<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549


                                   FORM 10-Q


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


                     FOR QUARTER ENDED September 30, 2001
                                       ------------------
                          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
 incorporation or organization)                        Number)


                  1850 K Street, N.W., Washington, D.C. 20006
--------------------------------------------------------------------------------
              (Address or principal executive office) (Zip code)


       Registrant's telephone number, including area code (202) 729-1000
                                                          --------------

                                      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 November 2, 2001:

           Common Stock, par value $.01 per share: 61,101,945 shares
--------------------------------------------------------------------------------

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 reports) and (2) has been subject to such filing
requirements for the past ninety (90) days.

                      YES    X      NO_______
                           -----

<PAGE>

                                      Index
                                      -----

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
Part I: Financial Information
-----------------------------
<S>                                                                                                           <C>
Item 1.  Financial Statements

         Consolidated balance sheets of CarrAmerica Realty Corporation and subsidiaries as of
         September 30, 2001 (unaudited) and December 31, 2000..............................................        4

         Consolidated statements of operations of CarrAmerica Realty Corporation and
         subsidiaries for the three months and nine months ended September 30, 2001 and 2000
         (unaudited)......................................................................................    5 to 6

         Consolidated statements of cash flows of CarrAmerica Realty Corporation and
         subsidiaries for the nine months ended September 30, 2001 and 2000 (unaudited)...................         7

         Notes to consolidated financial statements (unaudited)...........................................   8 to 13

         Independent Accountants' Review Report...........................................................        14

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations........................................................................  15 to 21

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.......................................        22

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

Item 6.  Exhibits and Reports on Form 8-K.................................................................        23
</TABLE>

                                       2

<PAGE>

                                    Part I
                                    ------

Item 1.  Financial Information
         ---------------------

The information furnished in our accompanying consolidated balance sheets,
consolidated statements of operations and consolidated statements of cash flows
reflect all adjustments which are, in our opinion, necessary for a fair
presentation of the aforementioned financial statements for the interim periods.

The 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 in our December 31, 2000 Annual Report on
Form 10-K. The results of operations for the nine months ended September 30,
2001 are not necessarily indicative of the operating results to be expected for
the full year.

                                       3

<PAGE>

                CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
  Consolidated Balance Sheets As Of September 30, 2001 and December 31, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                              September 30,        December 31,
(In thousands, except share amounts)                                               2001                2000
                                                                             ----------------   -----------------
                                                                               (unaudited)
<S>                                                                          <C>                <C>
Assets
------
Rental property:
      Land                                                                   $        648,171   $         644,326
      Buildings                                                                     1,851,016           1,836,214
      Tenant improvements                                                             351,642             325,936
      Furniture, fixtures and equipment                                                 3,705               6,844
                                                                             ----------------   -----------------
                                                                                    2,854,534           2,813,320
      Less: Accumulated depreciation                                                 (450,661)           (381,260)
                                                                             ----------------   -----------------
           Total rental property                                                    2,403,873           2,432,060

Land held for development or sale                                                      45,311              47,984
Construction in progress                                                               14,185              48,300
Cash and cash equivalents                                                               8,831              24,704
Restricted deposits                                                                     5,083              39,482
Accounts and notes receivable                                                          31,127              70,693
Investments in unconsolidated entities                                                156,382             269,193
Accrued straight-line rents                                                            63,073              54,960
Tenant leasing costs, net                                                              53,163              54,522
Deferred financing costs, net                                                           9,088              11,311
Prepaid expenses and other assets, net                                                 34,395              19,632
                                                                             ----------------   -----------------
                                                                             $      2,824,511   $       3,072,841
                                                                             ================   =================
Liabilities, Minority Interest, and Stockholders' Equity
--------------------------------------------------------

Liabilities:
      Mortgages and notes payable                                            $      1,111,239   $       1,211,158
      Accounts payable and accrued expenses                                            69,967              96,147
      Rents received in advance and security deposits                                  26,378              29,143
                                                                             ----------------   -----------------
           Total liabilities                                                        1,207,584           1,336,448

Minority interest                                                                      84,433              89,687

Stockholders' equity:
      Preferred stock, $.01 par value, authorized 35,000,000 shares:
           Series A Cumulative Convertible Redeemable Preferred Stock,
                80,000 and 480,000 shares issued and outstanding at
                September 30, 2001 and December 31, 2000, respectively,
                with an aggregate liquidation preference of $2,000 and
                $12,000 respectively.                                                       1                   5
           Series B, C, and D Cumulative Redeemable Preferred Stock,
                8,800,000 shares issued and outstanding with an aggregate
                liquidation preference of $400,000.                                        88                  88
      Common Stock, $.01 par value, authorized 180,000,000 shares
           issued and outstanding 62,487,942 shares at September 30,
           2001 and 65,017,623 shares at December 31, 2000.                               625                 650
      Additional paid-in capital                                                    1,663,851           1,755,985
      Cumulative dividends in excess of net income                                   (132,071)           (110,022)
                                                                             ----------------   -----------------
           Total stockholders' equity                                               1,532,494           1,646,706
                                                                             ----------------   -----------------
Commitments and contingencies
                                                                             $      2,824,511   $       3,072,841
                                                                             ================   =================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4

<PAGE>

                CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
                     Consolidated Statements of Operations
            For the Three Months Ended September 30, 2001 and 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                2001              2000
                                                                            -------------     -------------
<S>                                                                         <C>               <C>
Operating revenues:
     Rental revenue:
        Minimum base rent                                                       $ 108,127         $ 112,302
        Recoveries from tenants                                                    14,715            15,389
        Parking and other tenant charges                                            3,920             3,999
                                                                            -------------     -------------
            Total rental revenue                                                  126,762           131,690
     Real estate service revenue                                                    6,682             7,667
                                                                            -------------     -------------
            Total operating revenues                                              133,444           139,357
                                                                            -------------     -------------
Operating expenses:
     Property expenses:
        Operating expenses                                                         30,158            29,720
        Real estate taxes                                                           8,760            10,028
     Interest expense                                                              20,091            24,772
     General and administrative                                                    10,844            12,282
     Depreciation and amortization                                                 33,077            31,847
                                                                            -------------     -------------
            Total operating expenses                                              102,930           108,649
                                                                            -------------     -------------
            Real estate operating income                                           30,514            30,708
                                                                            -------------     -------------
Other income:
     Interest income                                                                  641               602
     Equity in earnings of unconsolidated entities                                  1,229             2,195
                                                                            -------------     -------------
            Total other income                                                      1,870             2,797
                                                                            -------------     -------------
            Income before income taxes, minority
            interest, and gain on sale of assets and other
            provisions, net                                                        32,384            33,505

Income taxes                                                                         (713)              (30)
Minority interest                                                                  (2,755)           (3,747)
Gain on sale of assets and other provisions, net                                       28            20,182
                                                                            -------------     -------------
            Net income                                                          $  28,944         $  49,910
                                                                            =============     =============
     Basic net income per common share                                          $    0.33         $    0.62
                                                                            =============     =============
     Diluted net income per common share                                        $    0.32         $    0.60
                                                                            =============     =============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       5

