,326
                                       Maryland
2000 Corporate Ridge       10%         McLean, Virginia       256,000    Office        3,864     3,841
                                                                                     -------    ------
                                                                                      $9,199    $9,119
                                                                                     =======    ======
</TABLE>

NOTE 6. MORTGAGE LOAN RECEIVABLE

The Company has loaned a Pauls affiliate approximately $38 million, including
accrued interest, at March 31, 2001, secured by a first mortgage, to continue
the build-out of Gateway Park in Aurora, Colorado. The loan bears interest at a
fixed rate of 13% and matures in July, 2005. Gateway Park is a development
project where the Company and



                                       12
<PAGE>   13
                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2001


Pauls 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 and 1,600 multifamily units over the
next ten years.

NOTE 7. OTHER ASSETS

As of March 31, 2001 and December 31, 2000, other assets on the consolidated
balance sheets consists of the following (in thousands):

<TABLE>
<CAPTION>
                                              2001            2000
                                            -------          ------
<S>                                         <C>              <C>
Accounts receivable, net                    $ 3,669          $2,463
Prepaid expenses                              6,575           6,632
Impound accounts                              4,061           7,792
Deferred leasing and financing costs         19,562          20,421
Investment in management contracts            3,418           3,567
Corporate office fixed assets, net            1,135           1,238
Marketable securities                         3,300              --
Other                                           946             690
                                            -------         -------
Total other assets                          $42,666         $42,803
                                            =======         =======
</TABLE>

NOTE 8. SECURED AND UNSECURED LIABILITIES

The Company had the following mortgage loans, bank lines, and notes payable
outstanding as of March 31, 2001, and December 31, 2000 (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                           2001           2000
                                                                                         --------       --------
<S>                                                                                      <C>             <C>
Secured loans with various lenders, net of unamortized discount of $3,406 and
$3,518 at March 31, 2001 and December 31, 2000, respectively. All loans have a
fixed interest rate of 6.125% and a November 10, 2008 maturity date. Monthly
principal and interest payments range between $296 and $458. These loans are
secured by properties with an aggregate net carrying value of $319,706 and
$322,067 at March 31, 2001 and December 31, 2000, respectively.                          $170,387       $170,899

Secured loans with various lenders, bearing interest at fixed rates between
6.95% and 9.25%, with monthly principal and interest payments ranging between
$19 and $443 and maturing at various dates through July 1, 2008. These loans are
secured by properties with an aggregate net carrying value of $302,126 and
$303,532 at March 31, 2001 and December 31, 2000, respectively.                          $169,878       $171,144

Secured loans with various banks bearing interest at variable rates ranging
between 6.63% and 7.58% at March 31, 2001 and 8.11% and 9.06% at December 31,
2000, maturing at various dates through November 28, 2003. These loans are
secured by properties with an aggregate net
carrying value of $143,716 and $119,008 at March 31, 2001 and December 31, 2000,
respectively.                                                                            $111,663       $108,581

</TABLE>



                                       13
<PAGE>   14
                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2001


<TABLE>
<CAPTION>
                                                                                           2001           2000
                                                                                         --------       --------
<S>                                                                                      <C>             <C>

Unsecured $142,500 line of credit with a group of commercial banks ("Credit
Facility") with a variable interest rate of LIBOR plus 1.50% and LIBOR plus
1.625% at March 31, 2001 and December 31, 2000, respectively (6.58% and 8.19% at
March 31, 2001 and December 31, 2000, respectively), monthly interest only
payments and a maturity date of June 10, 2002, with one option to extend for 10
years.                                                                                   $ 63,705       $ 31,053

Unsecured $125,000 term loan with a group of commercial banks with a variable
interest rate of LIBOR plus 1.75% (6.83% and 8.31% at March 31, 2001 and
December 31, 2000, respectively),
monthly interest only payments and a maturity date of June 10, 2002.                       35,822        125,000
                                                                                         --------       --------
Total                                                                                    $551,455       $606,677
                                                                                         ========       ========
</TABLE>

In the first quarter of 2001, the Company obtained a $14 million construction
loan to build a 96,000 square foot office property in Bridgewater, New Jersey.
Approximately $1.6 million was outstanding at March 31, 2001. The loan has a
maturity date of January 5, 2003 and bears interest at the floating rate of
LIBOR plus 2.35%. The interest rate on this loan at March 31, 2001 was 7.43%.

