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(ARDEN REALITY LOGO)

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Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

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

For the quarter ended September 30, 2002

Commission file number 1-12193

ARDEN REALTY, INC.
(Exact name of registrant as specified in its charter)

|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|Maryland                                                      |  | 95-4578533                         
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)

11601 Wilshire Boulevard,
4th Floor
Los Angeles, California 90025-1740
(Address and zip code of principal executive offices)

Registrants telephone number, including area code: (310) 966-2600

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X]  No [   ]

As of November 12, 2002 there were 63,074,884 shares of the registrants common
stock, $.01 par value, issued and outstanding.



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TABLE OF CONTENTS



|                                      |                                                                                               |                                                      |  |  |  |  |  | 
|------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|Part I. FINANCIAL INFORMATION        
|                                      | Item 1. Financial Statements                                                                 
|                                      |                                                                                               | Consolidated Balance Sheets                         
|                                      |                                                                                               | Consolidated Statements of Income                   
|Consolidated Statements of Cash Flows
|                                      |                                                                                               | Notes to Consolidated Condensed Financial Statements
|                                      | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                      | Item 3. Quantitative and Qualitative Disclosure about Market Risk                            
|                                      | Item 4. Controls and Procedures                                                              
|Part II. OTHER INFORMATION           
|SIGNATURES                           
|OFFICERS CERTIFICATIONS             



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##### Table of Contents



ARDEN REALTY, INC.
FORM 10-Q
TABLE OF CONTENTS

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|        |                          |                                                                                                               |  |  |    | PAGE NO.
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|PART I  | FINANCIAL INFORMATION    |                                                                                                               |  |  |   
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|        | Item 1.                  | Financial Statements                                                                                          |  |  |    |         
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|        |                          | Consolidated Balance Sheets as of September 30, 2002 (unaudited)and December 31, 2001                         |  |  |    | 3       
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|        |                          | Consolidated Statements of Income for the three and nine months ended September 30, 2002 and 2001 (unaudited) |  |  |    | 4       
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|        |                          | Consolidated Statements of Cash Flows for the nine months ended September 30, 2002 and 2001 (unaudited)       |  |  |    | 5       
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|        |                          | Notes to Consolidated Financial Statements                                                                    |  |  |    | 6       
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|        | Item 2.                  | Management's Discussion and Analysis of Financial Condition and Results of Operations                         |  |  |    | 10      
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|        | Item 3.                  | Quantitative and Qualitative Disclosures about Market Risk                                                    |  |  |    | 25      
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|        | Item 4.                  | Controls and Procedures                                                                                       |  |  |    | 26      
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|PART II | OTHER INFORMATION        |                                                                                                               |  |  | 27
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|        | SIGNATURES               |                                                                                                               |  |  | 28
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|        | OFFICERS
CERTIFICATIONS |                                                                                                               |  |  | 29

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Part I. FINANCIAL INFORMATION




Item 1. Financial Statements




Arden Realty, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)

|                                                                                                                                                                        |                                                 |                                            |           |               |           |              |           |           |           | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ------------------------------------------ | --------- | ------------- | --------- | ------------ | --------- | --------- | --------- | 
|                                                                                                                                                                        |                                                 |                                            |           | September 30, |           | December 31,
|                                                                                                                                                                        |                                                 |                                            |           | 2002          |           | 2001        
|                                                                                                                                                                        |                                                 |                                            |           |               |           |             
|                                                                                                                                                                        |                                                 |                                            |           | (unaudited)   |           |              |           |          
|Assets                                                                                                                                                                  |                                                 |                                            |           |               |           |              |           |          
|Investment in real estate:                                                                                                                                              |                                                 |                                            |           |               |           |              |           |          
|                                                                                                                                                                        | Land                                            |                                            | $         | 491,615       |           |              | $         | 447,753   |          
|                                                                                                                                                                        | Buildings and improvements                      |                                            |           | 2,167,193     |           |              |           | 1,975,427 |          
|                                                                                                                                                                        | Tenant improvements and leasing commissions     |                                            |           | 295,903       |           |              |           | 251,201   |          
|                                                                                                                                                                        |                                                 |                                            |           |               |           |              |           |          
|                                                                                                                                                                        |                                                 |                                            | 2,954,711 |               |           |              | 2,674,381 |          
|                                                                                                                                                                        | Less: accumulated depreciation and amortization |                                            |           | (368,965      | )         |              |           | (293,385  | )        
|                                                                                                                                                                        |                                                 |                                            |           |               |           |              |           |          
|                                                                                                                                                                        |                                                 |                                            | 2,585,746 |               |           |              | 2,380,996 |          
|                                                                                                                                                                        | Properties under development                    |                                            |           | 154,890       |           |              |           | 133,012   |          
|                                                                                                                                                                        | Properties held for disposition, net            |                                            |           |              |           |              |           | 108,972   |          
|                                                                                                                                                                        |                                                 |                                            |           |               |           |              |           |          
|                                                                                                                                                                        |                                                 | Net investment in real estate              |           |               | 2,740,636 |              |           |           | 2,622,980 | 
|Cash and cash equivalents                                                                                                                                               |                                                 |                                            | 6,288     |               |           |              | 37,041    |          
|Restricted cash                                                                                                                                                         |                                                 |                                            | 22,061    |               |           |              | 18,768    |          
|Rent and other receivables, net of allowance of $5,444 and $3,770 at
September 30, 2002 and December 31, 2001, respectively                                             |                                                 |                                            | 3,438     |               |           |              | 9,685     |          
|Mortgage notes receivable, net of discount                                                                                                                              |                                                 |                                            | 13,007    |               |           |              | 13,495    |          
|Deferred rent                                                                                                                                                           |                                                 |                                            | 42,840    |               |           |              | 38,989    |          
|Prepaid financing costs, expenses and other assets, net of amortization                                                                                                 |                                                 |                                            | 20,227    |               |           |              | 20,485    |          
|                                                                                                                                                                        |                                                 |                                            |           |               |           |              |           |          
|                                                                                                                                                                        |                                                 | Total assets                               |           | $             | 2,848,497 |              |           | $         | 2,761,443 | 
|                                                                                                                                                                        |                                                 |                                            |           |               |           |              |           |          
|Liabilities                                                                                                                                                             |                                                 |                                            |           |               |           |              |           |          
|Mortgage loans payable                                                                                                                                                  |                                                 | $                                          | 571,396   |               |           | $            | 573,452   |          
|Unsecured lines of credit                                                                                                                                               |                                                 |                                            | 174,587   |               |           |              | 180,350   |          
|Unsecured term loan                                                                                                                                                     |                                                 |                                            | 125,000   |               |           |              |          |          
|Unsecured senior notes, net of discount                                                                                                                                 |                                                 |                                            | 497,967   |               |           |              | 497,681   |          
|Accounts payable and accrued expenses                                                                                                                                   |                                                 |                                            | 52,190    |               |           |              | 43,002    |          
|Security deposits                                                                                                                                                       |                                                 |                                            | 20,278    |               |           |              | 19,683    |          
|Dividends payable                                                                                                                                                       |                                                 |                                            | 32,589    |               |           |              | 31,408    |          
|                                                                                                                                                                        |                                                 |                                            |           |               |           |              |           |          
|                                                                                                                                                                        |                                                 | Total liabilities                          |           |               | 1,474,007 |              |           |           | 1,345,576 | 
|Minority interest                                                                                                                                                       |                                                 |                                            | 75,201    |               |           |              | 78,661    |          
|Stockholders Equity                                                                                                                                                    |                                                 |                                            |           |               |           |              |           |          
|Preferred stock, $.01 par value 20,000,000 shares authorized, none issued                                                                                               |                                                 |                                            |          |               |           |              |          |          
|Common stock, $.01 par value, 100,000,000 shares authorized,
64,503,384 and 64,098,110 issued and outstanding at September 30, 2002 and
December 31, 2001, respectively |                                                 |                                            | 646       |               |           |              | 641       |          
|Additional paid-in capital                                                                                                                                              |                                                 |                                            | 1,310,276 |               |           |              | 1,345,698 |          
|Deferred compensation                                                                                                                                                   |                                                 |                                            | (11,633   | )             |           |              | (9,133    | )        
|                                                                                                                                                                        |                                                 |                                            |           |               |           |              |           |          
|                                                                                                                                                                        |                                                 | Total stockholders equity                 |           |               | 1,299,289 |              |           |           | 1,337,206 | 
|                                                                                                                                                                        |                                                 |                                            |           |               |           |              |           |          
|                                                                                                                                                                        |                                                 | Total liabilities and stockholders equity |           | $             | 2,848,497 |              |           | $         | 2,761,443 | 
|                                                                                                                                                                        |                                                 |                                            |           |               |           |              |           |          

See accompanying notes to consolidated financial statements.

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Arden Realty, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)

|                                            |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |        | 
|------------------------------------------- | ------- | - | ------------------ | ------ | ----------------- | - | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ | 
|                                            |         |   | Three Months Ended |        | Nine Months Ended
|                                            |         |   | September 30,      |        | September 30,    
|                                            |         |   |                    |        |                  
|                                            |         |   | 2002               |        | 2001              |   | 2002    |        | 2001
|                                            |         |   |                    |        |                   |   |         |        |     
|Revenue                                     |         | $ | 104,378            |        |                   | $ | 105,831 |        |      | $ | 309,277 |        |  | $ | 311,932 |       
|Property operating expenses                 |         |   | 34,935             |        |                   |   | 32,016  |        |      |   | 96,079  |        |  |   | 91,132  |       
|                                            |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |       
|                                            |         |   | 69,443             |        |                   |   | 73,815  |        |      |   | 213,198 |        |  |   | 220,800 |       
|General and administrative expenses         |         |   | 3,323              |        |                   |   | 2,505   |        |      |   | 9,234   |        |  |   | 8,087   |       
|Interest expense                            |         |   | 22,403             |        |                   |   | 20,819  |        |      |   | 65,384  |        |  |   | 63,058  |       
|Depreciation and amortization               |         |   | 27,650             |        |                   |   | 25,854  |        |      |   | 82,855  |        |  |   | 74,176  |       
|Interest and other income                   |         |   | (524               | )      |                   |   | (706    | )      |      |   | (1,576  | )      |  |   | (2,331  | )     
|                                            |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |       
|Income before gain and minority interest    |         |   | 16,591             |        |                   |   | 25,343  |        |      |   | 57,301  |        |  |   | 77,810  |       
|Gain on sale of properties                  |         |   |                   |        |                   |   | 24      |        |      |   | 1,273   |        |  |   | 3,575   |       
|                                            |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |       
|Income before minority interest             |         |   | 16,591             |        |                   |   | 25,367  |        |      |   | 58,574  |        |  |   | 81,385  |       
|Minority interest                           |         |   | (1,478             | )      |                   |   | (1,878  | )      |      |   | (4,701  | )      |  |   | (5,806  | )     
|                                            |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |       
|Net income                                  |         | $ | 15,113             |        |                   | $ | 23,489  |        |      | $ | 53,873  |        |  | $ | 75,579  |       
|                                            |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |       
|Net income per common share:                |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |       
|                                            | Basic   |   | $                  | 0.23   |                   |   | $       | 0.37   |      |   | $       | 0.84   |  |   | $       | 1.19   | 
|                                            |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |       
|                                            | Diluted |   | $                  | 0.23   |                   |   | $       | 0.37   |      |   | $       | 0.83   |  |   | $       | 1.18   | 
|                                            |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |       
|Weighted average common shares outstanding: |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |       
|                                            | Basic   |   |                    | 64,586 |                   |   |         | 63,761 |      |   |         | 64,440 |  |   |         | 63,692 | 
|                                            |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |       
|                                            | Diluted |   |                    | 64,790 |                   |   |         | 64,121 |      |   |         | 64,695 |  |   |         | 63,959 | 
|                                            |         |   |                    |        |                   |   |         |        |      |   |         |        |  |   |         |       

See accompanying notes to consolidated financial statements.