<PAGE>

                CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
                     Consolidated Statements of Operations
             For the Nine Months Ended September 30, 2001 and 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
(Unaudited and in thousands, except per share amounts)                          2001              2000
                                                                            -------------     -------------
<S>                                                                         <C>               <C>
Operating revenues:
     Rental revenue:
        Minimum base rent                                                       $ 320,139         $ 341,485
        Recoveries from tenants                                                    43,439            49,728
        Parking and other tenant charges                                           10,796            16,229
                                                                            -------------     -------------
            Total rental revenue                                                  374,374           407,442
     Real estate service revenue                                                   26,522            17,920
                                                                            -------------     -------------
            Total operating revenues                                              400,896           425,362
                                                                            -------------     -------------
Operating expenses:
     Property expenses:
        Operating expenses                                                         90,632            93,906
        Real estate taxes                                                          28,377            34,546
     Interest expense                                                              62,087            76,777
     General and administrative                                                    37,184            33,505
     Depreciation and amortization                                                 94,722            99,166
                                                                            -------------     -------------
            Total operating expenses                                              313,002           337,900
                                                                            -------------     -------------
            Real estate operating income                                           87,894            87,462
                                                                            -------------     -------------
Other income:
     Interest income                                                                2,768             2,352
     Equity in earnings of unconsolidated entities                                  8,257             4,911
                                                                            -------------     -------------
            Total other income                                                     11,025             7,263
                                                                            -------------     -------------
            Income from continuing operations before income taxes, minority
            interest, and gain on sale of assets and other
            provisions, net                                                        98,919            94,725

Income taxes                                                                         (947)             (606)
Minority interest                                                                  (7,284)           (9,155)
Gain on sale of assets and other provisions, net                                    1,082            27,923
                                                                            -------------     -------------
            Income from continuing operations                                      91,770           112,887

Discontinued operations - Income from executive suites operations
     (net of applicable income tax expense of $1,300 )                                  -               456
Discontinued operations - Gain on sale of discontinued operations
     (net of applicable income tax expense of $21,131)                                  -            31,852
                                                                            -------------     -------------
            Net income                                                          $  91,770         $ 145,195
                                                                            =============     =============
     Basic net income per common share:
        Income from continuing operations                                       $    1.05         $    1.29
        Discontinued operations                                                         -              0.01
        Gain on sale of discontinued operations                                         -              0.48
                                                                            -------------     -------------
            Net income                                                          $    1.05         $    1.78
                                                                            =============     =============
     Diluted net income per common share:
        Income from continuing operations                                       $    1.03         $    1.28
        Discontinued operations                                                         -              0.01
        Gain on sale of discontinued operations                                         -              0.47
                                                                            -------------     -------------
            Net income                                                          $    1.03         $    1.76
                                                                            =============     =============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       6
<PAGE>

                CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
                     Consolidated Statements of Cash Flows
             For the Nine Months Ended September 30, 2001 and 2000
--------------------------------------------------------------------------------
(Unaudited and in thousands)

<TABLE>
<CAPTION>
                                                                                            2001              2000
                                                                                       ----------------  ----------------
<S>                                                                                    <C>               <C>
Cash flows from operating activities:
     Net income                                                                              $  91,770        $  145,195
     Adjustments to reconcile net income to net cash provided by operating activities:
        Depreciation and amortization                                                           94,722            99,166
        Minority interest                                                                        7,284             9,155
        Equity in earnings of unconsolidated entities                                           (8,257)           (4,911)
        Gain on sale of assets and other provisions, net                                        (1,082)          (27,923)
        Income and gain on sale of discontinued operations                                           -           (32,308)
        Provision for uncollectible accounts                                                     4,667             1,431
        Stock based compensation                                                                 2,296             1,640
        Other                                                                                     (179)           (2,084)
     Changes in assets and liabilities:
        Decrease (increase) in accounts receivable                                              17,884            (2,268)
        Increase in accrued straight-line rents                                                 (9,301)           (5,837)
        Additions to tenant leasing costs                                                       (9,054)          (10,966)
        Increase in prepaid expenses and other assets                                          (17,543)          (11,789)
        Decrease in accounts payable and accrued expenses                                      (27,099)           (2,766)
        (Decrease) increase in rent received in advance and security deposits                   (2,233)               66
                                                                                       ----------------  ----------------
            Total adjustments                                                                   52,105            10,606
                                                                                       ----------------  ----------------
            Net cash provided by operating activities                                          143,875           155,801
                                                                                       ----------------  ----------------
Cash flows from investing activities:
     Acquisition and development of rental property                                            (32,497)          (71,627)
     Additions to land held for development or sale                                            (36,421)          (19,268)
     Additions to construction in progress                                                     (28,050)          (68,335)
     Acquisition and development of executive suites assets                                          -            (6,678)
     Payments on notes receivable                                                               16,542                 -
     Issuance of notes receivable                                                                 (465)             (139)
     Distributions from unconsolidated entities                                                 89,766             5,811
     Investments in unconsolidated entities                                                    (12,244)          (15,407)
     Acquisition of minority interest                                                           (4,903)           (4,025)
     Decrease (increase) in restricted deposits                                                 34,399            (3,928)
     Proceeds from the sale of discontinued operations                                               -           377,310
     Proceeds from sales of  properties                                                        101,351           325,174
                                                                                       ----------------  ----------------
            Net cash provided by investing activities                                          127,478           518,888
                                                                                       ----------------  ----------------
Cash flows from financing activities:
     Repurchase of common stock                                                               (119,210)          (60,256)
     Exercises of stock options                                                                 26,541            20,713
     Net repayments on unsecured credit facility (including $140,500 related to
        discontinued operations in 2000)                                                       (62,000)         (367,500)
     Payment of senior unsecured notes                                                               -          (150,000)
     Repayments of mortgages payable (including $14,449 related to
        discontinued operations in 2000)                                                       (38,041)          (24,259)
     Proceeds from mortgages                                                                    26,628                 -
     Dividends and distributions to minority interests                                        (121,144)         (127,140)
     Contributions from minority interests                                                           -             2,302
                                                                                       ----------------  ----------------
            Net cash used by financing activities                                             (287,226)         (706,140)
                                                                                       ----------------  ----------------
            Decrease in cash and cash equivalents                                              (15,873)          (31,451)
Cash and cash equivalents, beginning of the period                                              24,704            51,886
                                                                                       ----------------  ----------------
Cash and cash equivalents, end of the period                                                 $   8,831        $   20,435
                                                                                       ================  ================
Supplemental disclosure of cash flow information:
     Cash paid for interest (net of capitalized interest of $4,383 and $10,046
        for the nine months ended September 30, 2001 and 2000, respectively)                 $  62,232        $   72,237
                                                                                       ================  ================
     Cash paid for income taxes                                                              $  26,997        $    6,297
                                                                                       ================  ================
</TABLE>

See accompanying notes to consolidated financial statements

                                       7
<PAGE>

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

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

         (a)      Business

                  We are a fully integrated, self-administered and self-managed
                  publicly traded real estate investment trust ("REIT"),
                  organized under the laws of Maryland. We focus on the
                  acquisition, development, ownership and operation of office
                  properties, located primarily in selected suburban markets
                  across the United States.

         (b)      Basis of Presentation

                  Our accounts and those of our majority-owned/controlled
                  subsidiaries and affiliates are consolidated in the financial
                  statements. We use the equity or cost methods, as appropriate
                  in the circumstances, to account for our investments in and
                  our share of the earnings or losses of unconsolidated
                  entities. These entities are not majority owned or controlled
                  by us.