During the first quarter of 2001, the Company paid down its unsecured term loan
in the amount of approximately $89 million with the proceeds from the sale of
its multifamily portfolio on December 29, 2000 and a draw on the Credit
Facility, as discussed below.

Outstanding borrowings under the Credit Facility increased from $31,053,000 at
December 31, 2000, to $63,705,000 at March 31, 2001. The increase was due to
draws of $88,925,000 for the pay down of the unsecured term loan (as discussed
above), acquisitions and operating cash, offset by pay downs of $56,273,000
generated from proceeds from the sales of properties and cash from operations.
The Credit Facility requires, among other things, the Company to be in
compliance with certain financial covenants and ratios. The Company is in
compliance at March 31, 2001.

Some of the Company's properties are held in limited partnerships and limited
liability companies in order to facilitate financing. Such limited partnerships
and limited liability companies are included in the consolidated financial
statements of the Company in accordance with accounting principles generally
accepted in the United States.

The required principal payments on the Company's debt for the next five years
and thereafter, as of March 31, 2001, are as follows (in thousands):

Year Ending
December 31,
-----------
2001                          $  73,534
2002                            128,352
2003                             64,706
2004                              8,513
2005                             27,463
Thereafter                      248,887
                              ---------
Total                         $ 551,455
                              =========


                                       14
<PAGE>   15
                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2001


NOTE 9. NET LOSS ON EARLY EXTINGUISHMENT OF DEBT

In connection with the pay down of the unsecured term loan, as discussed above,
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 entirely of losses due
to the writeoff of unamortized original issuance costs.

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

NOTE 10. RELATED PARTY TRANSACTIONS

Fee and reimbursement income earned by the Company from related parties totaled
$2,310,000 and $468,000 for the three months ended March 31, 2001 and 2000,
respectively, and consisted of property management fees, asset management fees
and other fee income. In addition, the Company paid GC property management fees
and salary reimbursements totaling $405,000 for the three months ended March 31,
2000, for management of a portfolio of residential properties owned by the
Company, which is included in property operating expenses and general and
administrative expenses on the accompanying consolidated statements of income.
As discussed in Note 1, effective October 24, 2000, GC merged with the Company.

NOTE 11. EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                               Three months ended
                                                    March 31,
                                            -------------------------
                                               2001           2000
                                            ----------     ----------
<S>                                         <C>            <C>
Net income available to common
       Stockholders - Basic                     $5,145         $2,563
Minority interest                                  587            306
                                            ----------     ----------
Net income available to common
       Stockholders - Diluted                   $5,732         $2,869
                                            ----------     ----------
Weighted average shares:
Basic                                       26,992,324     30,355,685
Stock options                                  411,081        140,471
Convertible Operating Partnership Units      3,072,996      3,600,308
                                            ----------     ----------
Diluted                                     30,476,401     34,096,464
                                            ----------     ----------
Basic earnings per share                         $0.19          $0.08
Diluted earnings per share                       $0.19          $0.08

</TABLE>

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 quarter ended March 31, 2001, the Company owned a diverse portfolio
of properties comprising four product types: office, industrial, retail and
multifamily. During the quarter ended March 31, 2000, the Company's portfolio
was comprised of five product types: office, industrial, retail, multifamily and
hotels. Each of these


