================================================================================

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20543

                                   ----------

                                    FORM 10-Q

                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                        FOR QUARTER ENDED March 31, 1998


                           COMMISSION FILE NO. 1-11706


                         CARRAMERICA REALTY CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                                   ----------

            Maryland                                   52-1796339
-------------------------------         ---------------------------------------
(State or other jurisdiction of         (I.R.S. Employer Identification Number)
 incorporation or organization)


             1700 Pennsylvania Avenue, N.W., Washington, D.C. 20006
             ------------------------------------------------------
               (Address or principal executive office) (Zip code)

                                   ----------

                                 (202) 624-7500
               --------------------------------------------------
               Registrant's telephone number, including area code

                                   ----------

                                       N/A
                   ------------------------------------------
                    (Former name, former address and former
                   fiscal year, if changed since last report)

                                   ----------

            Number of shares outstanding of each of the registrant's
                  classes of common stock, as of May 15, 1998:

               Common Stock, par value $.01 per share: 71,620,019

                                   ----------

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 twelve (12) months (or such shorter period that the Registrant was
required to file such report) and (2) has been subject to such filing
requirements for the past ninety (90) days.

                   YES      X                 NO
                       -----------               -----------

================================================================================

<PAGE>


                                      Index


<TABLE>
<CAPTION>
                                                                                                Page
                                                                                                ----
<S>      <C>
Part I:  Financial Information
------------------------------

Item 1.  Financial Statements

         Condensed consolidated balance sheets of CarrAmerica Realty Corporation and
         subsidiaries as of March 31, 1998 (unaudited) and December 31, 1997.......................4

         Condensed consolidated statements of operations of CarrAmerica Realty Corporation
         and subsidiaries for the three
         months ended March 31, 1998 and 1997 (unaudited)..........................................5

         Condensed consolidated statements of cash flows of CarrAmerica Realty Corporation
         and subsidiaries for the three
         months ended March 31, 1998 and 1997 (unaudited)..........................................6

         Notes to condensed consolidated financial statements......................................7

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations......................................................15


Part II: Other Information
--------------------------

Item 1.  Legal Proceedings........................................................................25

Item 2.  Changes in Securities....................................................................25

Item 3.  Defaults Upon Senior Securities..........................................................25

Item 4.  Submission of Matters to a Vote of Security Holders......................................25

Item 5.  Other Information........................................................................25

Item 6.  Exhibits and Reports on Form 8-K.........................................................25
</TABLE>

                                       2

<PAGE>



                                     PART I
                             FINANCIAL INFORMATION


Item 1.  FINANCIAL STATEMENTS

         The information furnished in the accompanying condensed consolidated
balance sheets, condensed consolidated statements of operations and condensed
consolidated statements of cash flows of CarrAmerica Realty Corporation and
subsidiaries (the Company) reflect all adjustments which are, in the opinion of
management, necessary for a fair presentation of the aforementioned financial
statements for the interim periods.

         The aforementioned financial statements should be read in conjunction
with the notes to the financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations.




                                       3
<PAGE>



                 CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                   As of March 31,1998 and December 31, 1997
--------------------------------------------------------------------------------

(In thousands, except share amounts)
<TABLE>
<CAPTION>
                                                                                  March 31,         December 31,
                                                                                    1998                1997
                                                                                    ----                ----
                                                                                 (Unaudited)
<S>                                                                             <C>                 <C>        
Assets
Rental property (note 2):
     Land                                                                        $  599,276          $  557,536
     Buildings                                                                    1,793,123           1,692,389
     Tenant improvements                                                            138,936             131,527
     Furniture, fixtures and equipment                                               22,810              15,571
                                                                                 ----------          ----------
                                                                                  2,554,145           2,397,023
     Less - accumulated depreciation                                               (194,424)           (184,266)
                                                                                 ----------          ----------
         Total rental property                                                    2,359,721           2,212,757

Land held for development                                                            98,678              81,647
Construction in progress                                                            254,865             210,829

Cash and cash equivalents                                                            24,871              23,845
Restricted cash and cash equivalents (note 2)                                        31,355              18,049
Accounts and notes receivable                                                        43,396              38,321
Investments                                                                          70,330              20,128
Accrued straight-line rents                                                          29,544              33,212
Tenant leasing costs, net                                                            24,502              19,473
Deferred financing costs, net                                                        15,235               6,899
Prepaid expenses and other assets, net                                               92,130              78,900
                                                                                 ----------          ----------
                                                                                 $3,044,627          $2,744,060
                                                                                 ==========          ==========
Liabilities, Minority Interest, and Stockholders' Equity

Liabilities:
     Mortgages and notes payable (note 2)                                         1,309,878           1,028,946
     Accounts payable and accrued expenses                                           57,023              67,311
     Rent received in advance and security deposits                                  26,025              20,151
                                                                                 ----------          ----------
         Total liabilities                                                        1,392,926           1,116,408

Minority interest (note 3)                                                           91,076              74,955

Stockholders' equity (note 4):
     Preferred Stock, $.01 par value, authorized 15,000,000 shares:
     Series A Cumulative Convertible Redeemable Preferred Stock, $.01 par value,
780,000 shares issued and outstanding at March 31, 1998, and December
31, 1997 with an aggregate liquidation preference of $19.5 million.                       8                   8
     Series B, C and D Cumulative Redeemable Preferred Stock, outstanding
8,800,000 shares at March 31, 1998 and December 31, 1997, with an aggregate
liquidation preference of $400.0 million.                                                88                  88

     Common Stock, $.01 par value, authorized 90,000,000 shares, issued and
outstanding 60,005,986 shares at March 31, 1998 and 59,993,778 shares at
December 31, 1997.                                                                      600                 600
     Additional paid in capital                                                   1,628,977           1,629,214
     Cumulative dividends in excess of net income                                   (69,048)            (77,213)
                                                                                 ----------          ----------
         Total stockholders' equity                                               1,560,625           1,552,697
                                                                                 ----------          ----------


Commitments and Contingencies (Note 6)                                           $3,044,627          $2,744,060
                                                                                 ==========          ==========
</TABLE>
See accompanying notes to consolidated financial statements



                                       4
<PAGE>



                 CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
                     Consolidated Statements of Operations
                   For the Three Months Ended March 31, 1998
--------------------------------------------------------------------------------

(Unaudited and in thousands, except per common share amounts)

<TABLE>
<CAPTION>
                                                                                    1998                1997
                                                                                    ----                ----

<S>                                                                                  <C>                 <C>   
Real estate operating revenue:
   Rental revenue:
     Minimum base rent                                                             $ 85,383              56,525
     Recoveries from tenants                                                         11,576               6,949
     Parking and other tenant charges                                                 3,370               2,815
                                                                                   --------              ------
         Total rental revenue                                                       100,329              66,289
   Executive suites revenue                                                          15,648                  --
   Real estate service income                                                         2,990               4,178
                                                                                   --------              ------
         Total revenue                                                              118,967              70,467
                                                                                   --------              ------

Real estate operating expenses:
   Property operating expenses:
    Operating expenses                                                               23,214              17,266
    Real estate taxes                                                                 9,302               6,377
   Interest expense                                                                  17,161              11,257
   Executive suites operating expenses                                               13,854                  --
   General and administrative                                                         6,439               5,156
   Depreciation and amortization                                                     23,643              15,916
                                                                                   --------              ------
         Total operating expenses                                                    93,613              55,972
                                                                                   --------              ------

         Real estate operating income                                                25,354              14,495
                                                                                   --------              ------

Other operating income (expense):
   Interest Income                                                                    1,017                 542
   Equity in earnings (losses) of unconsolidated partnerships                           754                 (61)
   Gain on sale of assets (note 5)                                                   25,931                  --
                                                                                   --------              ------
         Total other operating income                                                27,702                 481
                                                                                   --------              ------
         Net operating income before minority interest                               53,056              14,976
Minority interest (note 3)                                                           (8,547)             (1,717)
                                                                                   --------              ------
         Net income                                                                $ 44,509              13,259
                                                                                   ========              ======

         Basic net income per common share                                         $   0.60             $  0.26
                                                                                   ========             =======

         Diluted net income per share                                              $   0.59             $  0.26
                                                                                   ========             =======
</TABLE>

See accompanying notes to consolidated financial statements

                                        5
<PAGE>



                 CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
             Condensed Consolidated Statements of Cash Flows for the
                   Three Months Ended March 31, 1998 and 1997
--------------------------------------------------------------------------------

 (Unaudited and in thousands)