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Arden Realty, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

|                                                     |                                                                                   |                                                                      |                                                    |          |                   |        |        |          |        |        |  
|---------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------------------- | -------------------------------------------------- | -------- | ----------------- | ------ | ------ | -------- | ------ | ------ | -
|                                                     |                                                                                   |                                                                      |                                                    |          | Nine Months Ended
|                                                     |                                                                                   |                                                                      |                                                    |          | September 30,    
|                                                     |                                                                                   |                                                                      |                                                    |          |                  
|                                                     |                                                                                   |                                                                      |                                                    |          | 2002              |        | 2001  
|                                                     |                                                                                   |                                                                      |                                                    |          |                   |        |       
|Operating Activities:                                |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|                                                     | Net income                                                                        |                                                                      | $                                                  | 53,873   |                   |        | $      | 75,579   |       
|                                                     | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                                      |                                                    |          |                   |        |        |          |       
|                                                     |                                                                                   | Minority interests                                                   |                                                    |          | 4,701             |        |        |          | 5,806  |       
|                                                     |                                                                                   | Gain on sale of property                                             |                                                    |          | (1,273            | )      |        |          | (3,575 | )     
|                                                     |                                                                                   | Depreciation and amortization                                        |                                                    |          | 82,855            |        |        |          | 74,176 |       
|                                                     |                                                                                   | Amortization of loan costs                                           |                                                    |          | 2,814             |        |        |          | 2,645  |       
|                                                     |                                                                                   | Non-cash compensation expense                                        |                                                    |          | 875               |        |        |          | 1,395  |       
|                                                     |                                                                                   | Changes in operating assets and liabilities:                         |                                                    |          |                   |        |        |          |        |       
|                                                     |                                                                                   |                                                                      | Rent and other receivables                         |          |                   | 6,735  |        |          |        | 2,068  |  
|                                                     |                                                                                   |                                                                      | Deferred rent                                      |          |                   | (3,851 | )      |          |        | (5,641 | )
|                                                     |                                                                                   |                                                                      | Prepaid financing costs, expenses and other assets |          |                   | (2,666 | )      |          |        | (3,879 | )
|                                                     |                                                                                   |                                                                      | Accounts payable and accrued expenses              |          |                   | 8,979  |        |          |        | (2,304 | )
|                                                     |                                                                                   |                                                                      | Security deposits                                  |          |                   | 595    |        |          |        | 294    |  
|                                                     |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|                                                     | Net cash provided by operating activities                                         |                                                                      |                                                    | 153,637  |                   |        |        | 146,564  |       
|                                                     |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|Investing Activities:                                |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|                                                     | Improvements to investment in real estate                                         |                                                                      |                                                    | (85,419  | )                 |        |        | (125,087 | )     
|                                                     | Acquisition of properties                                                         |                                                                      |                                                    | (134,938 | )                 |        |        |         |       
|                                                     | Proceeds from sale of properties                                                  |                                                                      |                                                    | 21,919   |                   |        |        | 26,365   |       
|                                                     |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|                                                     | Net cash used in investing activities                                             |                                                                      |                                                    | (198,438 | )                 |        |        | (98,722  | )     
|                                                     |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|Financing Activities:                                |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|                                                     | Proceeds from term loan                                                           |                                                                      |                                                    | 125,000  |                   |        |        |         |       
|                                                     | Repayments of mortgage loans                                                      |                                                                      |                                                    | (2,056   | )                 |        |        | (1,934   | )     
|                                                     | Proceeds from unsecured lines of credit                                           |                                                                      |                                                    | 182,737  |                   |        |        | 123,500  |       
|                                                     | Repayments of unsecured lines of credit                                           |                                                                      |                                                    | (188,500 | )                 |        |        | (63,500  | )     
|                                                     | Proceeds from issuance of common stock                                            |                                                                      |                                                    | 8,358    |                   |        |        | 102      |       
|                                                     | Repurchases of common stock                                                       |                                                                      |                                                    | (5,723   | )                 |        |        |         |       
|                                                     | Distributions to preferred operating partnership unit holders                     |                                                                      |                                                    | (3,234   | )                 |        |        | (3,234   | )     
|                                                     | Increase in restricted cash                                                       |                                                                      |                                                    | (3,293   | )                 |        |        | (1,684   | )     
|                                                     | Distributions to minority interests                                               |                                                                      |                                                    | (2,660   | )                 |        |        | (3,132   | )     
|                                                     | Dividends paid                                                                    |                                                                      |                                                    | (96,581  | )                 |        |        | (91,983  | )     
|                                                     |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|                                                     | Net cash provided by (used in) financing activities                               |                                                                      |                                                    | 14,048   |                   |        |        | (41,865  | )     
|                                                     |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|Net (decrease) increase in cash and cash equivalents |                                                                                   |                                                                      | (30,753                                            | )        |                   |        | 5,977  |         
|Cash and cash equivalents at beginning of period     |                                                                                   |                                                                      | 37,041                                             |          |                   |        | 5,432  |         
|                                                     |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|Cash and cash equivalents at end of period           |                                                                                   | $                                                                    | 6,288                                              |          |                   | $      | 11,409 |         
|                                                     |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|Supplemental Disclosure of Cash Flow Information:    |                                                                                   |                                                                      |                                                    |          |                   |        |        |         
|                                                     |                                                                                   | Cash paid during the period for interest, net of amounts capitalized |                                                    | $        | 69,024            |        |        | $        | 65,460 |       
|                                                     |                                                                                   |                                                                      |                                                    |          |                   |        |        |         

See accompanying notes to consolidated financial statements.

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Arden Realty, Inc.
Notes to Consolidated Condensed Financial Statements
September 30, 2002
(unaudited)

1. Description of Business

The terms Arden Realty, us, we and our as used in this report
refer to Arden Realty, Inc. Through our controlling interest in Arden Realty
Limited Partnership, or the Operating Partnership, and our other subsidiaries,
we own, manage, lease, develop, renovate and acquire commercial office
properties located in Southern California. As of September 30, 2002, our
portfolio was comprised of 137 primarily suburban office properties, consisting
of 223 buildings with approximately 19.4 million net rentable square feet
including two properties with approximately 566,000 net rentable square feet
under lease-up. As of September 30, 2002 our properties were 89.7% occupied.

The accompanying consolidated condensed financial statements include our
accounts, and the accounts of the Operating Partnership and our other
subsidiaries. All significant intercompany balances and transactions have been
eliminated in consolidation.

The minority interests at September 30, 2002 consisted of limited
partnership interests in the Operating Partnership of approximately 2.6%,
exclusive of ownership interests of the Operating Partnerships preferred unit
holders.

2. Interim Financial Data

The accompanying consolidated condensed financial statements should be
read in conjunction with our 2001 Annual Report on Form 10-K as filed with the
Securities and Exchange Commission. The accompanying financial information
reflects all adjustments, which are, in our opinion, of a normal recurring
nature and necessary for a fair presentation of our financial position, results
of operations and cash flows for the interim periods. Interim results of
operations are not necessarily indicative of the results to be expected for the
full year.

3. New Accounting Standards

In October 2001, the Financial Accounting Standards Board issued Statement
No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets, which
is required to be adopted in fiscal years beginning after December 15, 2001.
Statement No. 144 supercedes Statement No. 121 Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and provide
a single accounting model for long-lived assets to be disposed of. We adopted
Statement No. 144 on January 1, 2002 and its adoption did not have a
significant impact on our consolidated financial statements.

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4. Commercial Real Estate

The following tables sets forth information regarding our acquisition and
disposition activities during the nine months ended September 30, 2002.

Property Acquisitions

|                            |           |                                     |  |                 |  |                  |  |                  |  |             |         |                |  |   |        |   |  |  |        |         |         |  |  |                |         | 
|--------------------------- | --------- | ----------------------------------- |  | --------------- |  | ---------------- |  | ---------------- |  | ----------- | ------- | -------------- |  | - | ------ | - |  |  | ------ | ------- | ------- |  |  | -------------- | ------- | 
|                            |           |                                     |  |                 |  |                  |  |                  |  |             |         |                |  |   |        |   |  |  |        |         |         |  |  | Purchase Price
|Property                    |           | County                              |  | Submarket       |  | Date of Purchase |  | Property Type    |  | Square Feet |         | (in thousands)
|                            |           |                                     |  |                 |  |                  |  |                  |  |             |         |               
|Gateway Towers              |           | Los Angeles                         |  | Torrance        |  | August 7, 2002   |  | Office           |  |             | 432,894 |                |  | $ | 62,500 |  
|Gateway Land Parcel         |           | Los Angeles                         |  | Torrance        |  | August 7, 2002   |  | Developable Land |  |             | N/A     |                |  |   | 3,500  |  
|Crossroads                  |           | San Diego                           |  | Mission Valley  |  | August 16, 2002  |  | Office           |  |             | 133,566 |                |  |   | (1     | )
|Governor Executive
Center   |           | San Diego                           |  | Governor Park   |  | August 16, 2002  |  | Office           |  |             | 52,195  |                |  |   | (1     | )
|Carmel Valley
Center I & II |           | San Diego                           |  | Del Mar Heights |  | August 30, 2002  |  | Office           |  |             | 107,197 |                |  |   | (1     | )
|Carmel View Office
Center   |           | San Diego                           |  | Rancho Bernardo |  | August 30, 2002  |  | Office           |  |             | 77,460  |                |  |   | (1     | )
|                            |           |                                     |  |                 |  |                  |  |                  |  |             |         |                |  |   |        |   |  |  |        |         |         |  |  |               
|                            | Sub-Total |                                     |  |                 |  |                  |  |                  |  |             |         |                |  |   |        |   |  |  |        | 803,312 |         |  |  | 66,000         |        
|                            |           | (1) San Diego
Portfolio
Acquisition |  |                 |  |                  |  |                  |  |             |         |                |  |   |       |   |  |  | 69,000 |        
|                            |           |                                     |  |                 |  |                  |  |                  |  |             |         |                |  |   |        |   |  |  |        |         |         |  |  |               
|                            |           | Total                               |  |                 |  |                  |  |                  |  |             |         |                |  |   |        |   |  |  |        |         | 803,312 |  |  | $              | 135,000 | 
|                            |           |                                     |  |                 |  |                  |  |                  |  |             |         |                |  |   |        |   |  |  |        |         |         |  |  |               