                                       15


<PAGE>   16
                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2001


product types represents a reportable segment with distinct uses and tenant
types which require the Company to employ different management strategies. Each
segment contains properties located in various regions and markets within the
United States. The office portfolio consists primarily of suburban office
buildings. The industrial portfolio consists of properties designed for
warehouse, distribution and light manufacturing for single-tenant or
multi-tenant use. The retail portfolio consists primarily of community shopping
centers anchored with national or regional supermarkets or drug stores. The
properties in the multifamily portfolio are apartment buildings with units
rented to residential tenants on either a month-by-month basis or for terms of
one year or less. The Company's hotel operations during the three months ended
March 31, 2000, were from one 227 room property leased to and operated by a
third party. In December 2000, 36 of the Company's 37 multifamily properties and
the one remaining hotel property were sold.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company evaluates performance of
its property types based on net operating income derived by subtracting rental
expenses and real estate taxes (operating expenses) from rental revenues.
Significant information used by the Company for its reportable segments as of
and for the three months ended March 31, 2001 and 2000 is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                            Multi-
2001                           Office   Industrial  Retail  family   Hotel    Total
                               -------  ----------  ------  ------   -----   -------
<S>                            <C>        <C>       <C>     <C>      <C>     <C>
Rental revenue                 $31,378    $9,859    $1,531  $1,136   $  --   $43,904
Property operating expenses     11,945     2,524       319     517      --    15,305
                               -------    ------    ------  ------   -----   -------
Net operating income (NOI)     $19,433    $7,335    $1,212  $  619   $  --   $28,599
                               =======    ======    ======  ======   =====   =======
</TABLE>

<TABLE>
<CAPTION>
                                                            Multi-
2001                           Office   Industrial  Retail  family    Hotel    Total
                               -------  ----------  ------  ------    -----   -------
<S>                            <C>        <C>       <C>     <C>       <C>     <C>
Rental revenue                 $32,952    $9,945    $2,866  $17,023   $375    $63,161
Property operating expenses     12,433     2,604       937    7,412     60     23,446
                               -------    ------    ------  -------   ----    -------
Net operating income (NOI)     $20,519    $7,341    $1,929  $ 9,611   $315    $39,715
                               =======    ======    ======  =======   ====    =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                                            2001        2000
                                                                          --------    --------
<S>                                                                       <C>         <C>
REVENUES
Total revenue for reportable segments                                     $ 43,904    $ 63,161
Other revenue (1)                                                            4,372       1,004
                                                                          --------    --------
Total consolidated revenues                                               $ 48,276    $ 64,165
                                                                          ========    ========
NET INCOME
NOI for reportable segments                                               $ 28,599    $ 39,715
Elimination of internal property management fees                             1,212       1,889
Unallocated amounts:
   Other revenue (1)                                                         4,372       1,004
   General and administrative expenses                                      (3,083)     (2,309)
   Depreciation and amortization                                           (10,838)    (15,129)
   Interest expense                                                         (8,876)    (16,347)
                                                                          --------    --------
Income from operations before minority interest
   and extraordinary items                                                $ 11,386    $  8,823
                                                                          ========    ========
</TABLE>

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


                                       16
<PAGE>   17
                      GLENBOROUGH REALTY TRUST INCORPORATED

                   Notes to Consolidated Financial Statements
                                 March 31, 2001


NOTE 13. SUBSEQUENT EVENTS

Acquisitions
Subsequent to March 31, 2001, through one of its development alliances, the
Company acquired Santa Fe Ranch, a 357 unit multifamily property in Irving,
Texas and Canyons I, a 349 unit multifamily property in Fort Worth, Texas. The
total aggregate acquisition cost was approximately $53 million.

Dispositions
Subsequent to March 31, 2001, the Company sold a 72,348 square foot retail
property and a 41,121 square foot office property, both located in Indianapolis,
Indiana, for an aggregate sale price of $8.8 million. This resulted in a loss on
sale of approximately $200,000, to be recognized in the second quarter of 2001.




                                       17
<PAGE>   18


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

BACKGROUND

Glenborough Realty Trust Incorporated (the "Company") is a self-administered and
self-managed real estate investment trust ("REIT") engaged primarily in the
ownership, operation, management, leasing, acquisition, expansion and
development of various types of income-producing properties. As of March 31,
2001, the Company owned and operated 87 income-producing properties (the
"Properties," and each a "Property"), including 3 joint ventures.

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

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

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2001 TO THE THREE MONTHS ENDED
MARCH 31, 2000.