<TABLE>
<CAPTION>
                                                                                    1998                1997
                                                                                    ----                ----
<S>                                                                               <C>                    <C>   
Cash flows from operating activities:
   Net income                                                                     $  44,509              13,259
                                                                                  ---------           --------- 
   Adjustments to reconcile net income to net cash provided by operating
     activities:
     Depreciaton and amortization                                                    23,643              15,916
     Minority interest in income                                                      8,547               1,717
     Equity in (earnings) losses of unconsolidated partnerships                        (754)                 61
     Loss on write-off of assets                                                         --                 211
     Increase in accounts and notes receivable                                       (5,075)             (2,425)
     Decrease (increase) in accrued straight-line rents                               3,668              (1,521)
     Additions to tenant leasing costs                                               (2,556)             (4,069)
     Decrease (Increase) in prepaid expenses and other assets                        15,551              (3,889)
     Increase (decrease) in accounts payable and accrued expenses                   (10,288)              4,435
     Increase in rent received in advance and security deposits                       5,874               3,972
                                                                                  ---------           --------- 
         Total adjustments                                                           38,610              14,408
                                                                                  ---------           --------- 
         Net cash provided by operating activities                                   83,119              27,667
                                                                                  ---------           --------- 

Cash flows from investing activities:
   Acquisition of executive suites assets                                           (28,397)                 --
   Additions to rental property                                                      (8,242)             (7,232)
   Acquisitions of rental property                                                 (107,299)           (135,379)
   Additions to land held for development                                           (71,918)             (6,340)
   Additions to construction in progress                                            (71,506)            (31,128)
   Distributions from unconsolidated partnerships                                       777                  54
   Investments in unconsolidated partnerships                                       (50,224)               (608)
   Decrease (increase) in restricted cash and cash equivalents                      (13,306)                480
   Proceeds from disposition of rental property                                      31,287                  --
                                                                                  ---------           --------- 
         Net cash used by investing activities                                    $(318,828)          $(180,153)
                                                                                  ---------           --------- 

Cash flows from financing activities:
   Net proceeds from sales of common and preferred stock                               (256)            136,111
   Net borrowings on unsecured credit facility                                       90,000              55,000
   Proceeds from issuance of unsecured notes                                        200,000                  --
   Net proceeds from exercise of options                                                 23               1,219
   Repayment of mortgages payable                                                   (15,068)            (14,589)
   Loan to investment venture                                                            --                (125)
   Contributions from minority interests                                             10,227                  --
   Dividends paid                                                                   (36,344)            (22,081)
   Additions to deferred financing costs                                             (9,194)             (1,007)
   Distributions to minority interests                                               (2,653)             (2,231)
                                                                                  ---------           --------- 
         Net cash provided by financing activities                                  236,735             152,297
                                                                                  ---------           --------- 
         Increase (decrease) in unrestricted cash and cash equivalents                1,026                (189)
Unrestricted cash and cash equivalents, beginning of the period                      23,845              27,637
                                                                                  ---------           ---------
Unrestricted cash and cash equivalents, end of the period                         $  24,871              27,448
                                                                                  =========           =========

Supplemental disclosure of cash flow information:
   Cash paid for interest (net of capitalized interest of $5,377 and
     $1,670 for the three months ended March 31, 1998 and 1997, respectively)     $  21,839              11,181
                                                                                  =========           =========

Supplemental disclosure of noncash investing and financing activities:
   During the three month periods ended March 31, 1998 and 1997, the Company
     funded a portion of the aggregate purchase price of its property
     acquisitions by assuming $6.0 million and $39.2 million of debt and
     liabilities, respectively, and by issuing $9.8 million and $4.7 million, 
     respectively, of Units.
</TABLE>


See accompanying notes to consolidated financial statements



                                       6
<PAGE>

                 CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

(1)      Description of Business and Summary of Significant Accounting Policies

         (a)      Business

                  CarrAmerica Realty Corporation (the "Company") is a
                  self-administered and self-managed equity real estate
                  investment trust ("REIT"), organized under the laws of
                  Maryland, which owns, develops, acquires and operates office
                  properties. The Company's office properties are located
                  primarily in 16 suburban markets across the United States.

         (b)      Basis of Presentation

                  The accounts of the Company and its majority-owned
                  subsidiaries are consolidated in the accompanying financial
                  statements. The Company uses the equity method of accounting
                  for its investments in and earnings and losses of
                  unconsolidated partnerships not controlled by the Company.
                  Management of the Company has made a number of estimates and
                  assumptions relating to the reporting of assets and
                  liabilities, revenues and expenses, and the disclosure of
                  contingent assets and liabilities to prepare these financial
                  statements in conformity with generally accepted accounting
                  principles. Actual results could differ from those estimates.

         (c)      Interim Financial Statements

                  The information furnished reflects all adjustments which are,
                  in the opinion of management, necessary to reflect a fair
                  presentation of the results for the interim periods, and all
                  such adjustments are of a normal, recurring nature.

         (d)      Rental Property

                  Rental property is recorded at cost less accumulated
                  depreciation (which is less than the net realizable value of
                  the rental property). Depreciation is computed on the
                  straight-line basis over the estimated useful lives of the
                  assets, as follows:

                  Base Building.............................30 to 50 years
                  Building components.......................7 to 20 years
                  Tenant improvements.......................Terms of the leases
                                                            or useful lives,
                                                            whichever is shorter
                  Furniture, fixtures and equipment.........5 to 15 years

                  Expenditures for maintenance and repairs are charged to
                  operations as incurred. Significant renovations are
                  capitalized.

                  The Company reviews its long-lived assets for impairment
                  whenever events or changes in circumstances indicate that the
                  carrying amount of an asset may not be recoverable.
                  Recoverability of assets to be held and used is measured by a
                  comparison of the carrying amount of an asset to future net
                  cash flows expected to be generated by the asset. If such
                  assets are considered to be impaired, the impairment to be
                  recognized is measured by the amount by which the carrying
                  amount of the assets exceed the fair value of the assets.

         (e)      Development Property

                  Land held for development and construction in progress is
                  carried at cost. Specifically identifiable direct and indirect
                  acquisition, development and construction costs are
                  capitalized including, where applicable, salaries and related
                  costs, real estate taxes, interest and certain
                  pre-construction costs essential to the development of a
                  property.

         (f)      Tenant Leasing Costs

                  Fees and costs incurred in the successful negotiation of
                  leases have been deferred and are being amortized on a
                  straight-line basis over the terms of the respective leases.



                                       7
<PAGE>

                 CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

         (g)      Deferred Financing Costs

                  Deferred financing costs include fees and costs incurred to
                  obtain financing and are being amortized over the terms of the
                  respective loans on a basis which approximates the interest
                  method.

         (h)      Goodwill, Real Estate Service Contracts and Other Intangibles

                  Real estate service contracts and other intangible assets
                  represent the purchase price of net assets of real estate
                  service operations acquired and are amortized on the
                  straight-line basis over the expected lives of the respective
                  real estate service contracts. Goodwill which represents the
                  excess of purchase price over the fair value of net assets
                  acquired in the acquisition of OmniOffices, is amortized on
                  the straight-line basis over 30 years. The Company assesses
                  the recoverability of these intangible assets by determining
                  whether the balance can be recovered over its remaining life
                  through undiscounted future operating cash flows of the
                  related assets or operations acquired. The amount of
                  impairment loss, if any, is measured as the amount by which
                  the carrying amount of the assets exceeds the fair value of
                  the assets. The assessment of the recoverability of these
                  intangible assets will be impacted if estimated future
                  operating cash flows are not achieved.

         (i)      Fair Value of Financial Instruments

                  The carrying amount of the following financial instruments
                  approximates fair value because of their short-term maturity:
                  cash and cash equivalents; accounts and notes receivable;
                  accounts payable and accrued expenses.

         (j)      Revenue Recognition

                  The Company reports base rental revenue for financial
                  statement purposes straight-line over the terms of the
                  respective leases. Accrued straight-line rents represent the
                  amount that straight-line rental revenue exceeds rents
                  collected in accordance with the lease agreements. Management,
                  considering current information and events regarding the
                  tenants' ability to fulfill their lease obligations, considers
                  accrued straight-line rents to be impaired if it is probable
                  that the Company will be unable to collect all rents due
                  according to the contractual lease terms. If accrued
                  straight-line rents associated with a tenant are considered to
                  be impaired, the amount of the impairment is measured based on
                  the present value of expected future cash flows. Impairment
                  losses, if any, are recorded through a loss on the write-off
                  of assets. Cash receipts on impaired accrued straight-line
                  rents are applied to reduce the remaining outstanding balance
                  and as rental revenue, thereafter.