Property Dispositions

|                        |       |             |  |                          |  |                |  |               |  |             |        |                |  |   |       |  |  |  |  |         |  |  |             |        | 
|----------------------- | ----- | ----------- |  | ------------------------ |  | -------------- |  | ------------- |  | ----------- | ------ | -------------- |  | - | ----- |  |  |  |  | ------- |  |  | ----------- | ------ | 
|                        |       |             |  |                          |  |                |  |               |  |             |        |                |  |   |       |  |  |  |  |         |  |  | Sales Price
|Property                |       | County      |  | Submarket                |  | Date of Sale   |  | Property Type |  | Square Feet |        | (in thousands)
|                        |       |             |  |                          |  |                |  |               |  |             |        |               
|Harbor Corporate
Center |       | Los Angeles |  | Torrance                 |  | March 7, 2002  |  | Office        |  |             | 63,925 |                |  | $ | 6,900 | 
|Renaissance Court       |       | Los Angeles |  | Simi/Conejo Valley       |  | April 16, 2002 |  | Office        |  |             | 61,245 |                |  |   | 8,300 | 
|6800 Owensmouth         |       | Los Angeles |  | West San
Fernando Valley |  | May 1, 2002    |  | Office        |  |             | 80,014 |                |  |   | 8,400 | 
|                        |       |             |  |                          |  |                |  |               |  |             |        |                |  |   |       |  |  |  |  |         |  |  |             |       
|                        | Total |             |  |                          |  |                |  |               |  |             |        |                |  |   |       |  |  |  |  | 205,184 |  |  | $           | 23,600 | 
|                        |       |             |  |                          |  |                |  |               |  |             |        |                |  |   |       |  |  |  |  |         |  |  |             |       

7



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##### Table of Contents



5. Outstanding Indebtedness

A summary of our outstanding indebtedness as of September 30, 2002 and
December 31, 2001 is as follows:

|                             |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  |  | 
|---------------------------- | ---------- | ----------- | -------------- | --------- | ------------ | ----------- | ------- | -------------- | ------------- | ------------- | ---------------- | -------- |  | ---------------------- | --------- | -------- | -- |  | ---- |  | ----- |  |  |  | 
|                             |            |             |                |           |              |             |         |                |               |               | Stated Annual    |          |  |                        |           |          |    |  |      |  |       |  | 
|                             |            |             |                |           |              |             |         |                |               |               | Interest Rate at |          |  |                        |           |          |    |  |      |  |       |  | 
|                             |            |             | September 30,  |           |              |             |         |                | September 30, |               |                  |          |  |                        | Number of |          |    |  |     
|                             |            |             | 2002           |           | December 31, |             | 2002    |                | Rate          |               | Properties       |          |  |                        |          
|Type of Debt                 |            | (unaudited) |                | 2001      |              | (unaudited) |         | Fixed/Floating |               | Securing Loan |                  | Maturity
|                             |            |             |                |           |              |             |         |                |               |               |                  |         
|                             |            |             | (in thousands) |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |     
|Mortgage Loans Payable:      |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|Fixed Rate                   |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|Mortgage Financing I(1)      |            | $           | 175,000        |           |              | $           | 175,000 |                |               |               | 7.52             | %        |  | Fixed                  |           |          | 18 |  |      |  | 6/04  | 
|Mortgage Financing III(2)    |            |             | 136,100        |           |              |             | 136,100 |                |               |               | 6.74             | %        |  | Fixed                  |           |          | 22 |  |      |  | 4/08  | 
|Mortgage Financing IV(2)     |            |             | 111,200        |           |              |             | 111,200 |                |               |               | 6.61             | %        |  | Fixed                  |           |          | 12 |  |      |  | 4/08  | 
|Mortgage Financing V(3)      |            |             | 108,697        |           |              |             | 110,253 |                |               |               | 6.94             | %        |  | Fixed                  |           |          | 12 |  |      |  | 4/09  | 
|Mortgage Financing VI(3)     |            |             | 21,890         |           |              |             | 22,036  |                |               |               | 7.54             | %        |  | Fixed                  |           |          | 3  |  |      |  | 4/09  | 
|Activity Business Center(3)  |            |             | 7,621          |           |              |             | 7,737   |                |               |               | 8.85             | %        |  | Fixed                  |           |          | 1  |  |      |  | 5/06  | 
|145 South Fairfax(3)         |            |             | 3,961          |           |              |             | 3,987   |                |               |               | 8.93             | %        |  | Fixed                  |           |          | 1  |  |      |  | 1/27  | 
|Marin Corporate Center(3)    |            |             | 2,880          |           |              |             | 2,966   |                |               |               | 9.00             | %        |  | Fixed                  |           |          | 1  |  |      |  | 7/15  | 
|Conejo Business Center(3)    |            |             | 2,825          |           |              |             | 2,911   |                |               |               | 8.75             | %        |  | Fixed                  |           | (Note 4) |    |  | 7/15 | 
|Conejo Business Center(3)    |            |             | 1,222          |           |              |             | 1,262   |                |               |               | 7.88             | %        |  | Fixed                  |           | (Note 4) |    |  | 7/15 | 
|                             |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|                             |            |             | 571,396        |           |              |             | 573,452 |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|Unsecured Lines of Credit:   |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|Floating Rate                |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|Wells Fargo-$310 mm(1)       |            |             | 174,587        |           |              |             | 105,350 |                |               |               | 2.88             | %        |  | LIBOR + 1.00% (Note 5) |           |          |   |  |      |  | 4/06  | 
|Lehman Brothers-$75 mm(6)    |            |             |               |           |              |             | 75,000  |                |               |               |                 |          |  | LIBOR + 1.30%          |           |          |   |  |      |  |      | 
|City National Bank-$10 mm(1) |            |             |               |           |              |             |        |                |               |               |                 |          |  | Prime Rate  0.875%    |           |          |   |  |      |  | 8/03  | 
|                             |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|                             |            |             | 174,587        |           |              |             | 180,350 |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|Unsecured Term Loan:         |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|Floating Rate                |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|Wells Fargo-$125 mm(1),(7)   |            |             | 125,000        |           |              |             |        |                |               |               | 3.13             | %        |  | LIBOR + 1.25%          |           |          |   |  |      |  | 6/04  | 
|Unsecured Senior Notes:      |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|Fixed Rate                   |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|2005 Notes(8)                |            |             | 199,744        |           |              |             | 199,667 |                |               |               | 8.88             | %        |  | Fixed                  |           |          |   |  |      |  | 3/05  | 
|2010 Notes(8)                |            |             | 49,693         |           |              |             | 49,663  |                |               |               | 9.15             | %        |  | Fixed                  |           |          |   |  |      |  | 3/10  | 
|2010 Notes(8)                |            |             | 99,324         |           |              |             | 99,262  |                |               |               | 8.50             | %        |  | Fixed                  |           |          |   |  |      |  | 11/10 | 
|2007 Notes(8)                |            |             | 149,206        |           |              |             | 149,089 |                |               |               | 7.00             | %        |  | Fixed                  |           |          |   |  |      |  | 11/07 | 
|                             |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|                             |            |             | 497,967        |           |              |             | 497,681 |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|                             |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 
|                             | Total Debt |             | $              | 1,368,950 |              |             | $       | 1,251,483      |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  |  | 
|                             |            |             |                |           |              |             |         |                |               |               |                  |          |  |                        |           |          |    |  |      |  |       |  |  | 



---

|(1) |  | Requires monthly payments of interest only, with outstanding principal
balance due upon maturity.                   
|--- |  | --------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Requires monthly payments of interest only for five years and monthly
payments of principal and interest thereafter.
|   
|   
|   
|   
|(3) |  | Requires monthly payments of principal and interest.                                                                
|   
|   
|   
|   
|(4) |  | Both mortgage loans are secured by the Conejo Business Center property.                                             
|   
|   
|   
|   
|(5) |  | This line of credit also has an annual 20 basis points facility fee on
the entire $310 million commitment amount.   
|   
|   
|   
|   
|(6) |  | This line of credit was repaid in June 2002.                                                                        
|   
|   
|   
|   
|(7) |  | This loan has a two-year extension option.                                                                          
|   
|   
|   
|   
|(8) |  | Requires semi-annual interest payments only, with principal balance due
upon maturity.                              

On June 13, 2002, our Operating Partnership closed on a $75 million
unsecured term loan with Wells Fargo. This loan matures in June 2004, has a
two-year extension option and bears interest at LIBOR + 1.25% during the
initial term and LIBOR + 1.45% during the extension period. On September 25,
2002, our Operating Partnership increased this term loan by an additional $50
million. The initial $75 million in proceeds from this loan were used to repay
the outstanding balance on our Lehman Brothers unsecured line of credit that
was scheduled to mature in July 2002. The additional $50 million in borrowings
were used to pay down our Wells Fargo unsecured line of credit.

On August 9, 2002, our Operating Partnership renewed and increased its
unsecured line of credit with a group of banks led by Wells Fargo. The renewed
line of credit provides for borrowings up to $310 million with an option to
increase the amount to $350 million and bears interest at a rate ranging
between LIBOR + 0.80% and LIBOR + 1.25% (including an annual facility fee
ranging from 0.15% to 0.40% based on the aggregate amount of the line of
credit) depending on the Operating Partnerships unsecured debt rating. This
new line of credit amends the previous $275 million unsecured line of credit
that was scheduled to mature in April 2003. This line of credit matures in
April 2006. In addition, as long as the Operating Partnership maintains an
unsecured debt rating of BBB-/Baa3 or better, the agreement contains a
competitive bid option, whereby the lenders may bid on the interest rate to be
charged for up to $150 million of the unsecured line of credit. The Operating
Partnership also has the option to convert the interest rate on this line of
credit to the higher of Wells Fargos prime rate or the Federal Funds rate plus
0.5%.

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##### Table of Contents



6. Stockholders Equity and Minority Interests

An operating partnership unit, or OP Unit, and a share of our common stock
have essentially the same economic characteristics as they share equally in the
total net income or loss and distributions of the operating partnership. An OP
Unit may be redeemed for cash or, at our election, for shares of common stock
on a one-for-one basis.

Our minority interest balance includes $50 million of 85/8% Series B
Cumulative Redeemable Preferred Operating Partnership Units, or Preferred OP
Units. These Preferred OP Units were issued in September of 1999, are callable
by us after five years and are exchangeable after ten years by the holder into
our 85/8% Series B Cumulative Redeemable Preferred Stock, on a one-for-one
basis. The Preferred OP Units have no stated maturity or mandatory redemption
and are subordinate to all debt.

On January 1, 2002, we extended the vesting period of a total of 477,600
unvested restricted stock awards granted to several key executive officers in
2000 and 2001, from their initial four-year and five-year vesting periods to a
ten-year vesting period from their initial grant date.

On February 28, 2002 we issued a total of 182,500 restricted stock awards
to several key executive officers. Holders of these shares have full voting
rights and will receive any dividends paid but are prohibited from selling or
transferring unvested shares. Of the 182,500 restricted shares awarded, 15,500
shares vest equally over three years and 167,000 shares vest equally over ten
years. We recorded a deferred compensation charge of approximately $4.7
million based on the market value of these shares on the date of award and will
amortize the compensation charge to expense on a straight-line basis over the
respective vesting periods.

On July 15, 2002, each non-employee director was granted 1,000 shares of
restricted stock under our Stock Option and Incentive Plan as part of their
annual compensation. The fair market value on the date of the grant for these
restricted shares was $25.09 per share. These restricted stock awards will
vest equally on the anniversary date of the awards over five years.

On July 24, 2002 our Board of Directors authorized a common stock
repurchase program pursuant to which we are authorized to purchase up to $75
million of our common stock over the following 12 months. As part of this
repurchase program, we acquired 239,500 shares of our common stock at an
average price of approximately $23.90 per share during the three months ended
September 30, 2002.