Rental Revenue. Rental revenue decreased $19,257,000, or 30%, to $43,904,000 for
the three months ended March 31, 2001 from $63,161,000 for the three months
ended March 31, 2000. The decrease consisted of declines in revenue from the
office, industrial, retail, multifamily and hotel Properties of $1,574,000,
$86,000, $1,335,000, $15,887,000 and $375,000, respectively. These decreases are
primarily due to the sales of nine office, ten industrial, six retail, thirty
six multifamily and one hotel Property since March 31, 2000.

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 joint ventures and the Rancon Partnerships.
This revenue increased $1,842,000, or 394%, to $2,310,000 for the three months
ended March 31, 2001, from $468,000 for the three months ended March 31, 2000,
primarily due to property management and asset management fees received from the
Rancon Partnerships and development, acquisition and financing fees relating to
three development projects. Certain of these fees were previously earned by GC,
prior to its merger with the Company, and were recognized as equity in earnings
of Associated Company.

Interest and Other Income. Interest and other income increased $736,000, or 61%,
to $1,952,000 for the three months ended March 31, 2001, from $1,216,000 for the
three months ended March 31, 2000. The increase was primarily due to interest
income earned upon the payoff of a loan made to a development project, which was
sold by a development alliance in the first quarter of 2001.

Equity in Earnings of Associated Company. Equity in earnings of Associated
Company decreased $46,000, or 100%, to $0 for the three months ended March 31,
2001, from $46,000 for the three months ended March 31, 2000. The decrease is
due to the merger of GC into the Company in the fourth quarter of 2000.

Equity in Earnings (Losses) of Unconsolidated Operating Joint Ventures. Equity
in earnings (losses) of unconsolidated operating joint ventures increased
$83,000, or 268%, to $52,000 for the three months ended March 31, 2001, from a
loss of $31,000 for the three months ended March 31, 2000. This increase is due
to an increase in net operating income at one joint venture, which began
operations in October of 2000.

Net Gain (Loss) 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, primarily
resulted from the sale of two retail Properties from the Company's portfolio in
2001. The net loss on sales of real estate assets of $695,000 during the three
months ended March 31, 2000, resulted from the sale of one office Property and
one industrial Property.



                                       18



<PAGE>   19

Property Operating Expenses. Property operating expenses decreased $7,464,000,
or 35%, to $14,093,000 for the three months ended March 31, 2001, from
$21,557,000 for the three months ended March 31, 2000. This decrease corresponds
to the 30% decrease in rental revenues resulting from the sale of properties.

General and Administrative Expenses. General and administrative expenses
increased $774,000, or 34%, to $3,083,000 for the three months ended March 31,
2001, from $2,309,000 for the three months ended March 31, 2000. The increase
was primarily due to expenses which were previously incurred by GC, prior to its
merger with the Company, which were reflected in equity in earnings of
Associated Company on the Company's consolidated statement of income for the
three months ended March 31, 2000. The increase was also due to incentive
compensation costs which were recognized in the first quarter of 2001 as
compared to the second quarter of 2000.

Depreciation and Amortization. Depreciation and amortization decreased
$4,291,000, or 28%, to $10,838,000 for the three months ended March 31, 2001,
from $15,129,000 for the three months ended March 31, 2000. This decrease is
primarily due to the sales of nine office, ten industrial, six retail, thirty
six multifamily and one hotel Property since March 31, 2000.

Interest Expense. Interest expense decreased $7,471,000, or 46%, to $8,876,000
for the three months ended March 31, 2001, from $16,347,000 for the three months
ended March 31, 2000. This decrease is primarily due to payoffs of loans in
connection with property sales, retirement of the Senior Notes and decreases in
variable interest rates.