                  The Company earns real estate service revenue for certain
                  properties it manages, leases and develops for third parties
                  and revenue from its executive suites business. Such revenue
                  is recognized as earned.

         (k)      New Accounting Pronouncements

                  In June 1997, the Financial Accounting Standards Board (FASB)
                  issued SFAS No. 130, "Reporting Comprehensive Income," which
                  requires an enterprise to display comprehensive income and its
                  components in a financial statement to be included in an
                  enterprise's full set of financial statements. Comprehensive
                  income represents a measure of all changes in equity of an
                  enterprise that result from recognized transactions and other
                  economic events for the period other than transactions with
                  owners in their capacity as owners. Comprehensive income
                  includes net income and such items as foreign currency items
                  and certain unrealized gains and losses. This standard is
                  effective for the Company's fiscal year 1998 and requires
                  prior years' comparative financial statements to be
                  reclassified to reflect the provisions of this standard. The
                  Company currently has no components of other comprehensive
                  income.



                                       8
<PAGE>

                 CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

         (l)      Income and Other Taxes

                  The Company qualifies as a REIT under Sections 856 through 860
                  of the Internal Revenue Code of 1986, as amended. A REIT will
                  generally not be subject to federal income taxation on that
                  portion of its income that qualifies as REIT taxable income to
                  the extent that it distributes at least 95 percent of its
                  taxable income to its shareholders and complies with certain
                  other requirements. Accordingly, no provision has been made
                  for federal income taxes for the Company and certain of its
                  subsidiaries in the accompanying consolidated financial
                  statements.

                  Certain subsidiaries, organized as partnerships, of the
                  Company are subject to District of Columbia franchise taxes.
                  Franchise taxes are recorded as general and administrative
                  expenses in the accompanying consolidated financial
                  statements.

                  CarrAmerica Development, Inc. ("CarrAmerica Development"), the
                  Company's development subsidiary, Carr Real Estate Services,
                  Inc. ("Carr Services, Inc."), the Company's real estate
                  service subsidiary, and OmniOffices, Inc. ("OmniOffices"), the
                  Company's executive suites subsidiary, file separate tax
                  returns and are subject to federal, state and local income
                  taxes. The Company has adopted the asset and liability method
                  of accounting for income taxes for these subsidiaries. Under
                  the asset and liability method, deferred tax assets and
                  liabilities are recognized for the future tax consequences
                  attributable to temporary differences between the financial
                  statement carrying amounts of existing assets and liabilities
                  and their respective tax bases and to operating loss and tax
                  credit carryforwards. Deferred tax assets and liabilities are
                  measured using enacted tax rates expected to apply to taxable
                  income in the years in which those temporary differences are
                  expected to be recovered or settled. The effect on deferred
                  tax assets and liabilities of a change in tax rates is
                  recognized in income in the period of the enactment date. The
                  income taxes and the effect of the asset and liability method
                  of the accounting for income taxes for these subsidiaries, are
                  insignificant to the financial statements of the Company.

         (m)      Hedging Transactions

                  From time to time, the Company enters into interest rate lock
                  and collar agreements that are designed to hedge against the
                  impact of interest rate fluctuations on certain of the
                  Company's existing and probable future long-term debt
                  instruments. Because these agreements qualify for hedge
                  accounting treatment, any gains or losses are recognized as
                  adjustments to interest expense over the lives of the
                  underlying debt instruments. For hedge agreements that are
                  terminated early or that are associated with anticipated
                  future debt instruments, gains or losses are deferred until
                  those debt instruments are entered into. If the Company
                  determines it is no longer probable that the Company will
                  enter into an anticipated debt instrument, any related
                  deferred gains or losses are recognized in the current period.



                                       9
<PAGE>

                 CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

          (n)     Per Share Data and Dividends

                  Effective December 31, 1997, the Company adopted the
                  provisions of SFAS No. 128 "Earnings Per Share." SFAS No. 128
                  supersedes APB No. 15 and specifies computation, presentation
                  and disclosure requirements for EPS and requires restatement
                  of prior years' comparative EPS amounts. The following is a
                  reconciliation of the numerators and denominators of the basic
                  and diluted EPS computations for income before extraordinary
                  item:

<TABLE>
<CAPTION>

                                                     Three Months Ended                   Three Months Ended 
                                                       March 31, 1998                       March 31, 1997
                                                    --------------------                  --------------------
                                              Income                      Per       Income                     Per
                                             (000's)        Shares       Share      (000's)       Shares      Share
                                           (Numerator)   (Denominator)   Amount   (Numerator)  (Denominator)  Amount
                                           -----------   -------------   ------   -----------  -------------  ------

<S>                                         <C>              <C>          <C>       <C>            <C>         <C>   
                  Basic EPS                 $ 35,718         59,997       $0.60     $ 12,498       47,254      $ 0.26
                  Effect of Dilutive
                    Securities
                    Stock Options                 --            233         --            --          222          --
                    Series A Preferred           
                      Stock                      361            780         --            --           --          --
                    Units in
                      CarrAmerica
                      Realty, LP                 896          1,778          --           --           --           --
                                            --------         ------       -----     --------       ------      -------
                  Diluted  EPS              $ 36,975         62,788       $0.59     $ 12,498       47,476      $ 0.26
                                            ========         ======                 ========       ======
</TABLE>


                  Income before extraordinary item has been reduced by preferred
                  stock dividends of $8,791 and $761 for the three month periods
                  ending March 31, 1998 and 1997, respectively.

                  The effects of units and Series A Preferred Stock are not
                  included in the computation of diluted EPS for a given year if
                  their effect is antidilutive.

         (o)      Cash Equivalents

                  For the purposes of reporting cash flows, the Company
                  considers all highly liquid investments with a maturity of
                  three months or less at the time of purchase to be cash
                  equivalents.

(2)      Mortgages, Unsecured Notes and Credit Facility

         The Company's mortgages payable, unsecured notes and credit facilities
         are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                                  March 31,        December 31,
                                                                    1998               1997
                                                                    ----               ----

<S>                                                             <C>                <C>        
                    Fixed rate mortgages                        $   575,577        $   590,645
                    Unsecured credit facility                       249,500            159,500
                    Notes payable                                     9,801              3,801
                    Senior unsecured notes                          475,000            275,000
                                                                -----------        -----------
                                                                $ 1,309,878        $ 1,028,946
                                                                ===========        ===========
</TABLE>

         Mortgages payable are collateralized by certain rental properties and
         generally require monthly principal and/or interest payments. Mortgages
         payable mature at various dates from June 1998 through July 2019. The
         weighted average interest rate of mortgages payable was 8.2% at March
         31, 1998 and 8.1% at December 31, 1997. A mortgage payable of $27.6
         million at March 31, 1998 is held by Carr Redmond Corporation, a
         wholly-owned subsidiary of the Company, which owns the Redmond East
         office campus.

                                       10
<PAGE>

                 CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

         The Company also has a $450.0 million unsecured credit facility with
         Morgan Guaranty Trust Company of New York (Morgan), as agent for a
         group of banks. At March 31, 1998, the credit facility bore interest,
         as selected by the Company, at either (i) the higher of the prime rate
         or the Federal Funds Rate for such day or (ii) an interest rate equal
         to 90 basis points above the 30 day London Interbank Offered Rate
         (LIBOR). The Company has predominately selected interest rates equal to
         .90 percent above the 30 day LIBOR rate. The credit facility matures in
         September 2000.

         In February 1998, the Company sold senior unsecured notes in the
         aggregate principal amount of $200 million of its long-term debt, in
         the form of $100 million of 6.625% notes due in 2005 and $100 million
         of 6.875% notes due in 2008. The Company's senior unsecured notes
         contain various covenants with which the Company must comply, including
         but not limited to: limits on the aggregate amount of indebtedness the
         Company may have outstanding on a consolidated basis; limits on the
         aggregate amount of secured indebtedness the Company may have
         outstanding on a consolidated basis; and, limits on the Company's
         required debt service payments. The senior unsecured notes are
         unconditionally guaranteed by CarrAmerica Realty, L.P.

         The annual maturities of debt as of March 31, 1998 are summarized as
         follows (in thousands):

                    1998                                      $   28,972
                    1999                                          40,467
                    2000                                         298,725(1)
                    2001                                         101,148
                    2002                                          42,288
                    2003 & thereafter                            798,278(2)
                                                              ----------
                                                              $1,309,878
                                                              ==========

                      (1)  Includes $249.5 million outstanding as of March 31,
                           1998 under the Company's $450 million unsecured line
                           of credit.