On September 5, 2002, we declared a quarterly dividend of $0.505 per share
to stockholders of record on September 30, 2002.

7. Revenue from Rental Operations and Property Expenses

Revenue from rental operations and property expenses are summarized as
follows (in thousands):

|                                |                          |   |                     |        |                     |   |         |        |      |   |         |         |  |   |         |         | 
|------------------------------- | ------------------------ | - | ------------------- | ------ | ------------------- | - | ------- | ------ | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                |                          |   | Three Months        |        | Nine Months        
|                                |                          |   | Ended September 30, |        | Ended September 30,
|                                |                          |   |                     |        |                    
|                                |                          |   | 2002                |        | 2001                |   | 2002    |        | 2001
|                                |                          |   |                     |        |                     |   |         |        |     
|                                |                          |   | (unaudited)        
|Revenue from Rental Operations: |                          |   |                     |        |                     |   |         |        |      |   |         |         |  |   |         |        
|                                | Scheduled cash rents     |   | $                   | 89,471 |                     |   | $       | 87,541 |      |   | $       | 263,785 |  |   | $       | 257,873 | 
|                                | Straight-line rents      |   |                     | 880    |                     |   |         | 2,428  |      |   |         | 4,665   |  |   |         | 6,937   | 
|                                | Tenant reimbursements    |   |                     | 5,805  |                     |   |         | 5,769  |      |   |         | 19,102  |  |   |         | 16,671  | 
|                                | Parking, net of expenses |   |                     | 5,420  |                     |   |         | 5,768  |      |   |         | 15,953  |  |   |         | 16,631  | 
|                                | Other rental operations  |   |                     | 2,802  |                     |   |         | 4,325  |      |   |         | 5,772   |  |   |         | 13,820  | 
|                                |                          |   |                     |        |                     |   |         |        |      |   |         |         |  |   |         |        
|                                |                          |   | 104,378             |        |                     |   | 105,831 |        |      |   | 309,277 |         |  |   | 311,932 |        
|                                |                          |   |                     |        |                     |   |         |        |      |   |         |         |  |   |         |        
|Property Expenses:              |                          |   |                     |        |                     |   |         |        |      |   |         |         |  |   |         |        
|                                | Repairs and maintenance  |   |                     | 9,904  |                     |   |         | 8,892  |      |   |         | 28,953  |  |   |         | 27,128  | 
|                                | Utilities                |   |                     | 10,734 |                     |   |         | 10,514 |      |   |         | 26,591  |  |   |         | 25,272  | 
|                                | Real estate taxes        |   |                     | 7,666  |                     |   |         | 7,308  |      |   |         | 22,278  |  |   |         | 21,994  | 
|                                | Insurance                |   |                     | 2,187  |                     |   |         | 1,500  |      |   |         | 5,951   |  |   |         | 4,211   | 
|                                | Ground rent              |   |                     | 278    |                     |   |         | 240    |      |   |         | 616     |  |   |         | 1,624   | 
|                                | Administrative           |   |                     | 4,166  |                     |   |         | 3,562  |      |   |         | 11,690  |  |   |         | 10,903  | 
|                                |                          |   |                     |        |                     |   |         |        |      |   |         |         |  |   |         |        
|                                |                          |   | 34,935              |        |                     |   | 32,016  |        |      |   | 96,079  |         |  |   | 91,132  |        
|                                |                          |   |                     |        |                     |   |         |        |      |   |         |         |  |   |         |        
|                                |                          | $ | 69,443              |        |                     | $ | 73,815  |        |      | $ | 213,198 |         |  | $ | 220,800 |        
|                                |                          |   |                     |        |                     |   |         |        |      |   |         |         |  |   |         |        

8. Subsequent Events

As part of our common stock repurchase program described in footnote 6
above, we repurchased an additional 1,428,500 shares of our common stock at an
average price of approximately $22.46 per share, subsequent to September 30,
2002.

On October 17, 2002, the borrower under our mortgage notes receivable
repaid the outstanding balance on the notes totaling approximately $13.7
million. As a result of this redemption, we recognized as income the
unamortized purchase discount at the time of repayment on these notes totaling
approximately $750,000.

9



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##### Table of Contents






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

Overview

The following discussion relates to our consolidated financial statements
and should be read in conjunction with the financial statements and related
notes thereto included in our 2001 Annual Report on Form 10-K.

We are a self-administered and self-managed real estate investment trust
that owns, manages, leases, develops, renovates and acquires commercial
properties located in Southern California. We are managed by 8 senior executive
officers who have experience in the real estate industry ranging from eleven to
thirty-four years and who collectively have an average of nineteen years
experience. We perform all property and development management, accounting,
finance and acquisition activities and a majority of our leasing transactions
with our staff of approximately 300 employees.

As of September 30, 2002, we were Southern Californias largest publicly
traded office landlord as measured by total net rentable square feet owned. As
of that date, our portfolio was comprised of 137 primarily suburban office
properties, consisting of 223 buildings with approximately 19.4 million net
rentable square feet including two development properties with approximately
566,000 net rentable square feet under lease-up. As of September 30, 2002, our
properties were approximately 89.7% occupied.

Our primary business strategy is to actively manage our portfolio to
achieve gains in rental rates and occupancy, control operating expenses and to
maximize income from ancillary operations and services. When market conditions
permit, we may selectively develop or acquire new properties that add value and
fit strategically into our portfolio. We may also sell existing properties and
redeploy the proceeds into investments that we believe will generate higher
long-term value.

10



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##### Table of Contents



RESULTS OF OPERATIONS

Our financial position and operating results are primarily comprised of
our portfolio of commercial properties and income derived from those
properties. Therefore, the comparability of financial data from period to
period will be affected by the timing of property developments, acquisitions
and dispositions.

Comparison of the
three months ended September 30, 2002 to the three months ended
September 30, 2001(in thousands, except number of properties and percentages):

|                          |                                 |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |     |     |    |   
|------------------------- | ------------------------------- | ----------------------- | ----------------------- | ------ | ------------------ | ------- | ------ | ------ | ------- | ------- | ------ | ----- | ------ | ------ | - | --- | --- | -- | --
|                          |                                 |                         |                         |        | Three Months Ended |         |        |        |         |         |        |       |       
|                          |                                 |                         |                         |        | September 30,      |         |        |        |         |         |        |       |       
|                          |                                 |                         |                         |        |                    |         | Dollar |        | Percent
|                          |                                 |                         |                         |        | 2002               |         | 2001   |        | Change  |         | Change
|                          |                                 |                         |                         |        |                    |         |        |        |         |         |       
|                          |                                 |                         |                         |        | (unaudited)        |         |        |        |         |         |        |       |       
|Revenue                   |                                 |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |    
|                          | Revenue from rental operations: |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |     |    
|                          |                                 | Scheduled cash rents    |                         | $      | 89,471             |         |        | $      | 87,541  |         |        | $     | 1,930  |        |   |     | 2   | % 
|                          |                                 | Straight-line rents     |                         |        | 880                |         |        |        | 2,428   |         |        |       | (1,548 | )      |   |     | (64 | ) 
|                          |                                 | Tenant reimbursements   |                         |        | 5,805              |         |        |        | 5,769   |         |        |       | 36     |        |   |     | 1   |   
|                          |                                 | Parking, net of expense |                         |        | 5,420              |         |        |        | 5,768   |         |        |       | (348   | )      |   |     | (6  | ) 
|                          |                                 | Other rental operations |                         |        | 2,802              |         |        |        | 4,325   |         |        |       | (1,523 | )      |   |     | (35 | ) 
|                          |                                 |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |    
|                          |                                 |                         | Total                   |        |                    | 104,378 |        |        |         | 105,831 |        |       |        | (1,453 | ) |     |     | (1 | ) 
|                          | Interest and other income       |                         |                         | 524    |                    |         |        | 706    |         |         |        | (182  | )      |        |   | (26 | )  
|                          |                                 |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |    
|                          |                                 |                         | Total revenue           |        | $                  | 104,902 |        |        | $       | 106,537 |        |       | $      | (1,635 | ) |     |     | (2 | )%
|                          |                                 |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |    
|Expenses                  |                                 |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |    
|                          | Property expenses:              |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |     |    
|                          |                                 | Repairs and maintenance |                         | $      | 9,904              |         |        | $      | 8,892   |         |        | $     | 1,012  |        |   |     | 11  | % 
|                          |                                 | Utilities               |                         |        | 10,734             |         |        |        | 10,514  |         |        |       | 220    |        |   |     | 2   |   
|                          |                                 | Real estate taxes       |                         |        | 7,666              |         |        |        | 7,308   |         |        |       | 358    |        |   |     | 5   |   
|                          |                                 | Insurance               |                         |        | 2,187              |         |        |        | 1,500   |         |        |       | 687    |        |   |     | 46  |   
|                          |                                 | Ground rent             |                         |        | 278                |         |        |        | 240     |         |        |       | 38     |        |   |     | 16  |   
|                          |                                 | Administrative          |                         |        | 4,166              |         |        |        | 3,562   |         |        |       | 604    |        |   |     | 17  |   
|                          |                                 |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |    
|                          |                                 |                         | Total property expenses |        |                    | 34,935  |        |        |         | 32,016  |        |       |        | 2,919  |   |     |     | 9  |   
|                          | General and administrative      |                         |                         | 3,323  |                    |         |        | 2,505  |         |         |        | 818   |        |        |   | 33  |    
|                          | Interest                        |                         |                         | 22,403 |                    |         |        | 20,819 |         |         |        | 1,584 |        |        |   | 8   |    
|                          | Depreciation and amortization   |                         |                         | 27,650 |                    |         |        | 25,854 |         |         |        | 1,796 |        |        |   | 7   |    
|                          |                                 |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |    
|                          |                                 |                         | Total expenses          |        | $                  | 88,311  |        |        | $       | 81,194  |        |       | $      | 7,117  |   |     |     | 9  | % 
|                          |                                 |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |    
|Number of Properties:     |                                 |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |    
|                          | Acquired during period          |                         |                         | 5      |                    |         |        |       |         |         |        |       |        |        |   |     |    
|                          | Sold during period              |                         |                         |       |                    |         |        | (2     | )       |         |        |       |        |        |   |     |    
|                          | In service at end of period     |                         |                         | 135    |                    |         |        | 138    |         |         |        |       |        |        |   |     |    
|Net Rentable Square Feet: |                                 |                         |                         |        |                    |         |        |        |         |         |        |       |        |        |   |    
|                          | Acquired during period          |                         |                         | 803    |                    |         |        |       |         |         |        |       |        |        |   |     |    
|                          | Sold during period              |                         |                         |       |                    |         |        | (131   | )       |         |        |       |        |        |   |     |    
|                          | In service at end of period     |                         |                         | 18,845 |                    |         |        | 18,271 |         |         |        |       |        |        |   |     |    

Variances from rental operations and property expenses are discussed on
the next page.

Interest and other income decreased by approximately $182,000 for the
three months ended September 30, 2002 as compared to the same period in 2001,
primarily due to lower effective interest rates in 2002 on investment of our
restricted cash balances required by mortgage loans.