                  Management has made estimates and assumptions that affect the
                  reported amounts of assets, liabilities, revenues and expenses
                  in the financial statements, and the disclosure of contingent
                  assets and liabilities. Estimates are required in order for us
                  to prepare our financial statements in conformity with
                  accounting principles generally accepted in the United States
                  of America. Significant estimates are required in a number of
                  areas, including the evaluation of impairment of long-lived
                  assets, determination of useful lives of assets subject to
                  depreciation or amortization and evaluation of the
                  collectibility of accounts and notes receivable. Actual
                  results could differ from these estimates.

         (c)      Interim Financial Statements

                  The financial statements reflect all adjustments, which are,
                  in our opinion, necessary to reflect a fair presentation of
                  the results for the interim periods, and all adjustments are
                  of a normal, recurring nature.

         (d)      New Accounting Pronouncements

                  In June 1998, the Financial Accounting Standards Board
                  ("FASB") issued Statement of Financial Accounting Standards
                  ("SFAS") No. 133 "Accounting for Derivative Instruments and
                  Hedging Activities". SFAS No. 133 requires that an entity
                  recognize all derivatives as either assets or liabilities in
                  the statement of financial position and measure those
                  instruments at fair value. We adopted this statement as of
                  January 1, 2001 and the adoption had no effect on our
                  financial statements. We had no derivative instruments as of
                  September 30, 2001.

                  In June 2000, the FASB issued SFAS No. 141, "Business
                  Combinations" and SFAS No. 142, "Goodwill and Other Intangible
                  Assets." SFAS No. 141 requires that the purchase method of
                  accounting be used for all business combinations initiated
                  after June 2001. SFAS No. 142 changes the accounting for
                  goodwill and intangible assets with indefinite useful lives
                  from an amortization approach to an impairment-only approach.
                  We believe that the adoption of SFAS No. 142 in January 2002
                  will not have a material effect on our financial statements.

                  In October 2001, the FASB issued SFAS No. 144, "Accounting for
                  the Impairment or Disposal of Long-Lived Assets." SFAS No. 144
                  supersedes SFAS No. 121, "Accounting for the Impairment of
                  Long-Lived Assets and for Long-Lived Assets to Be Disposed
                  Of," and APB Opinion No. 30, "Reporting the Results of
                  Operations - Reporting the Effects of Disposal of a Segment of
                  a Business, and Extraordinary, Unusual and Infrequently
                  Occurring Events and Transactions." The Statement does not
                  change the fundamental provisions of SFAS No. 121; however, it
                  resolves various implementation issues of SFAS No. 121 and
                  establishes a single accounting model for long-lived assets to
                  be disposed of by sale. It retains the requirement of Opinion
                  No. 30 to report separately discontinued operations buts
                  extends that reporting to a component of an entity that either
                  has been disposed of (by sale, abandonment, or in distribution
                  to owners) or is classified as held for sale. We believe that
                  adoption of this statement in 2002 will not have a material
                  effect on our financial statements.

                                       8
<PAGE>

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

         (e)      Earnings Per Share

                  The following table sets forth information relating to the
                  computations of our basic and diluted earnings per share for
                  income from continuing operations:

<TABLE>
<CAPTION>
                                                    Three Months Ended                        Three Months Ended
                                                     September 30, 2001                       September 30, 2000
                                      ------------------------------------------  -----------------------------------------
   (In thousands,                         Income           Shares     Per Share        Income       Shares        Per Share
     except per share amounts)         (Numerator)     (Denominator)   Amount      (Numerator)   (Denominator)      Amount
                                      --------------  -------------  -----------  -------------  ---------------  ---------
<S>                                   <C>             <C>            <C>          <C>             <C>            <C>
   Basic EPS                                $ 20,289       62,266     $ 0.33         $   41,068         65,987      $ 0.62
                                                                     ===========                                  =========
   Effect of Dilutive Securities
     Stock options                                 -        1,612                             -          1,820
     Convertible preferred stock                   -            -                           224            480
     Stock units                                   -            -                         3,622          6,480
                                      --------------  ------------   -----------  -------------  ---------------  --------
   Diluted EPS                              $ 20,289       63,878     $ 0.32         $   44,914         74,767      $ 0.60
                                      ==============  ============   ===========  =============  ===============  ========
</TABLE>

                  Income from continuing operations has been reduced by
                  preferred stock dividends of approximately $8,655,000 and
                  approximately $8,842,000 for the three months ended September
                  30, 2001 and 2000, respectively.

<TABLE>
<CAPTION>
                                             Nine Months Ended                               Nine Months Ended
                                             September 30, 2001                              September 30, 2000
                                      ------------------------------------------    ------------------------------------------
   (In thousands,                         Income        Shares        Per Share       Income          Shares        Per Share
     except per share amounts)         (Numerator)    (Denominator)     Amount      (Numerator)    (Denominator)      Amount
                                      ------------  ---------------   ----------    ------------    -------------  -----------
<S>                                   <C>           <C>              <C>            <C>            <C>             <C>
   Basic EPS                             $ 65,720       62,403        $ 1.05         $   86,523          66,603      $ 1.29
                                                                      ==========                                    ==========
   Effect of Dilutive Securities
     Stock options                              -        1,451                              -             961
                                      ------------  -----------       ----------    ------------   --------------   ----------
   Diluted EPS                           $ 65,720       63,854        $ 1.03         $   86,523          67,564      $ 1.28
                                      ============  ===========       ==========    ============   ==============   ==========
</TABLE>

                  Income from continuing operations has been reduced by
                  preferred stock dividends of approximately $26,050,000 and
                  approximately $26,364,000 for the six months ended September
                  30, 2001 and 2000, respectively.

                  The effects of convertible units in CarrAmerica Realty, L.P.
                  and Carr Realty, L.P. and Series A Convertible Preferred Stock
                  are not included in the computation of diluted earnings per
                  share for the periods in which their effect is antidilutive.

         (f)      Reclassifications

                  Certain reclassifications of prior period amounts have been
                  made to conform to the current period's presentation.

(3)      Discontinued Operations

         On January 20, 2000, we, along with HQ Global Workplaces, Inc. (HQ
         Global), VANTAS Incorporated (VANTAS) and FrontLine Capital Group
         ("FrontLine"), entered into several agreements that contemplated
         several transactions including (i) the merger of VANTAS with and into
         HQ Global, (ii) the acquisition by FrontLine of shares of HQ Global
         common stock from us and other stockholders of HQ Global, and (iii) the
         acquisition by VANTAS of our debt and equity interest in OmniOffices
         (UK) Limited and OmniOffices LUX 1929 Holding Company S.A. On June 1,
         2000, we consummated the transactions.

                                       9
<PAGE>

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

         As part of the HQ Global/VANTAS transactions, we received put rights
         with respect to our continuing interest in HQ Global. These rights can
         be exercised at specified times at our option if HQ Global has not
         completed an initial public offering. A portion of the put is
         exercisable in late 2001, with the balance exercisable in June 2002.
         Payment for our HQ Global stock will be based on the fair market value
         of our investment and can be made either in cash, a short-term note (in
         case of the 2001 put right) or delivery of common stock of FrontLine, a
         NASDAQ-listed company and the majority shareholder of HQ Global. We do
         not intend to exercise our eligible put right in 2001.