                      (2)  Includes $475 million of senior unsecured notes, $150
                           million of which matures in 2004, $100 million of
                           which matures in 2005, $125 million of which matures
                           in 2007, and $100 million of which matures in 2008.

 (3)     Minority Interest

         In conjunction with the formation of the Company and its majority-owned
         subsidiary, Carr Realty, L.P., persons contributing interests in
         properties to Carr Realty, L.P. had the right to elect to receive
         either common stock of the Company or Units in Carr Realty, L.P. In
         addition, the Company has acquired certain assets since its formation
         by issuing distribution paying Units and non-distribution paying Units
         of Carr Realty, L.P. and CarrAmerica Realty, L.P. The non-distribution
         paying Units are not entitled to any distributions until they
         automatically convert into distribution paying Units at various dates
         in the future. Each distribution paying Unit, subject to certain
         restrictions, may be redeemed for either one share of common stock or,
         at the option of the Company, cash equal to the fair market value of a
         share of common stock at the time of the redemption. When a Unitholder
         redeems a distribution paying Unit for a share of common stock or cash,
         minority interest is reduced and the Company's investment in Carr
         Realty, L.P. or CarrAmerica Realty, L.P., as the case may be, is
         increased. During the three month period ended March 31, 1998, 12,208
         dividend paying Units, of Carr Realty, L.P. and CarrAmerica Realty,
         L.P., were redeemed for common stock of the Company.


                                       11
<PAGE>

                 CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

         The following table sets forth the common stock and preferred stock
         which is convertible into common stock of the Company and Units of Carr
         Realty, L.P. and CarrAmerica Realty, L.P. (in thousands):

<TABLE>
<CAPTION>
                                                                           Convertible          Distribution        Non-Distribution
                                                   Common Stock          Preferred Stock        Paying Units          Paying Units
                                                    Outstanding            Outstanding           Outstanding          Outstanding
                                                    -----------            -----------           -----------          -----------

                   <S>                              <C>                       <C>                 <C>                    <C>
                   Outstanding as of:
                   March 31, 1998                   60,006                    780                 6,014                  540
                   December 31, 1997                59,994                    780                 5,699                  540
                                                    ======                    ===                 =====                  ===

                   Weighted average for
                   the three months ended:
                   March 31, 1998                   59,997                    780                 5,938                  540
                   March 31, 1997                   47,254                  1,740                 4,938                  540
                                                    ======                  =====                 =====                  ===
</TABLE>

         Minority interest in the accompanying consolidated financial statements
         relates primarily to holders of Units.


(4)      Preferred Stock

         The Company is authorized to issue 15,000,000 shares of Preferred
         Stock. On October 25, 1996, the Company issued 1,740,000 shares of
         Series A Cumulative Convertible Redeemable Preferred Stock ("Series A
         Preferred Stock") at $25 per share. Dividends for the Series A
         Preferred Stock are cumulative from the date of issuance and are
         payable quarterly in arrears in an amount per share equal to the
         greater of (1) $1.75 per share per annum, or (2) the cash dividend paid
         on the number of shares, or portion thereof, of the Company's common
         stock into which a share of Series A Preferred Stock is convertible.
         The Series A Preferred Stock has a liquidation preference of $25 per
         share. After April 25, 1997, each share of Series A Preferred Stock
         became convertible, at the option of the holder, into one share of the
         Company's common stock, subject to certain conversion adjustments. As
         of March 31, 1998, 960,000 shares of Series A Preferred Stock had been
         converted into the Company's common stock. After October 25, 1999, each
         outstanding share of Series A Preferred Stock is redeemable at the
         Company's option, at $25 per share, plus accrued and unpaid dividends.

         As of March 31, 1998, the following additional preferred stock issued
         by the Company was outstanding:


<TABLE>
<CAPTION>
                                                                                  Liquidation
                                        Shares             Issue Date             Preference          Dividend Rate
          ----------------------     --------------    --------------------    ------------------    -----------------

                <S>                    <C>                <C>                       <C>                    <C>  
                Series B               8,000,000           August 1997              $  25.00               8.57%
                Series C               6,000,000          November 1997             $  25.00               8.55%
                Series D               2,000,000          December 1997             $  25.00               8.45%
</TABLE>

         Series C and D shares listed above are Depositary Shares, each
         representing a 1/10 fractional interest in a share of preferred stock.
         Dividends for the Series B, C and D shares are cumulative from the date
         of issuance and are payable quarterly in arrears on the last day of
         February, May, August and November of each year. These preferred shares
         are redeemable at the option of the Company not prior to the following
         dates:

                  Series B - August 12, 2002
                  Series C - November 6, 2002
                  Series D - December 19, 2002


                                       12
<PAGE>

                 CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

(5)      Gain on Sale of Assets

         The Company disposed of assets that are inconsistent with its long-term
         strategic or return objectives or where market conditions for sale are
         favorable. The proceeds were redeployed into other office properties
         (utilizing tax-deferred exchanges where possible). During the first
         quarter of 1998, the Company disposed of one property. The Company
         recognized a gain totaling $25.9 million on this disposition.


(6)      Commitments and Contingencies

         At March 31, 1998, the Company is contingentally liable on letters of
         credit amounting to approximately $1.4 million for various completion
         escrows and on performance bonds amounting to approximately $10.1
         million to ensure completion of required public improvements on its
         construction projects.

         On March 16, 1998, the Company entered into a forward treasury
         agreement on a notional amount of $25.0 million, based on the 10-year
         treasury bill at 5.593% interest rate. The Company entered into this
         agreement in order to hedge against the impact that interest rate
         fluctuations may have on debt instruments the Company intends to issue
         in the future. As of March 31, 1998, the Company's has an insignificant
         unrealized gain on this agreement.

         On March 9, 1998, the Company entered into a forward treasury agreement
         on a notional amount of $25.0 million, based on the 10-year treasury
         bill at 5.725% interest rate. The Company entered into this agreement
         in order to hedge against the impact that interest rate fluctuations
         may have on debt instruments the Company intends to issue in the
         future. As of March 31, 1998, the Company's unrealized loss on this
         agreement is $.2 million.

         On March 4, 1998, the Company entered into a forward treasury agreement
         on a notional amount of $75.0 million, based on the 10-year treasury
         bill at 5.823% interest rate. The Company entered into this agreement
         in order to hedge against the impact that interest rate fluctuations
         may have on debt instruments the Company intends to issue in the
         future. As of March 31, 1998, the Company's unrealized loss on this
         agreement is $1.1 million.


(7)      Subsequent Events

         From April 1 to May 15, 1998, the Company, through its subsidiary
         OmniOffices, Inc., acquired the operations of executive suites
         businesses for approximately $94.8 million in cash plus warrants to
         purchase stock of OmniOffices, Inc. The businesses include 40 centers
         with 2,500 suites located in ten major markets.

         From April 1, 1998, to May 15, 1998, the Company acquired ten office
         properties. In addition, since April 1, 1998, the Company has acquired
         land which is expected to support the future development of 120,000
         square feet. The Company paid $83.1 million to purchase the properties
         and land. These acquisitions added to the Company's holdings as
         follows:


                                                                     Buildable
                                                                    Square Feet
                                                                    of Land Held
                                        # of          Square            for
                  Region             Buildings         Feet         Development
                  ------             ---------         ----         -----------

          Pacific Region                 10          623,000               --
          Mountain Region                --               --          120,000
                                         --          -------          -------
                   Total                 10          623,000          120,000
                                         ==          =======          =======



                                       13
<PAGE>

                 CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

         In April 1998, the Company completed three equity offerings. The
         Company completed the offering of 3,450,000 shares of common stock to
         the public and a concurrent sale of 1,478,571 shares of common stock to
         SC-USREALTY, raising net proceeds of $142 million. In addition, the
         Company sold 1,178,947 shares of common stock to Merrill Lynch &
         Company ("Merrill Lynch"), for deposit in a unit investment trust which
         raised net proceeds of $33 million. Concurrent with the sale to Merrill
         Lynch, the Company sold 505,263 shares to SC-USREALTY, raising net
         proceeds of $15 million.