General and administrative expenses as a percentage of total revenues were
approximately 3.2% for the three months ended September 30, 2002, as compared
to approximately 2.4% for the same period in 2001. The $818,000 increase in
general and administrative expenses was primarily related to non-recurring
costs resulting from employee separation costs and higher external legal and
accounting costs.

Interest expense increased approximately $1.6 million, or 8%, during the
three months ended September 30, 2002, as compared to the same period in 2001.
This increase was primarily due to increases in borrowings in 2002 for property
acquisitions and lower interest capitalized in 2002. Capitalized interest was
lower in 2002 as we ceased capitalizing interest on our 6080 Center Drive
development property in May 2002. The increases in interest expense were
partially offset by lower effective interest rates in 2002.

Depreciation and amortization expense increased by approximately $1.8
million or 7% during the three months ended September 30, 2002, as compared to
the same period in 2001, primarily due to depreciation related to a property
placed in service in the fourth quarter of 2001 and depreciation expense
recorded in 2002 related to properties previously held for sale in 2001 for
which no depreciation expense was recorded in 2001 while classified as held for
sale.

11



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##### Table of Contents



Variances for Revenue from Rental Operations and Property Expenses

The decrease in revenue from rental operations for the three months ended
September 30, 2002 as compared to the same period in 2001 was primarily due to
a 4.3% reduction in the average occupancy and the timing of lease termination
settlements and other non-recurring items in our portfolio of 129 properties
that we owned for all of the three month periods ended September 30, 2001 and
2002.

Following is a summary of the variances in revenue from rental operations
and property expenses that relates to the seventeen properties that were either
acquired, sold or placed in service after June 30, 2001 and for the 129
non-development properties we owned for all of the three month periods ended
September 30, 2001 and 2002 (unaudited and in thousands, except for number of
properties):

|                                |                          |   |                |        |                     |   |                                |       |                      |   |                            |        |  
|------------------------------- | ------------------------ | - | -------------- | ------ | ------------------- | - | ------------------------------ | ----- | -------------------- | - | -------------------------- | ------ | -
|                                |                          |   |                |        |                     |   |                                |       |                      |   | Non-Development Properties
|                                |                          |   |                |        |                     |   | Properties Acquired, Sold or   |       | Owned for all of the
|                                |                          |   |                |        |                     |   | Placed in Service              |       | Three Months Ended  
|                                |                          |   | Total Variance |        | after June 30, 2001 |   | September 30, 2002 and 2001(1)
|                                |                          |   |                |        |                     |   |                               
|Revenue from Rental Operations: |                          |   |                |        |                     |   |                                |       |                      |   |                            |       
|                                | Scheduled cash rents     |   | $              | 1,930  |                     |   | $                              | 1,991 |                      |   | $                          | (61    | )
|                                | Straight-line rents      |   |                | (1,548 | )                   |   |                                | (207  | )                    |   |                            | (1,341 | )
|                                | Tenant reimbursements    |   |                | 36     |                     |   |                                | 606   |                      |   |                            | (570   | )
|                                | Parking, net of expenses |   |                | (348   | )                   |   |                                | 43    |                      |   |                            | (391   | )
|                                | Other rental operations  |   |                | (1,523 | )                   |   |                                | 60    |                      |   |                            | (1,583 | )
|                                |                          |   |                |        |                     |   |                                |       |                      |   |                            |       
|                                |                          | $ | (1,453         | )      |                     | $ | 2,493                          |       |                      | $ | (3,946                     | )     
|                                |                          |   |                |        |                     |   |                                |       |                      |   |                            |       
|Property Expenses:              |                          |   |                |        |                     |   |                                |       |                      |   |                            |       
|                                | Repairs and maintenance  |   | $              | 1,012  |                     |   | $                              | 434   |                      |   | $                          | 578    |  
|                                | Utilities                |   |                | 220    |                     |   |                                | 165   |                      |   |                            | 55     |  
|                                | Real estate taxes        |   |                | 358    |                     |   |                                | 275   |                      |   |                            | 83     |  
|                                | Insurance                |   |                | 687    |                     |   |                                | 63    |                      |   |                            | 624    |  
|                                | Ground rent              |   |                | 38     |                     |   |                                |      |                      |   |                            | 38     |  
|                                | Administrative           |   |                | 604    |                     |   |                                | 859   |                      |   |                            | (255   | )
|                                |                          |   |                |        |                     |   |                                |       |                      |   |                            |       
|                                |                          | $ | 2,919          |        |                     | $ | 1,796                          |       |                      | $ | 1,123                      |       
|                                |                          |   |                |        |                     |   |                                |       |                      |   |                            |       
|Other Data:                     |                          |   |                |        |                     |   |                                |       |                      |   |                            |       
|                                | Number of properties     |   |                |        |                     |   |                                | 17    |                      |   |                            | 129    |  
|                                | Net rentable square feet |   |                |        |                     |   |                                | 1,444 |                      |   |                            | 17,880 |  



---

|(1) |  | See analysis for these properties below.
|--- |  | ----------------------------------------

12



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##### Table of Contents



Same Properties

Following is a comparison of property operating data computed under the
GAAP basis and cash basis of accounting for the 129 non-development properties
we owned for the entire three month periods ended September 30, 2002 and 2001
(in thousands, except number of properties and percentages):

|                                     |  |                    |        |        |  |         |         |        |  |   |        |   |  |  |      |   
|------------------------------------ |  | ------------------ | ------ | ------ |  | ------- | ------- | ------ |  | - | ------ | - |  |  | ---- | --
|                                     |  | Three Months Ended |        |        |  |         |         |        |  |  
|                                     |  | September 30,      |        |        |  |         |         |        |  |  
|                                     |  |                    |        | Dollar |  | Percent
|                                     |  | 2002               |        | 2001   |  | Change  |         | Change
|                                     |  |                    |        |        |  |         |         |       
|                                     |  | (unaudited)        |        |        |  |         |         |        |  |  
|GAAP Basis:                          |  |                    |        |        |  |         |         |        |  |   |        |   |  |  |      |   
|Revenue from rental operations       |  | $                  | 97,964 |        |  | $       | 101,910 |        |  | $ | (3,946 | ) |  |  | (3.9 | %)
|Property expenses                    |  |                    | 32,347 |        |  |         | 31,224  |        |  |   | 1,123  |   |  |  | 3.6  | % 
|                                     |  |                    |        |        |  |         |         |        |  |   |        |   |  |  |      |   
|                                     |  | $                  | 65,617 |        |  | $       | 70,686  |        |  | $ | (5,069 | ) |  |  | (7.2 | %)
|                                     |  |                    |        |        |  |         |         |        |  |   |        |   |  |  |      |   
|Cash Basis(1):                       |  |                    |        |        |  |         |         |        |  |   |        |   |  |  |      |   
|Revenue from rental operations       |  | $                  | 97,523 |        |  | $       | 100,128 |        |  | $ | (2,605 | ) |  |  | (2.6 | %)
|Property expenses                    |  |                    | 32,347 |        |  |         | 31,224  |        |  |   | 1,123  |   |  |  | 3.6  | % 
|                                     |  |                    |        |        |  |         |         |        |  |   |        |   |  |  |      |   
|                                     |  | $                  | 65,176 |        |  | $       | 68,904  |        |  | $ | (3,728 | ) |  |  | (5.4 | %)
|                                     |  |                    |        |        |  |         |         |        |  |   |        |   |  |  |      |   
|Number of non-development properties |  |                    | 129    |        |  |         | 129     |        |  |   |        |   |  |  |      |   
|Average occupancy                    |  |                    | 89.6   | %      |  |         | 93.9    | %      |  |   |        |   |  |  |      |   
|Net rentable square feet             |  |                    | 17,880 |        |  |         | 17,880  |        |  |   |        |   |  |  |      |   



---

|(1) |  | Excludes straight-line rent adjustments.
|--- |  | ----------------------------------------

Revenue from rental operations for these properties, computed on a GAAP
basis, decreased by approximately $3.9 million, or 3.9%, during the third
quarter of 2002 as compared to the same period in 2001. This decrease was due
to a $1.6 million decrease in revenue from other rental operations in 2002, a
$1.3 million decrease in straight-line rents, a $570,000 decrease in tenant
reimbursements, a $391,000 decrease in parking income and a $61,000 decrease in
scheduled cash rents. Revenue from other rental operations decreased primarily
due to lower lease termination settlements and other non-recurring items in
2002. The decrease in straight-line rents is discussed below. Tenant
reimbursements decreased primarily due to a 4.3% decrease in average occupancy
for the three months ended September 30, 2002 compared to the same period in
2001 and increases in our reimbursement receivables reserve partially offset by
recovery billings from higher property expenses discussed below. Parking
income decreased due to the decline in average occupancy while scheduled cash
rents decreased slightly as the decrease in rents from our decline in average
occupancy was offset by scheduled rent increases and rental rate growth
attained on new and renewed leases.

The approximate $1.3 million decrease in 2002 for straight-line rents was
primarily due to increases in our deferred rent reserves and the turning over
of straight-line rents for older leases throughout our same property portfolio.

Property expenses for these properties increased by approximately $1.1
million, or 3.6%, during the three months ended September 30, 2002, compared to
the same period in 2001, primarily due to an approximate $578,000 increase in
repairs and maintenance expense and a $624,000 increase in insurance expense.
The increase in repairs and maintenance expense was due primarily to increases
in janitorial costs and the timing of contractual payments. Insurance expense
increased due to increases in industry-wide insurance rates in 2002 and
premiums related to a $100 million terrorism insurance policy entered into in
the second quarter of 2002.

13



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##### Table of Contents



Comparison of the
nine months ended September 30, 2002 to the nine months ended
September 30, 2001
          (in thousands, except number of propertiesand percentages):