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, consists entirely
of losses due to the writeoff of unamortized original issuance costs in
connection with the pay down of the Company's unsecured term loan. Net loss on
early extinguishment of debt of $466,000 during the three months ended March 31,
2000, consists of $931,000 of gains on retirement of Series A Senior Notes at a
discount, offset by the related write-off of unamortized loan fees in the amount
of $1,397,000.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows
For the three months ended March 31, 2001, cash provided by operating activities
increased by $2,855,000 to $20,812,000 as compared to $17,957,000 for the same
period in 2000. The increase is due primarily to the refund of lender impounds
upon the payoff of loans in connection with property sales. Cash used for
investing activities was $28,025,000 for the three months ended March 31, 2001,
as compared to $10,642,000 provided by investing activities for the same period
in 2000. The change is primarily due to an increase in cash used for real estate
acquisitions and investments in land and development in the first three months
of 2001 as compared to the same period in 2000. Cash used for financing
activities increased by $38,177,000 to $72,412,000 for the three months ended
March 31, 2001, as compared to $34,235,000 for the same period in 2000. This
change was primarily due to an increase in cash used for the repayment of debt
and a decrease in proceeds from new debt offset by a decrease in cash used for
the retirement of the Series A Senior Notes and the repurchase of common and
preferred stock.

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

The Company's principal sources of funding for acquisitions, development,
expansion and renovation of properties and stock repurchases include the
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 416,000 square feet of
commercial property in California, Colorado and New Jersey. In the first quarter
of 2001, the Company placed in service one office property and one industrial
property aggregating $25 million. As of March 31, 2001, the Company had invested
approximately $26.9 million in the remaining projects.



                                       19



<PAGE>   20

Additionally, the Company has approximately 1.7 million of proposed square feet,
aggregating approximately $10.1 million, available for future development as of
March 31, 2001. The loans secured by certain development properties contain
recourse provisions to the Company in the event of default.

The Company is currently involved in a number of alliances for the development
of approximately 418,000 square feet of commercial properties and 1,146
multifamily units in California, Colorado and Texas. The alliances grant the
Company certain rights to purchase the properties upon completion of development
over the next five years. As of March 31, 2001, the Company had invested
approximately $21.3 million in these alliances and had acquired properties from
these alliances aggregating approximately $52 million. As of March 31, 2001, the
Company has provided guarantees on $32.2 million of related debt.

Additionally, in 2000, the Company formed a new joint venture with the Pauls
Corporation ("Pauls"), Glenborough Pauls Development LLC ("Development LLC").
The Company and Pauls each own an equal 50% interest in Development LLC. The
Company accounts for its investment in Development LLC using the equity method.
In the fourth quarter of 2000, Development LLC acquired two sites aggregating
33.5 acres in the San Francisco Bay Area for mixed use development. As of March
31, 2001, the Company had advanced approximately $17.3 million to Development
LLC and had provided guarantees on $21.8 million of related debt.

Subsequent to March 31, 2001, through one of its development alliances, the
Company acquired Santa Fe Ranch, a 357 unit multifamily property in Irving,
Texas and Canyons I, a 349 unit multifamily property in Fort Worth, Texas. The
total aggregate acquisition cost was approximately $53 million.

Investments in Operating Joint Ventures
Investments in operating joint ventures increased from $9,119,000 at December
31, 2000, to $9,199,000 at March 31, 2001. This increase was due to the
Company's first quarter equity interest in the joint ventures' earnings.

Mortgage Loan Receivable
Mortgage loan receivable increased from $37,250,000 at December 31, 2000, to
$38,011,000 at March 31, 2001. This increase was due to accrued interest on a
loan made by the Company under a development alliance.

Secured and Unsecured Financing
Mortgage loans payable increased from $450,624,000 at December 31, 2000, to
$451,928,000 at March 31, 2001. This increase resulted from draws on a new
construction loan (discussed below) offset by scheduled principal payments on
other debt.

In the first quarter of 2001, the Company obtained a $14 million construction
loan to build a 96,000 square foot office property in Bridgewater, New Jersey.
Approximately $1.6 million was outstanding at March 31, 2001. The loan has a
maturity date of January 5, 2003 and bears interest at the floating rate of
LIBOR plus 2.35%. The interest rate on this loan at March 31, 2001 was 7.43%.