         The Company also sold 5,000,000 shares of common stock to Merrill Lynch
         in a forward equity offering raising net proceeds of $147 million. In
         connection with this offering, the Company and Merrill Lynch entered
         into an agreement to adjust the total number of shares of common stock
         sold by the Company to Merrill Lynch (or adjust the aggregate purchase
         price for such shares) in the event of a change in the trading price
         above or below $30.00 through April 2, 1999. Pursuant to an interim
         settlement mechanism, the Company may periodically deposit shares of
         common stock in a Merrill Lynch collateral account if the Company's
         stock price falls below $30.00.

         In April 1998, OmniOffices entered into an unsecured revolving credit
         facility with borrowing capacity of $125.0 million. The facility bears
         interest, as selected by OmniOffices, at either (i) the higher of the
         prime rate or the Federal Funds Rate for such day or (ii) an interest
         rate equal to 105 basis points above LIBOR. The facility has a term of
         three years maturing in April 2001. The facility is unconditionally
         guaranteed by the Company. As of May 15, 1998, OmniOffices had $69.4
         million outstanding on this credit facility and $55.6 million available
         for draw.



                                       14
<PAGE>

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

         The following discussion is based primarily on the Consolidated
Financial Statements of CarrAmerica Realty Corporation and its subsidiaries (the
"Company") as of March 31, 1998 and December 31, 1997, and for the three months
ended March 31, 1998 and 1997. The comparability of the periods is significantly
impacted by acquisitions made during 1998 and 1997. As of March 31, 1997, the
Company owned 230 properties. This number grew to 258 as of March 31, 1998.

         This information should be read in conjunction with the accompanying
consolidated financial statements and notes thereto. These consolidated
financial statements include all adjustments which are, in the opinion of
management, necessary to reflect a fair statement of the periods presented, and
all such adjustments are of a normal, recurring nature.

RESULTS OF OPERATIONS - Three Months Ended March 31, 1998 and 1997

Real Estate Operating Revenue. Total real estate operating revenue increased
$48.5 million, or 68.8%, to $119.0 million for the three months ended March 31,
1998 as compared to $70.5 million for the three months ended March 31, 1997. The
increase in revenue was primarily attributable to a $34.0 million and a $14.5
million increase in rental revenue and other real estate operating revenue,
respectively. The Company experienced net growth in its rental revenue as a
result of its acquisitions, and development properties placed in service net of
disposition, which together contributed approximately $33.4 million of
additional rental revenue in the three month period ended March 31, 1998. Rental
revenue from properties that were fully operational throughout both periods
increased by approximately $.7 million primarily due to increased occupancy in
these properties. Other real estate operating revenue increased by $14.5
million, or 446.1%, for the three months ended March 31, 1998 to $18.6 million
as compared to $4.1 million for the three months ended March 31, 1997, primarily
as a result of executive office suites revenue earned by OmniOffices, which
acquired the assets of OmniOffices Group, Inc. in August 1997.

Real Estate Operating Expenses. Total real estate operating expenses increased
$37.6 million for the three months ended March 31, 1998, or 67.2%, to $93.6
million as compared to $56.0 million for the three months ended March 31, 1997.
The net increase in operating expenses was attributable to a $8.9 million
increase in property operating expenses, a $5.9 million increase in interest
expense, the addition of $13.8 million in executive office suites operating
expenses associated with OmniOffices, a $1.3 million increase in general and
administrative expenses, and a $7.7 million increase in depreciation and
amortization. Property operating expenses increased primarily as a result of
property acquisitions, with property operating expenses from properties that
were fully operational in both periods remaining unchanged. The increase in the
Company's interest expense is primarily related to borrowings for acquisitions.
The addition of executive office suites operating expenses is a result of the
acquisition of the assets of OmniOffices Group, Inc. by OmniOffices. in August
1997. The increase in general and administrative expenses is predominately a
result of the addition of new staff to implement the Company's business
strategy. The increase in depreciation and amortization is predominately a
result of additional depreciation and amortization on the Company's real estate
acquisitions.

Other Operating Income (Expense). Other operating income increased $27.2 million
for the three months ended March 31, 1998, to $27.7 million as compared to $.5
million for the three months ended March 31, 1997, primarily due to the gain
recognized on the disposition of 267,000 square feet of office space.


                                       15
<PAGE>

Net Income. Net income of $44.5 million was earned for the three months ended
March 31, 1998 as compared to $13.3 million during the three months ended March
31, 1997. The comparability of net income between the two periods is impacted by
the acquisitions the Company made and the other changes described above.

Cash Flows. Net cash provided by operating activities increased $55.4 million,
or 200.4%, to $83.1 million for the three months ended March 31,1998 as compared
to $27.7 million for the three months ended March 31, 1997, primarily as a
result of the acquisitions made by the Company. Net cash used by investing
activities increased $138.6 million, to $318.8 million for the three months
ended March 31, 1998 as compared to $180.2 million for the three months ended
March 31, 1997, primarily as a result of capital deployed by the Company for
acquisitions of office properties, land held for future development and
construction in progress. Net cash provided by financing activities increased
$84.4 million, to $236.7 million for the three months ended March 31, 1998 as
compared to $152.3 million for the three months ended March 31, 1997, primarily
as a result of borrowings on the unsecured credit facility and the issuance of
unsecured notes, net of repayments of mortgages payable and dividends paid to
the common and preferred stockholders.

LIQUIDITY AND CAPITAL RESOURCES

         The Company seeks to create and maintain a capital structure that will
enable it to diversify its capital sources and thereby allow the Company to
obtain additional capital from a number of different sources, including
additional equity offerings of common and/or preferred stock, public and private
debt financings, and, where appropriate, asset dispositions. Management believes
that the Company will have access to the capital resources necessary to expand
and develop its business, to fund its operating and administrative expenses, to
continue debt service obligations, to pay dividends in accordance with REIT
requirements, to acquire additional properties and land, and to pay for
construction in progress in both the short and long term.

         The Company has three investment grade ratings. Duff & Phelps Credit
Rating Co. (DCR) and Standard & Poors (S&P) have each assigned their BBB rating
to prospective senior unsecured debt offerings of the Company and their BBB-
rating to prospective cumulative preferred stock offerings of the Company.
Moody's Investor Service (Moody's) has assigned its Baa3 rating to prospective
senior unsecured debt offerings of the Company and its Ba2 rating to prospective
cumulative preferred stock offerings of the Company.

         The Company's total indebtedness at March 31, 1998 was $1.310 billion,
of which $249.5 million, or 19.0%, bears a LIBOR-based floating interest rate.
Currently, the unsecured credit facility bears interest at 90 basis points over
LIBOR. The Company's mortgage payable fixed rate indebtedness bears an effective
weighted average interest rate of 8.2% at March 31, 1998 and has a weighted
average term to maturity of 5.0 years. Based upon the Company's total market
capitalization at March 31, 1998 of $3.730 billion (the common stock price was
$30.00 per share; the total shares of common stock, convertible preferred stock
and Units outstanding was 67,339,338 and the aggregate liquidation value of the
cumulative redeemable preferred stock was $400 million), the Company's debt
represented 35.1% of its total market capitalization. The Company has a $450.0
million unsecured credit facility with a current borrowing capacity of $313.6
million. As of May 15, 1998, the Company had $68.0 million outstanding and
$245.6 million available for draw under this unsecured credit facility.

         In the first quarter of 1998, the Company began developing a plan to
address Year 2000 issues and began converting its computer systems to be Year
2000 compliant. The plan provides for the conversion efforts to be completed
prior to the end of 1999 for both the Company's financial and property related
systems. The Year 2000 issues are the result of computer programs being written
using two digits rather than four to define the applicable year. The Company
believes that through its commitment to maintaining the highest level of systems
support and by working closely with vendors providing services to the Company's
properties, it will, through the normal course of business, convert all systems
users to Year 2000 compliant equipment prior to the end of 1999. The Company
estimates the costs associated with implementation of the plan will not be
significant to the Company's financial statements.



                                       16
<PAGE>


         The Company will require capital to invest in its existing portfolio of
operating assets for major capital projects such as large-scale renovations,
routine capital expenditures and deferred maintenance on certain properties
recently acquired and tenant related capital expenditures, such as tenant
improvements and allowances and leasing commissions. The Company intends to use
cash flow from operations and its unsecured revolving credit facility to meet
its working capital needs for its existing portfolio of operating assets.

         The Company will also require a substantial amount of capital for
development projects currently underway and planned for the future. As of April
1998, the Company had 49 development projects underway which are expected to
require a total investment by the Company of approximately $620.0 million. As
part of the Company's ordinary course of business, the Company is also pursuing
certain portfolio acquisitions, which, if consummated, would require a
substantial amount of capital. The Company intends to use cash flow from
operations, its unsecured, revolving credit facility and the Company's access to
public and private equity and debt markets to meet its capital needs for
development projects and potential future acquisitions.