|                          |                                 |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |     |     |    | 
|------------------------- | ------------------------------- | ------------------------ | --------------------------------- | ------ | ----------------- | ------ | ------- | ------ | ------- | ------ | ------ | ----- | ------ | ----- | -- | --- | --- | -- | 
|                          |                                 |                          |                                   |        | Nine Months Ended |        |         |        |         |        |        |       |       
|                          |                                 |                          |                                   |        | September 30,     |        |         |        |         |        |        |       |       
|                          |                                 |                          |                                   |        |                   |        | Dollar  |        | Percent
|                          |                                 |                          |                                   |        | 2002              |        | 2001    |        | Change  |        | Change
|                          |                                 |                          |                                   |        |                   |        |         |        |         |        |       
|                          |                                 |                          |                                   |        | (unaudited)       |        |         |        |         |        |        |       |       
|Revenue                   |                                 |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |    
|                          | Revenue from rental operations: |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |     |    
|                          |                                 | Scheduled cash rents     |                                   | $      | 263,785           |        |         | $      | 257,873 |        |        | $     | 5,912  |       |    |     | 2   | % 
|                          |                                 | Straight-line rents      |                                   |        | 4,665             |        |         |        | 6,937   |        |        |       | (2,272 | )     |    |     | (33 | ) 
|                          |                                 | Tenant reimbursements    |                                   |        | 19,102            |        |         |        | 16,671  |        |        |       | 2,431  |       |    |     | 15  |   
|                          |                                 | Parking, net of expenses |                                   |        | 15,953            |        |         |        | 16,631  |        |        |       | (678   | )     |    |     | (4  | ) 
|                          |                                 | Other rental operations  |                                   |        | 5,772             |        |         |        | 13,820  |        |        |       | (8,048 | )     |    |     | (58 | ) 
|                          |                                 |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |    
|                          |                                 |                          | 309,277                           |        |                   |        | 311,932 |        |         |        | (2,655 | )     |        |       | (1 | )  
|                          | Interest and other income       |                          |                                   | 1,576  |                   |        |         | 2,331  |         |        |        | (755  | )      |       |    | (32 | )  
|                          |                                 |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |    
|                          |                                 | Total revenue            |                                   | $      | 310,853           |        |         | $      | 314,263 |        |        | $     | (3,410 | )     |    |     | (1  | )%
|                          |                                 |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |    
|Expenses                  |                                 |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |    
|                          | Property expenses:              |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |     |    
|                          |                                 | Repairs and maintenance  |                                   | $      | 28,953            |        |         | $      | 27,128  |        |        | $     | 1,825  |       |    |     | 7   | % 
|                          |                                 | Utilities                |                                   |        | 26,591            |        |         |        | 25,272  |        |        |       | 1,319  |       |    |     | 5   |   
|                          |                                 | Real estate taxes        |                                   |        | 22,278            |        |         |        | 21,994  |        |        |       | 284    |       |    |     | 1   |   
|                          |                                 | Insurance                |                                   |        | 5,951             |        |         |        | 4,211   |        |        |       | 1,740  |       |    |     | 41  |   
|                          |                                 | Ground rent              |                                   |        | 616               |        |         |        | 1,624   |        |        |       | (1,008 | )     |    |     | (62 | ) 
|                          |                                 | Administrative           |                                   |        | 11,690            |        |         |        | 10,903  |        |        |       | 787    |       |    |     | 7   |   
|                          |                                 |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |    
|                          |                                 |                          | Total property operating expenses |        |                   | 96,079 |         |        |         | 91,132 |        |       |        | 4,947 |    |     |     | 5  | 
|                          | General and administrative      |                          |                                   | 9,234  |                   |        |         | 8,087  |         |        |        | 1,147 |        |       |    | 14  |    
|                          | Interest                        |                          |                                   | 65,384 |                   |        |         | 63,058 |         |        |        | 2,326 |        |       |    | 4   |    
|                          | Depreciation and amortization   |                          |                                   | 82,855 |                   |        |         | 74,176 |         |        |        | 8,679 |        |       |    | 12  |    
|                          |                                 |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |    
|                          |                                 | Total expenses           |                                   | $      | 253,552           |        |         | $      | 236,453 |        |        | $     | 17,099 |       |    |     | 7   | % 
|                          |                                 |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |    
|Number of Properties:     |                                 |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |    
|                          | Acquired during period          |                          |                                   | 5      |                   |        |         |       |         |        |        |       |        |       |    |     |    
|                          | Sold during period              |                          |                                   | (3     | )                 |        |         | (4     | )       |        |        |       |        |       |    |     |    
|                          | In service at end of period     |                          |                                   | 135    |                   |        |         | 138    |         |        |        |       |        |       |    |     |    
|Net Rentable Square Feet: |                                 |                          |                                   |        |                   |        |         |        |         |        |        |       |        |       |    |    
|                          | Acquired during period          |                          |                                   | 803    |                   |        |         |       |         |        |        |       |        |       |    |     |    
|                          | Sold during period              |                          |                                   | (205   | )                 |        |         | (387   | )       |        |        |       |        |       |    |     |    
|                          | In service at end of period     |                          |                                   | 18,845 |                   |        |         | 18,271 |         |        |        |       |        |       |    |     |    

Variances from rental operations and property expenses are discussed on
the next page.

Interest and other income decreased approximately $755,000 for the nine
months ended September 30, 2002 as compared to the same period in 2001,
primarily due to lower effective interest rates in 2002 on investment of our
restricted cash balances required by mortgage loans.

General and administrative expenses as a percentage of total revenues were
approximately 3.0% for the nine months ended September 30, 2002, as compared to
approximately 2.6% for the same period in 2001. The $1.1 million increase in
general and administrative expenses was partially due to non-recurring costs
resulting from employee separation costs and higher external legal and
accounting costs.

Interest expense increased approximately $2.3 million or 4% during the
nine months ended September 30, 2002, as compared to the same period in 2001.
This increase was primarily due to an increase in borrowings in 2002 for
property acquisitions and lower interest capitalized in 2002. Capitalized
interest was lower in 2002 as we ceased capitalizing interest on 6080 Center
Drive development property in May 2002. The increases in interest expense were
partially offset by lower effective interest rates in 2002.

Depreciation and amortization expense increased by approximately $8.7
million or 12% during the nine months ended September 30, 2002 compared to the
same period in 2001, primarily due to depreciation related to a newly developed
property placed in service in the fourth quarter of 2001 and depreciation
expense recorded in 2002 related to properties previously held for sale in 2001
for which no depreciation expense was recorded in 2001 while classified as held
for sale.

14



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##### Table of Contents



Variances for Revenue from Rental Operations and Property Expenses

The decrease in revenue from rental operations for the nine months ended
September 30, 2002 as compared to the same period in 2001 was primarily due to
a 3.2% reduction in the average occupancy and the timing of lease termination
settlements and other non-recurring items in our portfolio of 129 properties
that we owned for all of the nine month periods ended September 30, 2001 and
2002.

Following is a summary of the variances in revenue from rental operations
and property expenses that relates to the nineteen properties that were either
acquired, sold or placed in service after December 31, 2000 and for the 129
non-development properties we owned for all of the nine month periods ended
September 30, 2001 and 2002 (unaudited and in thousands, except for number of
properties):

|                                |                          |   |                |        |      |   |                    |        |                    |   |                 |        |  
|------------------------------- | ------------------------ | - | -------------- | ------ | ---- | - | ------------------ | ------ | ------------------ | - | --------------- | ------ | -
|                                |                          |   |                |        |      |   |                    |        |                    |   | Non-Development
|                                |                          |   |                |        |      |   | Properties         |        | Properties Owned  
|                                |                          |   |                |        |      |   | Acquired, Sold or  |        | for all of the    
|                                |                          |   |                |        |      |   | Placed in Service  |        | Nine Months Ended 
|                                |                          |   |                |        |      |   | after December 31, |        | September 30, 2002
|                                |                          |   | Total Variance |        | 2000 |   | and 2001(1)       
|                                |                          |   |                |        |      |   |                   
|Revenue from Rental Operations: |                          |   |                |        |      |   |                    |        |                    |   |                 |       
|                                | Scheduled cash rents     |   | $              | 5,912  |      |   | $                  | 4,499  |                    |   | $               | 1,413  |  
|                                | Straight-line rents      |   |                | (2,272 | )    |   |                    | 721    |                    |   |                 | (2,993 | )
|                                | Tenant reimbursements    |   |                | 2,431  |      |   |                    | 1,588  |                    |   |                 | 843    |  
|                                | Parking, net of expenses |   |                | (678   | )    |   |                    | (92    | )                  |   |                 | (586   | )
|                                | Other rental operations  |   |                | (8,048 | )    |   |                    | (2,082 | )                  |   |                 | (5,966 | )
|                                |                          |   |                |        |      |   |                    |        |                    |   |                 |       
|                                |                          | $ | (2,655         | )      |      | $ | 4,634              |        |                    | $ | (7,289          | )     
|                                |                          |   |                |        |      |   |                    |        |                    |   |                 |       
|Property Expenses:              |                          |   |                |        |      |   |                    |        |                    |   |                 |       
|                                | Repairs and maintenance  |   | $              | 1,825  |      |   | $                  | 817    |                    |   | $               | 1,008  |  
|                                | Utilities                |   |                | 1,319  |      |   |                    | 288    |                    |   |                 | 1,031  |  
|                                | Real estate taxes        |   |                | 284    |      |   |                    | 470    |                    |   |                 | (186   | )
|                                | Insurance                |   |                | 1,740  |      |   |                    | 66     |                    |   |                 | 1,674  |  
|                                | Ground rent              |   |                | (1,008 | )    |   |                    |       |                    |   |                 | (1,008 | )
|                                | Administrative           |   |                | 787    |      |   |                    | 673    |                    |   |                 | 114    |  
|                                |                          |   |                |        |      |   |                    |        |                    |   |                 |       
|                                |                          | $ | 4,947          |        |      | $ | 2,314              |        |                    | $ | 2,633           |       
|                                |                          |   |                |        |      |   |                    |        |                    |   |                 |       
|Other Data:                     |                          |   |                |        |      |   |                    |        |                    |   |                 |       
|                                | Number of properties     |   |                |        |      |   |                    | 19     |                    |   |                 | 129    |  
|                                | Net rentable square feet |   |                |        |      |   |                    | 1,700  |                    |   |                 | 17,880 |  



---

|(1) |  | See analysis for these properties below.
|--- |  | ----------------------------------------

15



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##### Table of Contents



Same Properties

Following is a comparison of property operating data computed under the
GAAP Basis and Cash Basis for the 129 non- development properties we owned for
the entire nine month periods ended September 30, 2002 and 2001 (in thousands,
except number of properties and percentages):

|                                     |  |                   |         |        |  |         |         |        |  |   |        |   |  |  |      |   
|------------------------------------ |  | ----------------- | ------- | ------ |  | ------- | ------- | ------ |  | - | ------ | - |  |  | ---- | --
|                                     |  | Nine months Ended |         |        |  |         |         |        |  |  
|                                     |  | September 30,     |         |        |  |         |         |        |  |  
|                                     |  |                   |         | Dollar |  | Percent
|                                     |  | 2002              |         | 2001   |  | Change  |         | Change
|                                     |  |                   |         |        |  |         |         |       
|                                     |  | (unaudited)       |         |        |  |         |         |        |  |  
|GAAP Basis:                          |  |                   |         |        |  |         |         |        |  |   |        |   |  |  |      |   
|Revenue from rental operations       |  | $                 | 293,782 |        |  | $       | 301,071 |        |  | $ | (7,289 | ) |  |  | (2.4 | %)
|Property expenses                    |  |                   | 90,975  |        |  |         | 88,342  |        |  |   | 2,633  |   |  |  | 3.0  | % 
|                                     |  |                   |         |        |  |         |         |        |  |   |        |   |  |  |      |   
|                                     |  | $                 | 202,807 |        |  | $       | 212,729 |        |  | $ | (9,922 | ) |  |  | (4.7 | %)
|                                     |  |                   |         |        |  |         |         |        |  |   |        |   |  |  |      |   
|Cash Basis(1):                       |  |                   |         |        |  |         |         |        |  |   |        |   |  |  |      |   
|Revenue from rental operations       |  | $                 | 290,560 |        |  | $       | 294,856 |        |  | $ | (4,296 | ) |  |  | (1.5 | %)
|Property expenses                    |  |                   | 90,975  |        |  |         | 88,342  |        |  |   | 2,633  |   |  |  | 3.0  | % 
|                                     |  |                   |         |        |  |         |         |        |  |   |        |   |  |  |      |   
|                                     |  | $                 | 199,585 |        |  | $       | 206,514 |        |  | $ | (6,929 | ) |  |  | (3.4 | %)
|                                     |  |                   |         |        |  |         |         |        |  |   |        |   |  |  |      |   
|Number of non-development properties |  |                   | 129     |        |  |         | 129     |        |  |   |        |   |  |  |      |   
|Average occupancy                    |  |                   | 90.8    | %      |  |         | 94.0    | %      |  |   |        |   |  |  |      |   
|Net rentable square feet             |  |                   | 17,880  |        |  |         | 17,880  |        |  |   |        |   |  |  |      |   



---

|(1) |  | Excludes straight-line rent adjustments.
|--- |  | ----------------------------------------

Revenue from rental operations for these properties, computed on a GAAP
basis, decreased by approximately $7.3 million, or 2.4%, during the nine months
ended September 30, 2002 as compared to the same period in 2001. The decrease
was due to an approximate $6.0 million decrease in revenue from other rental
operations, a $3.0 million decrease in straight-line rents and a $586,000
decrease in parking income that was partially offset by an approximate $1.4
million increase in scheduled cash rents and an $843,000 increase in tenant
reimbursements. The decrease in revenue from other rental operations was
primarily due to lower lease termination settlements and other non-recurring
items in 2002 while the decrease in parking income was due to a decrease in
average occupancy for the nine month ended September 30, 2002 compared to the
same period in 2001. The decrease in straight-line rents in 2002 is discussed
below. Scheduled cash rents increased primarily due to scheduled rent
increases and rental rate growth attained on new and renewed leases which were
partially offset by the decline in average occupancy. Tenant reimbursements
increased primarily due to recovery billings for higher operating expenses
discussed below.