         FrontLine, the majority stockholder of HQ Global, recently announced
         that HQ is in default with respect to certain covenant and payment
         obligations under its senior and mezzanine indebtedness. FrontLine also
         reported that, effective as of October 1, 2001, HQ Global entered into
         an agreement with its senior loan lenders under which these lenders
         agreed not to enforce the remedies they now have as a result of HQ
         Global's default. This forbearance period is scheduled to terminate on
         December 14, 2001, or earlier under certain circumstances (including
         the termination, if earlier, of the forbearance period relating to HQ's
         mezzanine indebtedness which is scheduled to terminate no later than
         December 31, 2001). During this period, HQ Global can still draw funds
         under the senior credit agreement for working capital needs and to make
         interest payments to these lenders. At the end of the forbearance
         period, if HQ Global has not paid in full all amounts due and owing to
         the lenders, or if HQ has not cured all of its existing defaults, then
         the lenders may immediately exercise any rights and remedies available
         to them.

         HQ Global is in active negotiations with its lenders regarding the
         restructuring of its long-term indebtedness, with an objective of
         reaching an agreement on terms that will provide HQ Global with
         sufficient liquidity to operate its business through the current
         economic downturn. There can be no assurance that HQ Global will be
         able to restructure its indebtedness. Depending on the outcome of HQ
         Global's discussions with its lenders, we may be required to write-off
         some or all of our remaining $42.2 million investment in HQ Global.

(4)      Gain on Sale of Assets and Other Provisions, Net

         We dispose of assets that are inconsistent with our long-term strategic
         or return objectives or where market conditions for sale are favorable.
         During the three months ended September 30, 2001, we disposed of a
         parcel of land held for development. During the three months ended
         September 30, 2000, we disposed of one operating property, exclusive of
         the properties contributed to Carr Office Park, L.L.C. We recognized a
         gain of $0.1 million, net of $0.8 million in income taxes on this
         property.

         On August 17, 2000, we closed on a joint venture with New York State
         Teachers' Retirement System ("NYSTRS"). At closing, we and some of our
         affiliates contributed properties to the joint venture, Carr Office
         Park, L.L.C., and NYSTRS contributed cash. We recognized a gain on the
         partial sale of approximately $20.1 million, net of income taxes of
         $13.1 million.

         During the nine months ended September 30, 2001, we disposed of seven
         operating properties, one property under development and three parcels
         of land held for development. We recognized a gain of $4.0 million, net
         of taxes of $2.0 million. We also recognized an impairment loss of $0.9
         million on a parcel of land held for development during the nine months
         ended September 30, 2001. During the nine months ended September 30,
         2000, we disposed of six operating properties exclusive of properties
         contributed to Carr Office Park, L.L.C. We recognized a gain of $7.8
         million, net of taxes of $1.3 million, on these properties.

(5)      Segment Information

         Our reportable operating segments are real estate property operations
         and development operations. Other business activities and operating
         segments that are not reportable are included in other operations. The
         real estate property operations segment includes the operation and
         management of rental properties. The development operations segment
         includes the development of new rental properties for us and for
         unaffiliated companies. Our reportable segments offer different
         products and services and are managed separately because each requires
         different business strategies and management expertise.

                                       10
<PAGE>

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

         Our operating segments' performance is measured using funds from
         operations. Funds from operations is defined by the National
         Association of Real Estate Investment Trusts (NAREIT) as follows:

               *  Net income (loss) - computed in accordance with generally
                  accepted accounting principles (GAAP);
               *  Less gains (or plus losses) from sales of depreciable
                  operating properties and items that are classified as
                  extraordinary items under GAAP;
               *  Plus depreciation and amortization of assets uniquely
                  significant to the real estate industry;
               *  Plus or minus adjustments for unconsolidated partnerships and
                  joint ventures (to reflect funds from operations on the same
                  basis).

         Funds from operations does not represent net income or cash flow
         generated from operating activities in accordance with GAAP. As such,
         it should not be considered an alternative to net income as an
         indication of our performance or to cash flows as a measure of our
         liquidity or our ability to make distributions.

         Operating results of our reportable segments and our other operations
         for the three and nine months ended September 30, 2001 and 2000 are
         summarized and reconciled to net income for the applicable period as
         follows:

<TABLE>
<CAPTION>
                                                    For the three months ended September 30, 2001
                                                -------------------------------------------------------
                                                Real Estate
                                                 Property     Development        Other
    (In millions)                               Operations     Operations     Operations       Total
                                                ------------  ------------  -------------  ------------
    <S>                                         <C>           <C>           <C>            <C>
    Operating revenue                               $ 126.8           1.8            4.8       $ 133.4
    Segment expense                                    38.9           1.4            9.5          49.8
                                                ------------  ------------  -------------  ------------
    Net segment revenue (expense)                      87.9           0.4           (4.7)         83.6
    Interest expense                                   11.0             -            9.1          20.1
    Other income (expense), net                         3.7             -           (1.7)          2.0
                                                ------------  ------------  -------------  ------------
    Funds from operations                           $  80.6           0.4          (15.5)         65.5
                                                ============  ============  =============
    Depreciation and amortization                                                                (33.9)
                                                                                           ------------
    Income from continuing operations before minority interest
      and loss on sale of assets and other provisions, net                                        31.6
    Minority interest and loss on sale of assets and other provisions, net                        (2.7)
                                                                                           ------------
        Net income                                                                              $ 28.9
                                                                                           ============
</TABLE>

                                       11
<PAGE>

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

<TABLE>
<CAPTION>
                                                    For the three months ended September 30, 2000
                                                -------------------------------------------------------
                                                Real Estate
                                                 Property     Development       Other
    (In millions)                               Operations     Operations    Operations       Total
                                                ------------  -------------  ------------  ------------
    <S>                                         <C>           <C>            <C>           <C>
    Operating revenue                               $ 131.7            3.0           4.7       $ 139.4
    Segment expense                                    39.8            1.5          10.7          52.0
                                                ------------  -------------  ------------  ------------
    Net segment revenue (expense)                      91.9            1.5          (6.0)         87.4
    Interest expense                                   12.8              -          12.0          24.8
    Other income (expense), net                         3.3              -          (0.9)          2.4
                                                ------------  -------------  ------------  ------------
    Funds from operations                            $ 82.4            1.5         (18.9)         65.0
                                                ============  =============  ============
    Depreciation and amortization                                                                (31.5)
                                                                                           ------------
    Income from continuing operations before minority interest
      and gain on sale of assets and other provisions, net                                        33.5
    Minority interest and gain on sale of assets and other provisions, net                        16.4
                                                                                           ------------
        Net income                                                                              $ 49.9
                                                                                           ============

<CAPTION>
                                                     For the nine months ended September 30, 2001
                                                -------------------------------------------------------
                                                Real Estate
                                                 Property     Development       Other
    (In millions)                               Operations     Operations    Operations       Total
                                                ------------  -------------  ------------  ------------
    <S>                                         <C>           <C>            <C>           <C>
    Operating revenue                               $ 374.4           12.6          13.9       $ 400.9
    Segment expense                                   119.0            4.0          33.2         156.2
                                                ------------  -------------  ------------  ------------
    Net segment revenue (expense)                     255.4            8.6         (19.3)        244.7
    Interest expense                                   33.4              -          28.7          62.1
    Other income (expense), net                        16.1            0.3          (3.1)         13.3
                                                ------------  -------------  ------------  ------------
    Funds from operations                           $ 238.1            8.9         (51.1)        195.9
                                                ============  =============  ============
    Depreciation and amortization                                                                (97.9)
                                                                                           ------------
    Income from continuing operations before minority interest
      and gain on sale of assets and other provisions, net                                        98.0
    Minority interest and gain on sale of assets and other provisions, net                        (6.2)
                                                                                           ------------
        Net income                                                                              $ 91.8
                                                                                           ============
</TABLE>