         Net cash provided by operating activities was $83.1 million for the
three months ended March 31, 1998, compared to $27.7 million for the three
months ended March 31, 1997. The increase in net cash provided by operating
activities was primarily a result of acquisitions made by the Company. The
Company's investing activities used approximately $318.8 million and $180.2
million for the three months ended March 31,1998 and 1997, respectively. The
Company's investment activities included the acquisitions of office buildings,
executive office suites businesses, and land held for future development and
additions to construction in process of approximately $279.1 million for the
three months ended March 31, 1998, as compared to $172.8 million in acquisitions
during the same period in 1997. Additionally, the Company invested approximately
$8.2 million and $7.2 million in its existing real estate assets for the three
months ended March 31, 1998 and 1997, respectively. Net of distributions to the
Company's stockholders and minority interests, the Company's financing
activities provided net cash of $275.7 million and $176.6 million for the three
months ended March 31, 1998 and 1997, respectively. For the three months ended
March 31,1998, the Company raised $200.0 million through the sale of unsecured
notes which was used to repay amounts outstanding under its unsecured credit
facility and to fund acquisitions. The Company also drew amounts from its
unsecured credit facility during 1998 to finance its acquisitions and other
investing activities. For the three months ended March 31, 1998, the Company's
net borrowings on its unsecured credit facility were approximately $90.0
million.

         Rental revenue and real estate service revenue have been the principal
sources of capital to fund the Company's operating expenses, debt service and
capital expenditures, excluding non-recurring capital expenditures. The Company
believes that rental revenue and real estate service revenue will continue to
provide the necessary funds for its operating expenses and debt service. The
Company expects to fund capital expenditures, including tenant concession
packages, building renovations and construction costs, from (i) available funds
from operations, (ii) existing capital reserves, and (iii) if necessary, credit
facilities established with third party lenders. If these sources of funds are
insufficient, the Company's ability to make expected distributions may be
adversely impacted. As of March 31, 1998, the Company had cash of $56.2 million,
of which $31.4 million was restricted.

         The Company's dividends are paid quarterly. Amounts accumulated for
distribution are primarily invested by the Company in short-term investments
that are collateralized by securities of the United States Government or certain
of its agencies.


                                       17

<PAGE>


         Management believes that the Company will have access to the capital
resources necessary to expand and develop its business. The Company may seek to
obtain funds through additional equity offerings or debt offerings in a manner
consistent with its intention to operate with a conservative borrowing policy.
The Company anticipates that adequate cash will be available to fund its
operating and administrative expenses, continuing debt service obligations, the
payment of dividends in accordance with REIT requirements in both the short term
and long term, and future acquisitions of office properties.

         Effective March 19,1998, the Company has adopted the Emerging Issues
Task Force's Issue 97-11, "Accounting for Internal Costs Relating to Real Estate
Property Acquisitions." Issue 97-11 states that internal costs from acquiring
operating property should be expensed as incurred. Costs that have been
capitalized in the Company's financial statements through March 19, 1998
amounted to $.7 million. The Company believes that this will not have a material
effect on the Company's operations.

         The Company believes that funds from operations is helpful to investors
as a measure of the performance of an equity REIT because, along with cash flow
from operating activities, financing activities and investing activities, it
provides investors with an indication of the ability of the Company to incur and
service debt, to make capital expenditures and to fund other cash needs. In
accordance with the final National Association of Real Estate Investment Trusts
(NAREIT) White Paper on Funds From Operations as approved by the Board of
Governors of NAREIT on March 3, 1995, funds from operations represents net
income (loss) (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring or sales of
property, plus depreciation and amortization of assets uniquely significant to
the real estate industry and after adjustments for unconsolidated partnerships
and joint ventures. Adjustments for unconsolidated partnerships and joint
ventures are calculated to reflect funds from operations on the same basis. The
Company calculates its Funds From Operations by combining the Funds From
Operations from its real estate operations, calculated in accordance with
NAREIT's definition of Funds From Operations, and the earnings before
depreciation, amortization and deferred taxes ("EBDADT") of the Company's
executive suite business, excluding operating losses from centers under
development. The Company's funds from operations may not be comparable to funds
from operations reported by other REITs that do not define the term in
accordance with the current NAREIT definition or that interpret the current
NAREIT definition differently than the Company. Funds from operations does not
represent net income or cash flow generated from operating activities in
accordance with generally accepted accounting principles and, as such, should
not be considered an alternative to net income as an indication of the Company's
performance or to cash flow as a measure of liquidity or the Company's ability
to make distributions.



                                       18
<PAGE>


         The following table provides the calculation of the Company's funds
from operations:

 (in thousands):



                                                               Three Months
                                                              Ended March 31,
                                                            -----------------
                                                            1998         1997
                                                            ----         ----



      Net operating income before minority interest
          and extraordinary items                          $ 53,056     14,976


      Adjustments to derive funds from operations:
          Add:
             Depreciation and amortization                   23,055     15,016
             Losses associated with executive
                suites centers under development                493         --
          Deduct:
             Minority interests' (non Unitholders)
             share of depreciation, amortization and
             net income                                        (110)      (291)
             Gain on sale of assets                         (25,931)        --
                                                           --------     ------
      Funds from operations before allocation to
          the minority Unitholders                           50,563     29,701
      Less:  Funds from operations allocable to the
          minority Unitholders                               (3,706)    (2,866)
                                                           --------     ------
      Funds from operations allocable
          to CarrAmerica Realty Corporation                  46,857     26,835
      Less:  Preferred stock dividends (1)                   (8,791)        --
                                                           --------     ------
      Funds from operations attributable
          to common shareholders:                          $ 38,066     26,835
                                                           ========     ======

         (1) Includes dividends of $361 on shares of Series A Preferred Stock
             which are convertible into common shares.

     Changes in funds from operations are largely attributable to changes in net
income between the periods, as previously discussed.



                                       19
<PAGE>


Building And Lease Information

The following table sets forth certain information about each operating property
owned by the Company as of March 31,1998:


<TABLE>
<CAPTION>
                                            Company's            Net
                                            Effective          Rentable
                                             Property            Area         Percent
Property                                    Ownership      (square feet)(1)  Leased(2)
--------                                    ---------      ----------------  ---------

Consolidated Properties
-----------------------
<S>                                           <C>            <C>             <C>

SOUTHEAST REGION
Downtown Washington, D.C.:
International Square (3 Properties)           100.0%         1,018,313         89.2%
1730 Pennsylvania Avenue                      100.0            229,292         99.3
2550 M Street                                 100.0            187,931         89.8
1775 Pennsylvania Avenue (3)                  100.0            143,981         98.5
900 19th Street                               100.0            100,907         85.5
1747 Pennsylvania Avenue                       89.7 (4)        152,119         89.8
1255 23rd Street                               75.0 (5)        304,538         97.3

Suburban Washington, D.C.:
One Rock Spring Plaza (3)                     100.0            205,298        100.0
Tycon Courthouse                              100.0            416,195         99.0
Three Ballston Plaza                          100.0            302,875        100.0
Sunrise Corporate Center (3 Properties)       100.0            260,643         99.9
Parkway One                                   100.0             87,842        100.0

Suburban Atlanta:
Veridian (22 Properties)                      100.0            187,842         85.0
Glenridge                                     100.0             64,052         72.9
Century Springs West                          100.0             94,747         98.2
Holcomb Place                                 100.0             72,823        100.0
DeKalb Tech (5 Properties)                    100.0            163,159         76.2
Midori                                        100.0             99,900        100.0
Crestwood                                     100.0             88,186         98.3
Parkwood                                      100.0            144,038         74.5
Lakewood                                      100.0             80,338         98.2
The Summit                                    100.0            178,382         86.6
Triangle Parkway (3 Properties)               100.0             82,102        100.0
2400 Lake Park                                100.0             99,534         99.3
680 Engineering Drive                         100.0             62,154        100.0
Embassy Row (3 Properties)                    100.0            463,846         93.3
Waterford Center                              100.0             82,678         79.4

Florida,
Boca Raton:
Peninsula Plaza                               100.0            160,081         94.2
Presidential Circle                           100.0            281,266         88.4
                                                               -------         ----