The approximate $3.0 million decrease in 2002 for straight-line rents was
primarily due to the turning over of straight-line rents for older leases
throughout our same store portfolio and increases in our deferred rent
reserves.

Property expenses for these properties increased by approximately $2.6
million, or 3.0%, during the nine months ended September 30, 2002 as compared
to the same period in 2001. The increase was primarily due to a $1.0 million
increase in utility expenses, a $1.0 million increase in repairs and
maintenance expense and a $1.7 million increase in insurance expense in 2002
which was partially offset by a $1.0 million decrease in ground rent expense.
The increase in utility expenses was due to rate increases enacted in May 2001.
Repairs and maintenance expense increased in 2002 primarily due to higher
janitorial costs while insurance expense increased due to increases in
industry-wide insurance rates in 2002 and premiums related to a $100 million
terrorism insurance policy entered into in the second quarter of 2002. Ground
rent expense decreased in 2002 due to lower operating income from one of our
properties with a participating ground lease.

16



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##### Table of Contents



Liquidity and Capital Resources

Cash Flows

Cash provided by operating activities increased by approximately $7.0
million to $153.6 million for the nine months ended September 30, 2002, as
compared to $146.6 million for the same period in 2001. This increase was
primarily due to the increased cash flows on five properties acquired in the
third quarter of 2002, a reduction in tenant receivables in 2002 as a result of
our collection efforts and cash flows for a development property placed in
service in the fourth quarter of 2001, all of which was partially offset by the
loss of operating cash flows on ten properties sold in 2001, one property sold
in the first quarter of 2002 and two properties sold in the second quarter of
2002.

Cash used in investing activities increased by approximately $99.7 million
to $198.4 million for the nine months ended September 30, 2002 compared to
$98.7 million for the same period in 2001. This increase was primarily due to
the acquisition of five properties for approximately $134.9 million in the
third quarter of 2002 which was partially offset by the decrease in our
construction activity in 2002 as a result of our placement in service of a
development project in the fourth quarter of 2001 and completion of shell
construction of an additional development property in the second quarter of
2002.

Cash used in financing activities increased by approximately $55.9 million
to an inflow of $14.0 million for the nine months ended September 30, 2002, as
compared to an out flow of $41.9 million for the same period in 2001. This
increase was primarily due to borrowings under the Wells Fargo unsecured line
of credit made for purposes of funding our property acquisitions in 2002.

Available Borrowings, Cash Balance and Capital Resources

We have an unsecured line of credit with a total commitment of $10 million
from City National Bank. This line of credit accrues interest at the City
National Bank Prime Rate less 0.875% and is scheduled to mature on August 1,
2003. Proceeds from this line of credit are used, among other things, to
provide funds for tenant improvements and capital expenditures and provide for
working capital and other corporate purposes. As of September 30, 2002, there
was no outstanding balance on this line of credit and $10 million was available
for additional borrowings.

On March 7, 2002, we sold an approximate 64,000 square foot office
property located in Torrance, California for approximately $6.9 million. On
April 16, 2002, we sold an approximate 61,000 square foot office building
located in Westlake, California for approximately $8.3 million. On May 1, 2002
we also completed the sale of an approximate 80,000 square foot office property
located in Canoga Park, California for approximately $8.4 million. The net
proceeds from these dispositions were used to reduce the outstanding balance on
the Wells Fargo unsecured line of credit.

On June 13, 2002, our Operating Partnership closed on a $75 million
unsecured term loan with Wells Fargo. This loan matures in June 2004, has a
two-year extension option and bears interest at LIBOR + 1.25% during the
initial term and LIBOR + 1.45% during the extension period. The proceeds from
this loan were used to repay the outstanding balance on the Lehman Brothers
unsecured line of credit that was scheduled to mature in July 2002.

On July 24, 2002, our Board of Directors authorized a common stock
repurchase program pursuant to which we were authorized to purchase up to $75
million of our common stock over the following 12 months. As part of this
repurchase program, we have acquired a total of 1,668,000 shares as of the date
of this report at an average price of approximately $22.67 per share. The
funds for these repurchases were attained from the proceeds received from the
repayment of the mortgage notes receivable described below and borrowings under
the Wells Fargo unsecured line of credit.

On August 6, 2002, we acquired Gateway Towers, an office property located
in Torrance, California containing approximately 433,000 net rentable square
feet for approximately $66 million. Gateway Towers consists of two buildings
that are approximately 93% leased and includes an additional 5-acre development
parcel. The funds for this acquisition were attained from borrowings under the
Wells Fargo unsecured line of credit.

On August 9, 2002, our Operating Partnership renewed and increased its
unsecured line of credit with a group of banks led by Wells Fargo. The renewed
line of credit provides for borrowings up to $310 million with an option to
increase the amount to $350 million and bears interest at a rate ranging
between LIBOR + 0.80% and LIBOR + 1.25% (including an annual facility fee
ranging from 0.15% to 0.40% based on the aggregate amount of the line of
credit) depending on the Operating Partnerships unsecured debt rating. This
new line of credit amends the previous $275 million unsecured line of credit
that was scheduled to mature in April 2003. This line of credit matures in
April 2006. In addition, as long as the Operating Partnership maintains an
unsecured debt rating of BBB-/Baa3 or better, the agreement contains a
competitive bid option, whereby the lenders may bid on the interest rate to be
charged for up to $150 million of the unsecured line of credit. The Operating
Partnership also has the option to convert the interest rate on this line of
credit to the higher of Wells Fargos prime rate or the Federal Funds rate plus
0.5%.

On August 16, 2002, we acquired Governor Executive Center and Crossroads,
two office properties located in San Diego County containing approximately
186,000 square feet for approximately $28.0 million. Governor Executive Center
is a three-story, 52,195 square foot, 97% leased office building located in the
Governor Park submarket. Crossroads is a seven-story, 133,566 square foot,
100% leased multi-tenant office building located in the Mission Valley
submarket. On August 30, 2002, we acquired Carmel Valley Center I & II and
Carmel View Office Center, two office properties located in San Diego County
containing approximately 185,000 square feet for approximately $41.0 million.
Carmel Valley Center I & II consists of two 97% leased office buildings
totaling 107,197 square feet located in the Del Mar Heights submarket. Carmel
View Office Center is a three-story, 77,460 square foot, 94% leased office
building

17



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##### Table of Contents



located in the master planned development of Carmel Mountain Ranch within
the Rancho Bernardo submarket. The funds for these acquisitions were attained
from borrowings under the Wells Fargo unsecured line of credit.

On September 25, 2002, our Operating Partnership increased its $75 million
unsecured term loan with Wells Fargo by an additional $50 million and repaid
$50 million on the Wells Fargo unsecured line of credit.

On October 17, 2002, the borrower of our mortgage notes receivable repaid
the outstanding balance on the notes totaling approximately $13.7 million. As
a result of this redemption, we recognized as income the unamortized purchase
discount on these notes at the time of repayment totaling approximately
$750,000. The proceeds from this repayment were used to partially fund our
stock repurchases described above.

Following is a summary of scheduled principal payments for our total debt
outstanding as of September 30, 2002 (in thousands):

|           |       |        |         |           | 
|---------- | ----- | ------ | ------- | --------- | 
|Year       |       | Amount
|           |       |       
|2002       |       | $      | 808     |          
|2003       |       |        | 5,298   |          
|2004       |       |        | 307,062 | (1)      
|2005       |       |        | 207,678 |          
|2006       |       |        | 189,650 | (2)      
|2007       |       |        | 158,681 |          
|2008       |       |        | 230,305 |          
|2009       |       |        | 111,980 |          
|2010       |       |        | 150,565 |          
|2011       |       |        | 710     |          
|Thereafter |       |        | 6,213   |          
|           |       |        |         |          
|           | Total |        | $       | 1,368,950 | 
|           |       |        |         |          



---

|(1) |  | Includes $125 million outstanding on the Wells Fargo term loan which has a two-year extension option.
|--- |  | -----------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Consists primarily of $174.6 million outstanding on the Wells Fargo line of credit.                  

Following is certain other information related to our outstanding
indebtedness as of September 30, 2002 (in thousands, except percentage data):

Unsecured and Secured Debt:

|               |  |         |           |         |  |                  |     |   |  |          |      |  
|-------------- |  | ------- | --------- | ------- |  | ---------------- | --- | - |  | -------- | ---- | -
|               |  |         |           |         |  |                  |     |   |  | Weighted
|               |  |         |           |         |  |                  |     |   |  | Average 
|               |  | Balance |           | Percent |  | Interest Rate(1)
|               |  |         |           |         |  |                 
|Unsecured Debt |  | $       | 797,554   |         |  |                  | 58  | % |  |          | 6.64 | %
|Secured Debt   |  |         | 571,396   |         |  |                  | 42  | % |  |          | 7.36 | %
|               |  |         |           |         |  |                  |     |   |  |          |      |  
|Total Debt     |  | $       | 1,368,950 |         |  |                  | 100 | % |  |          | 6.94 | %
|               |  |         |           |         |  |                  |     |   |  |          |      |  

Floating and Fixed Rate Debt:

|                   |  |         |           |         |  |                  |     |   |  |          |      |  
|------------------ |  | ------- | --------- | ------- |  | ---------------- | --- | - |  | -------- | ---- | -
|                   |  |         |           |         |  |                  |     |   |  | Weighted
|                   |  |         |           |         |  |                  |     |   |  | Average 
|                   |  | Balance |           | Percent |  | Interest Rate(1)
|                   |  |         |           |         |  |                 
|Floating Rate Debt |  | $       | 299,587   |         |  |                  | 22  | % |  |          | 3.47 | %
|Fixed Rate Debt    |  |         | 1,069,363 |         |  |                  | 78  | % |  |          | 7.91 | %
|                   |  |         |           |         |  |                  |     |   |  |          |      |  
|Total Debt         |  | $       | 1,368,950 |         |  |                  | 100 | % |  |          | 6.94 | %
|                   |  |         |           |         |  |                  |     |   |  |          |      |  



---

|(1) |  | Includes amortization of prepaid financing costs.
|--- |  | -------------------------------------------------

Total interest incurred and the amount capitalized was as follows
(unaudited and in thousands):

|                        |  |                      |        |                     |  |      |        |      |  |   |        |   |  |   |        |  
|----------------------- |  | -------------------- | ------ | ------------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                        |  | For the Three Months |        | For the Nine Months
|                        |  | Ended September 30,  |        | Ended September 30,
|                        |  |                      |        |                    
|                        |  | 2002                 |        | 2001                |  | 2002 |        | 2001
|                        |  |                      |        |                     |  |      |        |     
|Total interest incurred |  | $                    | 23,651 |                     |  | $    | 23,074 |      |  | $ | 69,749 |   |  | $ | 70,269 |  
|Amount capitalized      |  |                      | (1,248 | )                   |  |      | (2,255 | )    |  |   | (4,365 | ) |  |   | (7,211 | )
|                        |  |                      |        |                     |  |      |        |      |  |   |        |   |  |   |        |  
|Amount expensed         |  | $                    | 22,403 |                     |  | $    | 20,819 |      |  | $ | 65,384 |   |  | $ | 63,058 |  
|                        |  |                      |        |                     |  |      |        |      |  |   |        |   |  |   |        |  

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As of September 30, 2002, we had $28.3 million in cash and cash
equivalents, including $22.1 million in restricted cash. Restricted cash
consisted of $13.7 million in interest bearing cash deposits required by five
of our mortgage loans payable and $8.4 million in cash impound accounts for
real estate taxes and insurance as required by several of our mortgage loans
payable.