During the first quarter of 2001, the Company paid down its unsecured term loan
in the amount of approximately $89 million with the proceeds from the sale of
its multifamily portfolio on December 29, 2000 and a draw on the Credit
Facility, as discussed below. In connection with the pay down of the unsecured
term loan, the Company recorded a net loss on early extinguishment of debt of
$763,000. This loss consists entirely of a writeoff of unamortized original
issuance costs.

The Company has an unsecured line of credit provided by a group of commercial
banks (the "Credit Facility"). Outstanding borrowings under the Credit Facility
increased from $31,053,000 at December 31, 2000, to $63,705,000 at March 31,
2001. The increase was due to draws of $88,925,000 for the pay down of the
unsecured term loan (as discussed above), acquisitions and operating cash,
offset by pay downs of $56,273,000 generated from proceeds from the sales of
Properties and cash from operations. The Credit Facility has a maturity date of
June 2002 and bears interest at a floating rate of LIBOR plus 1.50%. The
interest rate on the Credit Facility at March 31, 2001, was 6.58%. The Credit
Facility requires, among other things, the Company to be in compliance with
certain financial covenants and ratios. The Company is in compliance at March
31, 2001.


                                       20


<PAGE>   21

At March 31, 2001, the Company's total indebtedness included fixed-rate debt of
$340,265,000 and floating-rate indebtedness of $211,190,000. Approximately 59%
of the Company's total assets, comprising 59 properties, are encumbered by debt
at March 31, 2001.

It is the Company's policy to manage its exposure to fluctuations in market
interest rates through the use of fixed rate debt instruments to the extent
possible. At March 31, 2001, approximately 38% of the Company's outstanding
debt, including amounts borrowed under the Credit Facility, were subject to
variable rates. The Company may, from time to time, enter into interest rate
protection agreements intended to hedge the cost of new borrowings that are
reasonably assured of completion. It is not the Company's policy to engage in
hedging activities for previously outstanding debt instruments or for
speculative purposes. At March 31, 2001, the Company was not a party to any open
interest rate protection agreements.

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

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. Such
purchases will be made from time to time in the open market or otherwise and the
timing will depend on market conditions and other factors. In connection with
the sale of the Multifamily Portfolio, the repurchase authorization was
increased to approximately 8.2 million shares. As of March 31, 2001, 6,086,816
common shares, representing approximately 76% of the expanded repurchase
authorization, have been repurchased for a total cost of approximately
$101,195,000. In addition, during 1999, the Company announced that its Board of
Directors had approved an expansion of the stock repurchase program to include
preferred stock. The Company is authorized to repurchase up to 15% of its
preferred stock, or 1,725,000 shares. As of March 31, 2001, 1,402,200 preferred
shares, representing approximately 81% of the repurchase authorization, have
been repurchased for a total cost of approximately $21,037,000.

INFLATION

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

FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION

In October 1999, the Board of Governors of NAREIT issued `White Paper on
FFO-October 1999' to clarify its definition of Funds from Operations ("FFO").
The clarification is effective January 1, 2000 and requires restatement for all
periods presented in financial statements or tables. FFO, as clarified by
NAREIT, represents "net income excluding gains (or losses) from sales of
property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect FFO on the same
basis." The Company is reporting using the clarified definition for all periods
presented. The Company believes that FFO is a widely used measure of the
financial performance of equity REITs which provides a relevant basis for
comparison among other REITs. Together with net income and cash flows, FFO
provides investors with an additional basis to evaluate the ability of a REIT to
incur and service debt and to fund acquisitions, developments and other capital
expenditures. FFO does not represent net income or cash flows from operations as
defined by GAAP, and should not be considered as an alternative to net income
(determined in accordance with GAAP) as an indicator of the Company's operating
performance or as an alternative to cash flows from operating, investing and
financing activities (determined in accordance with GAAP) as a measure of
liquidity. FFO



                                       21


<PAGE>   22
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.