                                       12
<PAGE>

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

<TABLE>
<CAPTION>
                                                         For the nine months ended September 30, 2000
                                                    -------------------------------------------------------
                                                    Real Estate
                                                     Property     Development       Other
        (In millions)                               Operations     Operations    Operations       Total
                                                    ------------  -------------  ------------  ------------
       <S>                                          <C>           <C>            <C>           <C>
        Operating revenue                               $ 407.4            7.0          11.0       $ 425.4
        Segment expense                                   128.5            3.9          29.6         162.0
                                                    ------------  -------------  ------------  ------------
        Net segment revenue (expense)                     278.9            3.1         (18.6)        263.4
        Interest expense                                   37.7              -          39.1          76.8
        Other income (expense), net                         8.4              -          (4.0)          4.4
                                                    ------------  -------------  ------------  ------------
        Funds from operations                           $ 249.6            3.1         (61.7)        191.0
                                                    ============  =============  ============
        Depreciation and amortization                                                                (96.9)
                                                                                               ------------
        Income from continuing operations before minority interest
          and gain on sale of assets and other provisions, net                                        94.1
        Minority interest and gain on sale of assets and other provisions, net                        18.7
        Discontinued operations, net of applicable income tax expense                                  0.5
        Gain on sale of discontinued operations, net of applicable income tax expense                 31.9
                                                                                               ------------
            Net income                                                                             $ 145.2
                                                                                               ============
</TABLE>

(6)      Supplemental Cash Flow Information

         In April 2001, we exercised an option under a loan agreement to acquire
         two office buildings and related land located in the San Francisco Bay
         area. For financial reporting purposes, we had classified the loan as
         an investment in an unconsolidated entity and accounted for it using
         the equity method. The investment, which had a carrying value of
         approximately $50.3 million at the date the option was exercised, was
         reclassified to rental property in connection with this transaction.

         On June 29, 2001, we contributed land subject to a note payable of
         approximately $26.0 million to a joint venture in exchange for a 30%
         ownership interest. Our initial investment in the joint venture
         amounted to $7.3 million, the net book value of the asset and liability
         contributed.

         In the second quarter of 2001, 400,000 shares of our Series A
         Cumulative Convertible Redeemable Preferred Stock were converted to
         shares of common stock.

                                       13
<PAGE>

                    Independent Accountants' Review Report
                    --------------------------------------

The Board of Directors and Stockholders
CarrAmerica Realty Corporation:

We have reviewed the condensed consolidated balance sheet of CarrAmerica Realty
Corporation and subsidiaries as of September 30, 2001, the related condensed
consolidated statements of operations for the three-month and nine-month periods
ended September 30, 2001 and 2000, and the related condensed consolidated
statements of cash flows for the nine-month periods ended September 30, 2001 and
2000. These condensed consolidated financial statements are the responsibility
of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with accounting principles generally accepted in the
United States of America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
CarrAmerica Realty Corporation and subsidiaries as of December 31, 2000, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the year then ended (not presented herein); and in our report dated
February 2, 2001, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31, 2000, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.



                                                /s/KPMG LLP

Washington, D.C.
October 25, 2001

                                       14
<PAGE>

                     Management's Discussion and Analysis
--------------------------------------------------------------------------------

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

         The discussion that follows is based primarily on our consolidated
financial statements as of September 30, 2001 and December 31, 2000 and for the
three months and nine months ended September 30, 2001 and 2000 and should be
read along with the consolidated financial statements and related notes. The
ability to compare one period to another may be significantly affected by
acquisitions completed, development properties placed in service and
dispositions made during those periods.

         The discussion and analysis of operating results focuses on our
segments as management believes that segment analysis provides the most
effective means of understanding the business. Our reportable operating segments
are real estate property operations and development operations. Other business
activities and operations, which are not reported separately, are included in
other operations. Executive office suites operations are presented as
discontinued operations in our financial statements.

     Our operating segments' performance is measured using funds from
operations. Funds from operations is defined by the National Association of Real
Estate Investment Trusts (NAREIT) as follows:

*    Net income (loss) - computed in accordance with generally accepted
     accounting principles (GAAP);
*    Less gains (or plus losses) from sales of depreciable operating properties
     and items that are classified as extraordinary items under GAAP;
*    Plus depreciation and amortization of assets uniquely significant to the
     real estate industry;
*    Plus or minus adjustments for unconsolidated partnerships and joint
     ventures ( to reflect funds from operations on the same basis).

Funds from operations does not represent net income or cash flow generated from
operating activities in accordance with GAAP. As such, it should not be
considered an alternative to net income as an indication of our performance or
to cash flows as a measure of our liquidity or our ability to make
distributions.

RESULTS OF OPERATIONS

Real Estate Property Operations

         Operating results of real estate property operations are summarized as
follows:

<TABLE>
<CAPTION>
         -----------------------------------------------------------------------------------------------------------------------
                                 For the three months ended     Variance      For the nine months ended      Variance
                                                             ---------------                              ---------------
                                       September 30,            2001 vs.            September 30,            2001 vs.
                                -----------------------------                -----------------------------
         (in millions)               2001          2000           2000            2001          2000           2000
                                     ----          ----           ----            ----          ----           ----
         <S>                     <C>              <C>            <C>           <C>            <C>            <C>
         Operating revenue             $ 126.8       $ 131.7         $ (4.9)        $ 374.4       $ 407.4        $ (33.0)
         Segment expense                  38.9          39.8           (0.9)          119.0         128.5           (9.5)
         Interest expense                 11.0          12.8           (1.8)           33.4          37.7           (4.3)
         Other income, net                 3.7           3.3            0.4            16.1           8.4            7.7
         -----------------------------------------------------------------------------------------------------------------------
</TABLE>

         Real estate operating revenues decreased $4.9 million (3.7%) for the
three months ended September 30, 2001 as compared to 2000. This decrease
resulted from the dispositions of interests in properties, including the
properties contributed to Carr Office Park, L.L.C., a joint venture in which we
have a 35% interest. The decrease in revenues was partially offset by
development properties being placed in service and "same store" rental growth.
Same store rental revenues grew by approximately 4.7% (approximately $5.0
million). This increase was due primarily to an increase in average rental rates
in properties in the Northern California market and improved occupancy in
properties in the Washington, D.C. market.

         Real estate operating revenues decreased $33.0 million (8.1%) for the
nine months ended September 30, 2001 as compared to 2000. This decrease also was
attributable to dispositions of interests in properties, including the
properties contributed to Carr Office Park, L.L.C., partially offset by
development properties placed in service and "same store" rental growth. Same
store rental revenues grew by approximately 4.2% (approximately $13.1 million).
This increase was due primarily to an increase in average rental rates in
properties in the Northern California market.