         Southeast Region Subtotal                           5,815,062         92.8

PACIFIC REGION
Southern California,
Orange County/Los Angeles:
Scenic Business Park (4 Properties)           100.0            139,012        100.0
Harbor Corporate Park (4 Properties)          100.0            148,733         91.5
Plaza PacifiCare                              100.0            104,377        100.0
Katella Corporate Center                      100.0             79,917         95.6
Warner Center (12 Properties)                 100.0            342,866         97.3
South Coast Executive Center (2 Properties)   100.0            160,301        100.0
Warner Premier                                100.0             61,553        100.0
Westlake Corporate Center (2 Properties)      100.0             71,645         89.5
Von Karman                                    100.0            103,713         58.8
2600 W. Olive                                 100.0            145,304         95.7
Bay Technology Center (2 Properties)          100.0            107,480        100.0
</TABLE>


                                       20
<PAGE>

<TABLE>
<CAPTION>
                                            Company's            Net
                                            Effective          Rentable
                                             Property            Area         Percent
Property                                    Ownership      (square feet)(1)  Leased(2)
--------                                    ---------      ----------------  ---------

<S>                                           <C>            <C>              <C>

Southern California,
San Diego:
Del Mar Corporate Plaza (2 Properties)        100.0%           123,142        100.0%
Wateridge Pavilion                            100.0             62,194        100.0
Lightspan                                     100.0             64,800        100.0
Century Park II (3 Properties)                100.0            198,306        100.0

Northern California,
San Francisco Bay Area:
CarrAmerica Corporate Center (6 Properties)   100.0            957,737         95.3
Sunnyvale Research Plaza (3 Properties)       100.0            126,000        100.0
Rio Robles (7 Properties)                     100.0            368,178        100.0
Valley Business Park II (6 Properties)        100.0            161,040        100.0
Bayshore Centre (2 Properties)                100.0            195,249        100.0
Rincon Centre (3 Properties)                  100.0            201,178        100.0
Valley Centre II (4 Properties)               100.0            212,082        100.0
Valley Office Centre (2 Properties)           100.0             68,731        100.0
Valley Centre (2 Properties)                  100.0            102,291        100.0
Valley Business Park I (2 Properties)         100.0             67,784        100.0
3745 North First Street                       100.0             67,582        100.0
3571 North First Street                       100.0            116,000        100.0
Mission Plaza (2 Properties)                  100.0            102,687        100.0
North San Jose Technology Park (4 Properties) 100.0            299,233        100.0
Foster City Technology Center (2 Properties)  100.0             66,869        100.0
150 River Oaks                                100.0            100,024        100.0
Amador/Rinconada (3 Properties)               100.0            134,476        100.0
Amador III                                    100.0             82,944        100.0
Arroyo Center (2 Properties)                  100.0            104,741        100.0
San Mateo I                                   100.0             70,000        100.0
San Mateo II and III (2 Properties)           100.0            135,353         99.5
900-910 East Hamilton (2 Properties)          100.0            351,811        100.0
Hacienda West                                  99.7 (11)       205,724         95.6
Sunnyvale Technology Centre                    99.7 (11)       165,520        100.0
Baytech Business Park                         100.0            300,000        100.0

Northern California,
Sacramento:
1860 Howe Avenue                              100.0             98,992         87.6
University Office Park (2 Properties)         100.0            121,255         97.1
Capital Corporate Center (5 Properties)       100.0             94,670         93.5

Suburban Portland:
RadiSys Corporate Headquarters                100.0             80,525        100.0
RadiSys II                                    100.0             45,655        100.0

Suburban Seattle:
Redmond East (10 Properties)                  100.0            398,030         99.9
Willow Creek                                  100.0             96,179        100.0
Canyon Park Business Center (6 Properties)    100.0            246,565        100.0
Canyon Park Commons                           100.0             95,290        100.0
Redmond Hilltop                               100.0             43,046        100.0
                                                             ---------        -----
         Pacific Region Subtotal                             7,996,784         97.4

CENTRAL REGION
Austin, Texas:
Great Hills Plaza                             100.0            135,333        100.0
Balcones Center                               100.0             75,761         73.2
Park North (2 Properties)                     100.0            128,071         89.1
City View Centre (3 Properties)               100.0            135,170         85.7
Tower of the Hills (2 Properties)             100.0            165,322         96.5
</TABLE>



                                       21
<PAGE>


<TABLE>
<CAPTION>
                                            Company's           Net
                                            Effective         Rentable
                                             Property           Area         Percent
Property                                    Ownership      (square feet)(1)  Leased(2)
--------                                    ---------      ----------------  ---------

<S>                                           <C>            <C>              <C>  
Suburban Chicago:
Parkway North (2 Properties)                  100.0%           508,292        100.0%
Unisys (2 Properties)                         100.0            360,059         88.9
The Crossings (2 Properties)                  100.0            296,624         90.2
Bannockburn I & II (2 Properties)             100.0            209,860        100.0
Bannockburn IV                                100.0            108,469         97.5
Summit Oaks                                   100.0             91,601         91.6

Dallas, Texas:
Greyhound                                     100.0             92,890        100.0
Search Plaza                                  100.0            151,262         97.9
Quorum North                                  100.0            114,030         93.4
Quorum Place                                  100.0            176,278         95.8
Cedar Maple Plaza (3 Properties)              100.0            112,968         91.8
Tollhill East & West (2 Properties)           100.0            241,155         93.2
Two Mission Park                              100.0             76,962         59.6
Citymark                                       99.7 (11)       206,475         85.6
5000 Quorum                                   100.0            161,008         98.5
                                                               -------         ----

         Central Region Subtotal                             3,547,590         93.2

MOUNTAIN REGION
Southeast Denver:
Harlequin Plaza (2 Properties)                100.0            327,956         97.2
Quebec Court I & II (2 Properties)            100.0            287,294        100.0
Greenwood Center                              100.0             75,866         86.5
Quebec Center (3 Properties)                  100.0            106,849         96.1
Panorama Corporate Center I                   100.0            100,542         98.7
JD Edwards                                    100.0            189,087        100.0
Panorama II                                   100.0            100,916         91.8

Phoenix, Arizona:
Camelback Lakes (2 Properties)                100.0            199,029         99.8
Pointe Corridor IV                            100.0            178,762         94.1
Highland Park                                 100.0             78,019         51.8
The Grove at Black Canyon                     100.0            104,187         95.2
US West (4 Properties)                        100.0            532,506        100.0

Salt Lake City, Utah:
Sorenson Research Park (5 Properties)         100.0            285,144         99.1
Wasatch Corporate Center (3 Properties)       100.0            178,098        100.0
                                                               -------        -----
         Mountain Region Subtotal                            2,744,255         96.7%
                                                             ---------         ----
TOTAL CONSOLIDATED PROPERTIES:                              20,103,691
                                                            ----------
WEIGHTED AVERAGE                                                               95.3%
                                                                               ----

Unconsolidated Properties
--------------------------
Downtown Washington, D.C.:
1717 Pennsylvania Avenue                       50.0% (6)       184,446         99.3%
AARP Headquarters                              24.0  (7)       477,394         99.8
Bond Building                                  15.0  (8)       162,097        100.0
Willard Office/Hotel                            5.0  (9)       242,787         96.6

Suburban Washington, D.C.:
Booz-Allen & Hamilton Building                 50.0  (10)      222,989        100.0
                                                            ----------        -----

TOTAL UNCONSOLIDATED PROPERTIES:                             1,289,713
                                                             ---------
WEIGHTED AVERAGE                                                               99.2%
                                                                               ----

ALL OPERATING PROPERTIES
TOTAL:                                                      21,393,404
                                                            ==========
WEIGHTED AVERAGE                                                               95.5%
                                                                               ====
</TABLE>

                                       22
<PAGE>


----------
(1)      Includes office and retail space but excludes storage space.
(2)      Includes space for leases that have been executed and have commenced as
         of March 31, 1998.
(3)      The Company owns the improvements on the property and has a leasehold
         interest in all or a portion of the underlying land.
(4)      The Company holds a general and limited partner interest in a
         partnership that owns the property.
(5)      The Company holds a 50% joint venture interest in the joint venture
         that owns this property and a 50% joint venture interest in another
         joint venture, which holds the remaining 50% interest in the joint
         venture that owns the property. As a result of preferential rights to
         annual distributions from another venture, the Company will receive
         distributions of less than 75% (but in no event less than 50%) of the
         total amount distributed with respect to this property in each year
         until the preferential distribution requirements are satisfied, but
         will receive 100% of any subsequent distributions during the year until
         its aggregate distributions equal 75% of the cumulative distributions
         with respect to the property since inception of the partnership.
         Thereafter, the Company will receive 75% of the distributions made
         during the year with respect to the property. Upon sale of the
         property, the Company will receive 75% of the distributions until the
         Company receives its preference amount, 50% until the remaining
         venturer receives its preference amount, and 75% of the distributions
         thereafter.
(6)      The Company holds a 50% interest in the limited liability company that
         owns the property and serves as the entity's managing member.
(7)      The Company holds an effective 24% interest in the property by virtue
         of a 48% general partner interest in a partnership that owns a 50%
         general partner interest in the property.
(8)      The Company holds an effective 15% interest in the property by virtue
         of a 30.6% limited partner interest in a partnership that has a 49%
         limited partner interest in the property.
(9)      The Company holds an effective 5% interest in the property by virtue of
         a 7.85% limited partner interest in a partnership that owns a 63.7%
         limited partner interest in the property. The partnership in which the
         Company holds an interest owns the improvements on the property and has
         a leasehold interest in the underlying land.
(10)     The Company holds a 50% joint venture interest, and is the managing
         partner.
(11)     The Company holds an effective 99.7% interest in these properties by
         virtue of a 100% interest in a limited liability company that owns a 1%
         general partnership in a partnership that owns the properties as well
         as a 98.7% limited partnership interest in the same partnership.