Cash available for distribution ("CAD") represents net income (loss) before
minority interests and extraordinary items, adjusted for depreciation and
amortization including amortization of deferred financing costs and gains
(losses) from the disposal of properties, less lease commissions and recurring
capital expenditures, consisting of tenant improvements and normal expenditures
intended to extend the useful life of the property such as roof and parking lot
repairs. CAD should not be considered an alternative to net income (computed in
accordance with GAAP) as a measure of the Company's financial performance or as
an alternative to cash flow from operating activities (computed in accordance
with GAAP) as a measure of the Company's liquidity, nor is it necessarily
indicative of sufficient cash flow to fund all of the Company's cash needs.
Further, CAD as disclosed by other REITs may not be comparable to the Company's
calculation of CAD.

The following table sets forth the Company's calculation of FFO and CAD for the
three months ended March 31, 2001 and 2000 (in thousands, except weighted
average shares and per share amounts):

<TABLE>
<CAPTION>
                                                         March 31,        March 31,
                                                           2001             2000
                                                        ------------    ------------
<S>                                                     <C>             <C>
Income from operations before minority
   interest, extraordinary items
   and preferred dividends                              $     11,386    $      8,823
Preferred dividends                                           (4,891)         (5,488)
Net (gain) loss on sales of real estate assets                   (58)            695
Depreciation and amortization(1)                              10,579          14,915
Adjustment to reflect FFO of Unconsolidated
     JV's(2)                                                     247             190
Adjustment to reflect FFO of Associated
     Companies(3)                                                 --             164
                                                        ------------    ------------
FFO                                                     $     17,263    $     19,299
                                                        ============    ============

Amortization of deferred financing fees                          387             639
Capital expenditures                                          (2,966)         (4,989)
                                                        ------------    ------------
CAD                                                     $     14,684    $     14,949
                                                        ============    ============

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

Diluted weighted average shares outstanding               30,476,401      34,096,464
                                                        ============    ============
</TABLE>

(1)  Excludes non-real estate depreciation and amortization.
(2)  Reflects the adjustments to FFO required to reflect the FFO of the
     unconsolidated joint ventures allocable to the Company. The Company's
     investments in the joint ventures are accounted for using the equity method
     of accounting.
(3)  Reflects the adjustments to FFO required to reflect the FFO of the
     Associated Companies allocable to the Company. The Company's investments in
     the Associated Companies were accounted for using the equity method of
     accounting.
(4)  The distributions for the three months ended March 31, 2001, were paid on
     April 16, 2001.

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.


                                       22
<PAGE>   23

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, 2000, and other risk factors set forth
in the Company's other Securities and Exchange Commission filings. In addition,
past performance of the Company's Common Stock is not necessarily indicative of
results that will be obtained in the future from an investment in the Company's
Common Stock. Furthermore, the Company makes distributions to stockholders if,
as and when declared by its Board of Directors, and expects to continue its
policy of paying quarterly distributions, however, there can be no assurance
that distributions will continue or be paid at any specific level.

RISK FACTORS

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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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, 2001.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

            (a)         Exhibits:
                        ---------

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

            (b)         Reports on Form 8-K:
                        --------------------

                        On January 16, 2001, the Company filed a report on Form
                        8-K with respect to the sale of the Company's
                        Multifamily Portfolio.

                        On January 24, 2001, the Company filed a report on Form
                        8-K with respect to Supplemental Information for the
                        quarter ended December 31, 2000.


                                       23

<PAGE>   24




                                   SIGNATURES


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


                      GLENBOROUGH REALTY TRUST INCORPORATED




                                    By: Glenborough Realty Trust Incorporated,



Date: May 15, 2001                      /s/ Andrew Batinovich
                                        --------------------------------------
                                        Andrew Batinovich
                                        Director, President and
                                        Chief Operating Officer


Date: May 15, 2001                      /s/ Stephen Saul
                                        --------------------------------------
                                        Stephen Saul
                                        Chief Financial Officer
                                        (Principal Financial Officer)


Date: May 15, 2001                      /s/ Brian Peay
                                        --------------------------------------
                                        Brian Peay
                                        Vice President,
                                        Finance and Accounting
                                        (Principal Accounting Officer)











                                       24



<PAGE>   25


                                  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.









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