         Real estate operating expenses decreased $0.9 million (2.3%) for the
third quarter of 2001 as compared to the same period in 2000. This decrease was
due primarily to the dispositions of interests in properties, including the
properties

                                       15
<PAGE>

                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

contributed to Carr Office Park, L.L.C., partially offset by an increase in same
store operating expenses of approximately $3.5 million (9.9%).

         Real estate operating expenses decreased $9.5 million (7.4%) for the
first nine months 2001 as compared to the same period in 2000. This decrease was
also due primarily to the dispositions of interests in properties, including the
properties contributed to Carr Office Park, L.L.C., partially offset by an
increase in same store operating expenses of approximately $8.1 million (8.4%).
The increase in expenses includes an increase in the provision for uncollectible
accounts of approximately $4.7 million due to tenant bankruptcies and collection
issues.

         Real estate interest expense decreased $1.8 million (14.1%) in the
third quarter of 2001 as compared to the same period in 2000. This decrease was
principally the result of the retirement of mortgages following certain property
dispositions and maturing mortgages.

         Real estate interest expense decreased $4.3 million (11.4%) for the
first nine months of 2001 as compared to the first nine months of 2000. This
decrease was principally the result of the retirement of mortgages following
certain property dispositions.

         Real estate other income increased $0.4 million (12.1%) for the three
months ended September 30, 2001 as compared to the three months ended September
30, 2000. This increase was primarily the result of equity in earnings of
unconsolidated entities (excluding depreciation), primarily from the investment
in Carr Office Park, L.L.C. For the nine months ended September 30, 2001, real
estate other income increased $7.7 million (91.7%) for the same reason.

         As a result of the deteriorating economic climate, the real estate
markets have materially softened over the first three quarters of 2001. Demand
for office space has declined significantly and vacancy rates have increased in
each of our core markets except for downtown Washington, D.C. As a result,
occupancy in our portfolio of operating properties decreased to 95.9% at
September 30, 2001, as compared to 97.2% at June 30, 2001. While market rental
rates have declined somewhat in most markets from peak levels, rental rates on
space that was re-leased in the third quarter of 2001 increased an average of
9.5% over rates that were in effect under expiring leases.

         We expect vacancy rates to continue to increase in most of our markets
through the balance of the year due to expected weak demand. As a result, we
expect occupancy levels in our portfolio to decline to approximately 95.0% by
the end of 2001. We do not expect the softened market conditions to have a
material adverse affect on our operating results for the remainder of 2001. We
expect that real estate markets will remain soft throughout 2002. As a result of
the soft market, we anticipate that occupancy levels will remain at the
projected 2001 year-end level through 2002.

Development Operations

         Operating results of development operations are summarized as follows:

<TABLE>
<CAPTION>
     -----------------------------------------------------------------------------------------------------------------------
                                    For the three months ended     Variance      For the nine months ended      Variance
                                                                ---------------                              ---------------
                                          September 30,            2001 vs.            September 30,            2001 vs.
                                   -----------------------------                -----------------------------
     (in millions)                      2001          2000           2000            2001          2000           2000
                                        ----          ----           ----            ----          ----           ----
     <S>                            <C>              <C>          <C>             <C>            <C>           <C>
     Operating revenue                      $ 1.8         $ 3.0         $ (1.2)         $ 12.6         $ 7.0          $ 5.6
     Segment expense                          1.4           1.5           (0.1)            4.0           3.9            0.1
     Interest expense                           -             -              -               -             -              -
     Other income, net                          -             -              -             0.3             -            0.3
     -----------------------------------------------------------------------------------------------------------------------
</TABLE>

         Revenue from our development operations decreased $1.2 million (40.0%)
for the third quarter of 2001 compared to the third quarter of 2000 primarily
because we earned an incentive fee related to the development of a property
during the third quarter of 2000. Revenues from development operations increased
$5.6 million (80.0%) for the first nine months of 2001 compared to the same
period a year ago. This increase reflects our expanded operations in this area,
including services provided to Carr Office Park, L.L.C. and other unconsolidated
joint ventures in connection with their development of new properties.

                                       16
<PAGE>

                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

Other Operations

         Operating results of other operations are summarized as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                For the three months ended    Variance       For the nine months ended      Variance
                                                            --------------                               ---------------
                                       September 30,           2001 vs.            September 30,             2001 vs.
                               -----------------------------                -----------------------------
(in millions)                      2001           2000          2000             2001          2000           2000
                                   ----           ----          ----             ----          ----           ----
<S>                            <C>              <C>            <C>           <C>             <C>           <C>
Operating revenue                      $ 4.8          $ 4.7         $ 0.1           $ 13.9        $ 11.0          $ 2.9
Segment expense                          9.5           10.7          (1.2)            33.2          29.6            3.6
Interest expense                         9.1           12.0          (2.9)            28.7          39.1          (10.4)
Other (expense) income, net             (1.7)          (0.9)         (0.8)            (3.1)         (4.0)           0.9
------------------------------------------------------------------------------------------------------------------------
</TABLE>

     Revenues from our other operations increased $0.1 million (2.1%) in the
third quarter of 2001 as compared to the third quarter of 2000. The increase in
2001 resulted primarily from expansion of our operations in the area of managing
rental properties for affiliates and others. In particular, in August 2000, we
began providing leasing and management services to Carr Office Park, L.L.C.
Revenues from other operations for the nine months ended September 30, 2001
increased $2.9 million (26.4%) from the same period in 2000 for the same reason.

     Expenses of our other operations decreased $1.2 million (11.2%) in the
three months ended September 30, 2001 compared to the three months ended
September 30, 2000. The decrease was due primarily to our completion of portions
of our internal process improvement efforts. For the nine months ended September
30, 2001, expenses of our other operations increased $3.6 million (12.2%) from
the same period in 2001 primarily due to our expanded property management
operations and professional fees associated with internal process improvement
efforts and other initiatives.

     Interest expense decreased $2.9 million (24.2%) during the third quarter of
2001 compared to the third quarter of 2000 due primarily to lower debt levels
partially offset by a decrease in capitalized interest due to a lower level of
development activity. Interest expense decreased $10.4 million (26.6%) for the
first nine months of 2001 compared to the first nine months of 2000 for the same
reasons.

     During the second quarter of 2001, one of our strategic partners, Broadband
Office, Inc. filed for Chapter 11 bankruptcy protection. The bankruptcy of
Broadband Office, Inc. had no material impact on our operating results nor our
strategic plan. Broadband Office, Inc. had provided some telecommunications
related services to us. We arranged with other providers for the same services
with no significant impact on our business.

     We also have retained a significant equity investment in HQ Global.
FrontLine Capital Group ("FrontLine"), the majority stockholder of HQ Global,
recently announced that HQ is in default with respect to certain covenant and
payment obligations under its senior and mezzanine indebtedness. FrontLine also
reported that, effective as of October 1, 2001, HQ Global entered into an
agreement with its senior loan lenders under which these lenders agreed not to
enforce the remedies they now have as a result of HQ Global's default. This
forbearance period is scheduled to terminate on December 14, 2001, or earlier
under certain circumstances (including the termination, if earlier, of the
forbearance period relating to HQ's mezzanine indebtedness which is scheduled to
terminate no later than December 31, 2001). During this period, HQ Global can
still draw funds under the senior credit agreement for working capital needs and
to make interest payments to these lenders. At the end of the forbearance
period, if HQ Global has not paid in full all amounts due and owing to the
lenders, or if HQ has not cured all of its existing defaults, then the lenders
may immediately exercise any rights and remedies available to them.