         The following table sets forth a schedule of the lease expirations for
leases in place as of March 31, 1998 in each of the next ten years beginning
with 1998 and thereafter for the 258 operating office properties whose results
are consolidated in the financial statements of the Company, assuming that no
tenants exercise renewal options:




                                       Net                 Percent of
                                  Rentable Area           Leased Square
                                    Subject to               Footage
           Year                      Expiring              Represented
         of Lease                   Leases (1)             by Expiring
        Expiration                (square feet)              Leases
        ----------                -------------              ------

1998                                 2,260,000                 11.8%
1999                                 2,009,000                 10.5
2000                                 2,608,000                 13.6
2001                                 2,294,000                 12.0
2002                                 2,603,000                 13.6
2003                                 1,853,000                  9.7
2004                                 1,273,000                  6.6
2005                                   744,000                  3.9
2006                                 1,234,000                  6.4
2007 and thereafter                  2,274,000                 11.9

----------------------
(1)   Excludes 952,000 square feet of space that was vacant as of March 31,
      1998.



                                       23
<PAGE>

         Building and Lease Information. The following table sets forth certain
lease-related information for the consolidated operating properties presented in
order to show downtown Washington, D.C. operating properties separate from other
operating properties. The table presents leases that commenced during the twelve
month period from April 1, 1997 to March 31, 1998, excluding the leases for
operating properties that were executed prior to the date of acquisition:


<TABLE>
<CAPTION>
                                                 Calculated on a Weighted Average Basis
                                         ----------------------------------------------------------------------

Operating Properties,
Downtown
Washington, D.C.                             Tenant          Base
(9 Properties)                Total       Improvements       Rent       Lease                       Leasing
                             Square          & Cash           per        Life       Abatements     Commission
                              Feet       Allowances per     Square        in            in         Per Square
Type of Lease                Leased        Square Foot       Foot        Years        Months         Foot
-------------                ------        -----------       ----        -----        ------         ----

<S>                          <C>              <C>             <C>        <C>           <C>             <C> 
Office                      152,655       $  10.18          $ 29.15      5.5           0.5          $  2.25
Retail                       19,263           0.00            27.84      5.1           0.8             1.59
                            -------
Total/Weighted Average      171,918           9.04            29.01      5.5           0.6             2.18
                            =======       ========          =======      ===           ===          =======

New leases or
  expansion space           151,722       $  10.17          $ 29.15      5.7           0.6          $  2.30
Renewals of existing
  tenants' space             20,196           0.55            27.94      3.6           0.0             1.28
                            -------
Total/Weighted Average      171,918           9.04            29.01      5.5           0.6             2.18
                            =======       ========          =======      ===           ===          =======

<CAPTION>
                                                 Calculated on a Weighted Average Basis
                                         ----------------------------------------------------------------------

Operating Properties,
Downtown
Washington, D.C.                             Tenant          Base
(249 Properties)              Total       Improvements       Rent       Lease                       Leasing
                             Square          & Cash           per        Life       Abatements     Commission
                              Feet       Allowances per     Square        in            in         Per Square
Type of Lease                Leased        Square Foot       Foot        Years        Months         Foot
-------------                ------        -----------       ----        -----        ------         ----
<S>                          <C>              <C>             <C>        <C>           <C>             <C> 

Office                      3,934,012      $  4.05          $ 16.69      5.9           0.3          $  1.08
Retail                          1,205         0.00             4.55      1.1           0.0             0.00
                            ---------
Total/Weighted Average      3,935,217         4.05            16.68      5.9           0.3             1.08
                            =========      =======          =======      ===           ===          =======

New leases or
  expansion space           2,560,559      $  5.18          $ 16.49      5.8           0.5          $  1.62
Renewals of existing
  tenants' space            1,374,658         1.95            17.05      6.0           0.0             0.08
                            ---------
Total/Weighted Average      3,935,217         4.05            16.68      5.9           0.3             1.08
                            =========      =======          =======      ===           ===          =======
</TABLE>



                                       24
<PAGE>




                                     PART II

                               OTHER INFORMATION

Item 1.    Legal Proceedings

                  None

Item 2.    Changes in Securities

                  None

Item 3.    Defaults Upon Senior Securities

                  None

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

                  None

Item 5.    Other Information

           None

Item 6.    Exhibits and Reports on Form 8-K

           a. Exhibits
              --------

              10.1 First Amendment to Third Amended and Restated Agreement of
                   Limited Partnership of Carr Realty, L.P. dated January 22,
                   1998.

              10.2 Second Amendment to Third Amended and Restated Agreement of
                   Limited Partnership of Carr Realty, L.P. dated February 17,
                   1998.

              27   Financial Data Schedule


           b. Reports on Form 8-K
              -------------------

              a.   Current Report on Form 8-K filed on February 5, 1998
                   regarding certain supplemental data included in the Company's
                   press release dated February 5, 1998.

              b.   Current Report on Form 8-K/A filed on February 10, 1998
                   regarding certain supplemental data included in the Company's
                   press release dated February 5, 1998.

              c.   Current Report on Form 8-K filed by CarrAmerica Realty, L.P.
                   on February 18, 1998 regarding Historical Summaries of
                   Operating Revenue and Expenses for the nine months ended
                   September 30, 1997 (unaudited) and the year ended December
                   31, 1996 and the proforma condensed consolidated balance
                   sheet (unaudited) at September 30, 1997 for San Mateo II and
                   III and proforma condensed consolidated statements of
                   operations for nine months ended September 30, 1997
                   (unaudited) and for the year ended December 31, 1996.

              d.   Current Report on Form 8-K filed on February 18, 1998
                   regarding proforma condensed consolidated balance sheet
                   (unaudited) at September 30, 1997 and proforma condensed
                   consolidated statements of operations for nine months ended
                   September 30, 1997 (unaudited) and for the year ended
                   December 31, 1996.

              e.   Current Report on Form 8-K filed by CarrAmerica Realty, L.P.
                   on February 18, 1998 regarding historical summaries of
                   Operating Revenue and Expenses for the nine months ended
                   September 30, 1997 (unaudited) and the year ended December
                   31, 1996 for Canyon Park Commons.

              f.   Current Report on Form 8-K filed by CarrAmerica Realty, L.P.
                   on February 23, 1998 regarding Historical Summaries of
                   Operating Revenue and Expenses for the nine months ended
                   September 30, 1997 (unaudited) and the year ended December
                   31, 1996 for Tower of the Hills.




                                       25
<PAGE>


                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


CARRAMERICA REALTY CORPORATION




/s/ Thomas A. Carr
-----------------------------
Thomas A. Carr, President and
Chief Executive Officer




/s/ Brian K. Fields
----------------------------------------
Brian K. Fields, Chief Financial Officer




Date:    May 15, 1998



                                       26
<PAGE>


                                  Exhibit Index


<TABLE>
<CAPTION>
Exhibit        Description                                                                       Page
-------        -----------                                                                       ----

<S>            <C>                                                                               <C>
10.1           First Amendment to Third Amended and Restated Agreement of
               Limited Partnership of Carr Realty, L.P. dated January 22, 1998.

10.2           Second Amendment to Third Amended and Restated Agreement of
               Limited Partnership of Carr Realty, L.P. dated February 17, 1998.

27             Summary Data Schedule
</TABLE>




                                       27