     HQ Global is in active negotiations with its lenders regarding the
restructuring of its long-term indebtedness, with an objective of reaching an
agreement on terms that will provide HQ Global with sufficient liquidity to
operate its business through the current economic downturn. There can be no
assurance that HQ Global will be able to restructure its indebtedness. Depending
on the outcome of HQ Global's discussions with its lenders, we may be required
to write-off some or all of our remaining $42.2 million investment in HQ Global.

Depreciation and Amortization

     Depreciation and amortization increased $2.4 million (7.6%) in the third
quarter of 2001 compared to the third quarter of 2000. This increase was due
primarily to development properties being placed into service partially offset
by

                                       17
<PAGE>

                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

dispositions of interests in properties, including the properties contributed to
Carr Office Park, L.L.C. For the nine months ended September 30, 2001,
depreciation and amortization increased $1.0 million (1.0%) from the same period
a year ago for the same reasons.

Gain on Sale of Assets and Other Provisions, Net

     We dispose of assets that are inconsistent with our long-term strategic or
return objectives or where market conditions for sale are favorable. The
proceeds from the sales are redeployed into other properties or used to fund
development operations or to support other corporate needs. During the three
months ended September 30, 2001, we disposed of a parcel of land held for
development. During the three months ended September 30, 2000, we disposed of
one operating property, exclusive of the properties contributed to Carr Office
Park, L.L.C. We recognized a gain of $0.1 million, net of $0.8 million in income
taxes, on this property.

     On August 17, 2000, we closed on a joint venture with New York State
Teachers' Retirement System ("NYSTRS"). At closing, we and some of our
affiliates contributed properties to the joint venture, Carr Office Park,
L.L.C., and NYSTRS contributed cash. We recognized a gain on the partial sale of
approximately $20.1 million, net of income taxes of $13.1 million.

     During the nine months ended September 30, 2001, we disposed of seven
operating properties, one property under development and three parcels of land
held for development. We recognized a gain of $4.0 million, net of taxes of $2.0
million. We also recognized an impairment loss of $0.9 million on a parcel of
land held for development during the nine months ended September 30, 2001.
During the nine months ended September 30, 2000, we disposed of six operating
properties, exclusive of the properties contributed to Carr Office Park, L.L.C.
We recognized a gain of $7.8 million, net of taxes of $1.3 million on these
properties.

Consolidated Cash Flows

     Consolidated cash flow information is summarized as follows:

<TABLE>
<CAPTION>
                  --------------------------------------------------------------------------------------------
                                                                    For the nine months ended     Variance
                                                                                                --------------
                                                                           September 30,           2001 vs.
                                                                   -----------------------------
                  (in millions)                                        2001           2000          2000
                                                                       ----           ----          ----
                  <S>                                            <C>              <C>           <C>
                  Cash provided by operating activities               $ 143.9        $ 155.8       $ (11.9)
                  Cash provided by investing activities                 127.5          518.9        (391.4)
                  Cash used by financing activities                    (287.2)        (706.1)        418.9
                  --------------------------------------------------------------------------------------------
</TABLE>

     Operations generated $143.9 million of net cash in 2001 compared to $155.8
million in 2000. The changes in cash flow from operating activities were
primarily the result of factors discussed above in the analysis of operating
results. The level of net cash provided by operating activities is also affected
by the timing of receipt of revenues and payment of expenses, including in 2001,
income taxes relating to sales of certain assets and discontinued operations in
2000.

     Our investing activities provided net cash of $127.5 million in 2001 and
$518.9 million in 2000. The decrease in net cash provided by investing
activities in 2001 is due primarily to the fact that in 2000, we sold our
investment in HQ Global, generating $377.3 million of cash. Proceeds from sales
of properties were also higher in 2000 ($223.8 million) due primarily to the
Carr Office Park, L.L.C. transaction. The effect of the decreases on net cash
provided by investing was partially offset by a reduction in development
activities ($62.3 million), a receipt of a distribution from Carr Office Park,
L.L.C. from proceeds of a third party financing of properties ($77.9 million)
and a release of restricted deposits ($38.3 million).

     Our financing activities used net cash of $287.2 million in 2001 and $706.1
million in 2000. The decrease in net cash used by financing activities in 2001
is due primarily to lower repayments on unsecured credit facilities ($305.5
million) and increased proceeds from new mortgage debt ($26.6 million). In
addition, we repaid $150.0 million in senior unsecured notes in 2000. The effect
of these changes was partially offset by increased stock repurchase activities
($58.9 million) and increased mortgage repayments ($13.7 million) in 2001.

                                       18
<PAGE>

                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

     We seek to create and maintain a capital structure that will enable us to
diversify our capital resources. This should allow us to obtain additional
capital from a number of different sources. These sources could include
additional equity offerings of common stock and/or preferred stock, public and
private debt financings and possible asset dispositions. Our management believes
that we will have access to the capital resources necessary to expand and
develop our business, to fund our operating and administrative expenses, to
continue to meet our debt service obligations, to pay dividends in accordance
with REIT requirements, to acquire additional properties and land and to pay for
construction in progress.

     We have three investment grade ratings. As of September 30, 2001, Duff &
Phelps Credit Rating Co. and Standard & Poors have each assigned their BBB
rating to our prospective senior unsecured debt offerings and their BBB- rating
to our prospective cumulative preferred stock offerings. Moody's Investor
Service has assigned its Baa2 rating to our prospective senior unsecured debt
offerings and its Ba2 rating to our prospective cumulative preferred stock
offerings.

     Our total debt at September 30, 2001 was approximately $1.1 billion, of
which $114.0 million (10.3%) bore a LIBOR-based floating interest rate. The
interest rate on borrowings on our unsecured credit facility at September 30,
2001 was 3.3%. The interest rate of the unsecured credit facility is 70 basis
points over 30-day LIBOR. Our fixed rate mortgage payable debt bore an effective
weighted average interest rate of 8.04% at September 30, 2001. The weighted
average term of this debt is 6.5 years. At September 30, 2001, our debt
represented 31.2% of our total market capitalization of $3.6 billion.

     In June 2001, we closed on a new three-year $500 million unsecured credit
facility with J.P. Morgan Chase, as agent for a group of banks. We can extend
the life of the line an additional year at our option. The line carries an
interest rate of 70 basis points over 30-day LIBOR. The new credit facility has
substantially similar terms as our previous facility. As of September 30, 2001,
$114.0 million was drawn on the credit facility, $1.9 million in letters of
credit were outstanding and we had $384.1 million available for borrowing.

     Rental revenue and real estate service revenue have been our principal
sources of cash to pay our operating expenses, debt service and capital
expenditures, excluding non-recurring capital expenditures. We believe that our
current sources of revenue will continue to provide the necessary funds for our
operating expenses and debt service.

     We and our affiliates also require capital to invest in our existing
portfolio of operating assets for capital projects. These capital projects
include such things as large-scale renovations, routine capital expenditures,
deferred maintenance on properties we have recently acquired and tenant related
matters, including tenant improvements, allowances and leasing commissions. We
believe that operations along with borrowings under our credit facility will
continue to provide the necessary funds for these capital projects.

     We will require capital for development projects currently underway and in
the future. As of September 30, 2001, we had approximately 0.2 million square
feet of office space in two development projects in progress. Our total expected
investment on these projects is $24.1 million. Through September 30, 2001, we
had invested $14.2 million or 58.9% of the total expected investment for these
projects. As of September 30, 2001, we also had 1.4 million square feet of
office space under construction in six projects in which we own minority
interests. These projects are expected to cost $357.9 million, of which our
total investment is expected to be approximately $107.8 million. Through
September 30, 2001, approximately $164.4 million or 45.9% of total project costs
had been expended on these projects. We have financed our investment in projects
under construction at September 30, 2001 primarily from the proceeds of asset
dispositions and borrowings under our credit facility. We expect that these
sources and project-specific financing of selected assets will provide
additional funds required to complete the development and to finance the costs
of additional projects.

     In the future, if the debt and equity markets are not favorable, if we
cannot raise the expected funds from the sale of properties and/or if we are
unable to obtain capital from other sources, we believe that we would continue
to have sufficient funds to pay our operating and debt service expenses, our
regular quarterly dividends, to make necessary routine capital improvements with
respect to our existing portfolio of operating assets, and to continue to fund
all of our current development projects. However, our ability to expand our
development activities or fund additional development in our joint ventures
could be adversely affected if it is necessary for us to access either the
public equity or debt markets at a time when those markets may not be the best
source of capital for us.

                                       19
<PAGE>

                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

     Our Board of Directors has authorized us to spend up to $325 million to
repurchase our common shares, preferred shares, and debt securities. Since the
start of this program in mid-2000 through September 30, 2001, we have acquired
approximately 7.2 million common shares for $209.4 million, representing an
average price of $28.94 per share.

     We pay dividends quarterly. Funds, which we accumulate for distribution,
are invested primarily in short-term investments collateralized by securities of
the United States Government or one of its agencies.

Funds From Operations

     We believe that funds from operations is helpful to investors as a measure
of the performance of an equity REIT. Based on our experience, funds from
operations, along with information about cash flows from operating activities,
investing activities and financing activities, provides investors with an
indication of our ability to incur and service debt, to make capital
expenditures and to fund other cash needs. Funds from operations is defined by
the National Association of Real Estate Investment Trusts (NAREIT) as follows:

*  Net income (loss) - computed in accordance with generally accepted accounting
   principles (GAAP);
*  Less gains (or plus losses) from sales of depreciable operating properties
   and items that are classified as extraordinary items under GAAP;
*  Plus depreciation and amortization of assets uniquely significant to the real
   estate industry;
*  Plus or minus adjustments for unconsolidated partnerships and joint ventures
   (to reflect funds from operations on the same basis).

     Our funds from operations may not be comparable to funds from operations
reported by other REITs. These other REITs may not define the term in accordance
with the current NAREIT definition or may interpret the current NAREIT
definition differently than us. Funds from operations does not represent net
income or cash flow generated from operating activities in accordance with GAAP.
As such, it should not be considered an alternative to net income as an
indication of our performance or to cash flows as a measure of our liquidity or
our ability to make distributions.

         The following table provides the calculation of our funds from
operations for the periods presented:

<TABLE>
<CAPTION>
                                                                         Three Months Ended           Nine Months Ended
                                                                            September 30,                September 30,
                                                                     ---------------------------  ---------------------------
   (In thousands)                                                       2001           2000          2001           2000
                                                                     ------------  -------------  ------------  -------------
   <S>                                                               <C>           <C>              <C>           <C>
   Net income from continuing operations before minority interest       $ 31,699       $ 53,657      $ 99,054      $ 122,042
   Adjustments to derive funds from operations:
     Add depreciation and amortization                                    34,227         31,739        98,684         97,561
     Deduct:
       Minority interests' (non Unitholders) share of depreciation,
        amortization and net income                                         (213)          (248)         (714)          (722)
      Loss (gain) on sale of assets and other provisions, net                (28)       (20,182)       (1,082)       (27,923)
                                                                     ------------  -------------  ------------  -------------
   Funds from operations before allocations to the
     minority Unitholders                                                 65,685         64,966       195,942        190,958
   Less: Funds from operations allocable to the
              minority Unitholders                                        (4,596)        (4,000)      (12,940)       (12,230)
                                                                     ------------  -------------  ------------  -------------
   Funds from operations allocable to CarrAmerica
     Realty Corporation                                                   61,089         60,966       183,002        178,728
   Less: Preferred stock dividends                                        (8,655)        (8,842)      (26,050)       (26,364)
                                                                     ------------  -------------  ------------  -------------
   Funds from operations attributable to common shareholders            $ 52,434       $ 52,124     $ 156,952      $ 152,364
                                                                     ============  =============  ============  =============
</TABLE>

FORWARD-LOOKING STATEMENTS

     Certain statements contained herein constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our, and our affiliates, or the
industry's actual results,

                                       20
<PAGE>

                      Management's Discussion and Analysis
--------------------------------------------------------------------------------

performance, achievements or transactions to be materially different from any
future results, performance, achievements or transactions expressed or implied
by such forward-looking statements. Such factors include, among others, the
following:

     *   National and local economic, business and real estate conditions
         that will, among other things, affect:
          *   Demand for office properties
          *   The ability of the general economy to recover timely from the
              current economic downturn
          *   Availability and creditworthiness of tenants
          *   Level of lease rents
          *   Availability of financing for both tenants and us;
     *   Adverse changes in the real estate markets, including, among other
         things:
          *   Competition with other companies
          *   Risks of real estate acquisition and development
              *   Failure of pending acquisitions to close and pending
                  developments to be completed on time and within budget;
     *   Actions, strategies and performance of affiliates that we may not
         control or companies in which we have made investments;
     *   Governmental actions and initiatives; and
     *   Environmental/safety requirements.

For further discussion of these and other factors that could impact our future
results, performance, achievements or transactions, see the documents we file
from time to time with the Securities and Exchange Commission, and in
particular, the section titled "The Company - Risk Factors" in our Annual Report
on Form 10-K.

                                       21
<PAGE>

           Quantitative and Qualitative Disclosures About Market Risk
--------------------------------------------------------------------------------

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

     Any significant changes in our market risk that have occurred since the
filing of our Annual Report on Form 10-K for the year ended December 31, 2000
are summarized in the Liquidity and Capital Resources section of the
Management's Discussion and Analysis of Financial Condition and Results of
Operations.

                                       22
<PAGE>

                                     Part II

OTHER INFORMATION
-----------------


Item 6.  Exhibits and Reports on Form 8-K

         (a)   Exhibits

               15   Letter from KPMG LLP, dated November 13, 2001.

         (b)   Reports on Form 8-K

               Current Report on Form 8-K filed on August 3, 2001 regarding
               certain supplemental data included in the Company's press release
               dated August 3, 2001.

               Current Report on Form 8-K filed on September 26, 2001 regarding
               the effect of terrorist attacks of September 11, 2001, a tax
               disclosure and litigation disclosure regarding a summary
               judgement of September 12, 2001.

                                       23
<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/Richard F. Katchuk
--------------------------------------------------
Richard F. Katchuk, Chief Financial Officer


/s/ Stephen E. Riffee
--------------------------------------------------
Stephen E. Riffee, Senior Vice President, Controller and Treasurer
(Principal Accounting Officer)


Date: November 13, 2001

                                       24