We expect to continue meeting our short-term liquidity and capital
requirements generally through net cash provided by operating activities and
proceeds from our unsecured lines of credit. We believe the foregoing sources
of liquidity will be sufficient to fund our short-term liquidity needs over the
next twelve months, including recurring non-revenue enhancing capital
expenditures, tenant improvements and leasing commissions.

We expect to meet our long-term liquidity and capital requirements such as
scheduled principal repayments, development costs, property acquisitions, if
any, and other non-recurring capital expenditures through net cash provided by
operations, refinancing of existing indebtedness and the issuance of long-term
debt and equity securities.

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##### Table of Contents



Funds from Operations and Funds Available for Distribution

The following table reflects the calculation of our funds from operations
and our funds available for distribution for the three-month and nine-month
periods ended September 30, 2002 and 2001 (in thousands):

|                                              |                                                     |                                                                                                      |        |                                         |        |                                         |        |        |        |      |         |        |         |   |         |        |         |  
|--------------------------------------------- | --------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ------ | --------------------------------------- | ------ | --------------------------------------- | ------ | ------ | ------ | ---- | ------- | ------ | ------- | - | ------- | ------ | ------- | -
|                                              |                                                     |                                                                                                      |        | For theThree Months Ended September 30, |        | For the Nine Months Ended September 30,
|                                              |                                                     |                                                                                                      |        |                                         |        |                                        
|                                              |                                                     |                                                                                                      |        | 2002                                    |        | 2001                                    |        | 2002   |        | 2001
|                                              |                                                     |                                                                                                      |        |                                         |        |                                         |        |        |        |     
|                                              |                                                     |                                                                                                      |        | (unaudited)                            
|Funds From Operations:(1)                     |                                                     |                                                                                                      |        |                                         |        |                                         |        |        |        |      |         |        |         |   |         |       
|                                              | Net income                                          |                                                                                                      | $      | 15,113                                  |        |                                         | $      | 23,489 |        |      | $       | 53,873 |         |   | $       | 75,579 |        
|                                              | Depreciation and amortization of real estate assets |                                                                                                      |        | 27,650                                  |        |                                         |        | 25,854 |        |      |         | 82,855 |         |   |         | 74,176 |        
|                                              | Gain on sale of properties                          |                                                                                                      |        |                                        |        |                                         |        | (24    | )      |      |         | (1,273 | )       |   |         | (3,575 | )      
|                                              | Minority interest                                   |                                                                                                      |        | 1,478                                   |        |                                         |        | 1,878  |        |      |         | 4,701  |         |   |         | 5,806  |        
|                                              | Income allocated to preferred units                 |                                                                                                      |        | (1,078                                  | )      |                                         |        | (1,078 | )      |      |         | (3,234 | )       |   |         | (3,234 | )      
|                                              |                                                     |                                                                                                      |        |                                         |        |                                         |        |        |        |      |         |        |         |   |         |       
|Funds From Operations(2)                      |                                                     | $                                                                                                    | 43,163 |                                         |        | $                                       | 50,119 |        |        | $    | 136,922 |        |         | $ | 148,752 |       
|                                              |                                                     |                                                                                                      |        |                                         |        |                                         |        |        |        |      |         |        |         |   |         |       
|Funds Available for Distribution:(3)          |                                                     |                                                                                                      |        |                                         |        |                                         |        |        |        |      |         |        |         |   |         |       
|                                              |                                                     | Funds From Operations                                                                                |        | $                                       | 43,163 |                                         |        | $      | 50,119 |      |         | $      | 136,922 |   |         | $      | 148,752 |  
|                                              |                                                     | Non-cash compensation expense                                                                        |        |                                         | 315    |                                         |        |        | 545    |      |         |        | 875     |   |         |        | 1,395   |  
|                                              |                                                     | Amortization of prepaid financing costs                                                              |        |                                         | 913    |                                         |        |        | 891    |      |         |        | 2,814   |   |         |        | 2,645   |  
|                                              |                                                     | Straight-line rent adjustment                                                                        |        |                                         | (880   | )                                       |        |        | (2,428 | )    |         |        | (4,665  | ) |         |        | (6,937  | )
|                                              |                                                     | Recurring capital expenditures, second generation
tenant improvements and leasing commissions(4),(5) |        |                                         | (8,573 | )                                       |        |        | (3,685 | )    |         |        | (19,478 | ) |         |        | (15,317 | )
|                                              |                                                     |                                                                                                      |        |                                         |        |                                         |        |        |        |      |         |        |         |   |         |       
|Funds Available for Distribution              |                                                     | $                                                                                                    | 34,938 |                                         |        | $                                       | 45,442 |        |        | $    | 116,468 |        |         | $ | 130,538 |       
|                                              |                                                     |                                                                                                      |        |                                         |        |                                         |        |        |        |      |         |        |         |   |         |       
|Weighted average shares outstanding  Diluted |                                                     |                                                                                                      | 66,513 |                                         |        |                                         | 66,278 |        |        |      | 66,452  |        |         |   | 66,125  |       
|                                              |                                                     |                                                                                                      |        |                                         |        |                                         |        |        |        |      |         |        |         |   |         |       



---

|(1) |  | We consider funds from operations, as defined by the National
Association of Real Estate Investment Trusts, or NAREIT, to be a useful
financial measure of our operating performance. We believe that funds
from operations provides investors with an additional basis to evaluate
our ability to service debt and to fund acquisitions and other capital
expenditures. Funds from operations should not be considered an
alternative to net income determined in accordance with GAAP, as an
indicator of our financial performance, as a substitute for cash flow
from operating activities determined in accordance with GAAP or as a
measure of our liquidity. Funds from operations also is not necessarily
indicative of funds available to fund our cash needs, including our
ability to service our debt.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The White Paper on funds from operations approved by the Board of
Governors of NAREIT in April 2002 defines funds from operations as net
income or loss computed in accordance with GAAP, excluding extraordinary
items, as defined by GAAP, and gains and losses from sales of
depreciable operating property plus real estate-related depreciation and
amortization and after adjustments for unconsolidated partnerships and
joint ventures. We compute funds from operations in accordance with
standards established by the White Paper which may differ from the
standards used by other REITs and, accordingly, our funds from
operations may not be comparable to other REITs.                                                                                                                            
|   
|(2) |  | Includes non-cash compensation expense of $315,000 for the three months
ended September 30, 2002, $545,000 for the three months ended September
30, 2001, $875,000 for the nine months ended September 30, 2002 and $1.4
million for the nine months ended September 30, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) |  | Funds available for distribution consists of funds from operations
excluding non-cash compensation expense, amortization of prepaid
financing costs, straight-line rents and less costs incurred for
recurring capital expenditures, second generation tenant improvements
and leasing commissions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | We revised our funds available for distribution calculation for the
three months ended September 30, 2002. Prior to the current period, we
deducted an estimated reserve for capital expenditures and leasing costs
based on total capital expenditures, tenant improvements and leasing
costs forecasted for the future twelve months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | As a result of a review of the funds available for distribution
presentation of other publicly traded office REITs, we noted that most
companies deduct actual second generation capital expenditures and
leasing costs incurred during the period for purposes of calculating
funds available for distribution. Consequently, we have revised our
funds available for distribution calculation to deduct actual second
generation capital expenditures and leasing costs incurred on an
as-spent basis during the
period in order to make our presentation more comparable to our industry
peers. We recalculated the funds available for distribution for the nine
months ended September 30, 2002 and the corresponding three and
nine-month periods in 2001 to conform to the current revised
presentation. 
|   
|(4) |  | Recurring capital expenditures represent non-incremental building
improvements and leasing costs required to maintain current revenues.
Recurring capital expenditures do not include immediate building
improvements that were taken into consideration when underwriting the
purchase of a building or which are incurred to bring a building up to
operating standards.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(5) |  | Second generation tenant improvements and leasing commissions are tenant
improvements, leasing commissions and other leasing costs incurred
during leasing of second generation space. Costs incurred prior to
leasing available square feet are not included until such space is
leased. Second generation space excludes newly developed and renovated
square footage or square footage vacant at acquisition.                                                                                                                                                                                                                                                                                                                                                                                                  

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##### Table of Contents



Portfolio and Lease Information

The following tables set forth certain information regarding our
properties as of September 30, 2002.

PORTFOLIO SUMMARY

|                                     |          |            |    |           |     |                        |    |                    |     |                    |    |              |     |       |    |               |     |              |           |            |            |       |    |    |     |      |        |                              |        |  |    |      |     |   |        |         |         |  |    |    |     |  
|------------------------------------ | -------- | ---------- | -- | --------- | --- | ---------------------- | -- | ------------------ | --- | ------------------ | -- | ------------ | --- | ----- | -- | ------------- | --- | ------------ | --------- | ---------- | ---------- | ----- | -- | -- | --- | ---- | ------ | ---------------------------- | ------ |  | -- | ---- | --- | - | ------ | ------- | ------- |  | -- | -- | --- | -
|                                     |          |            |    |           |     |                        |    |                    |     |                    |    |              |     |       |    |               |     |              |           |            |            |       |    |    |     |      |        | Net Operating Income        
|                                     |          |            |    |           |     |                        |    |                    |     |                    |    |              |     |       |    |               |     |              |           |            |            |       |    |    |     |      |        |                             
|                                     |          |            |    | Number    |     | Number                 |    |                    |     |                    |    |              |     |       |    | For the Three |     | For the Nine
|                                     |          |            |    | of        |     | of                     |    | Approximate Net    |     | Months Ended       |    | Months Ended
|Location                             |          | Properties |    | Buildings |     | Rentable (Square Feet) |    | September 30, 2002 |     | September 30, 2002
|                                     |          |            |    |           |     |                        |    |                    |     |                   
|                                     |          |            |    |           |     |                        |    |                    |     |                    |    |              |     |       |    |               |     |              |           |            |            |       |    |    |     |      |        | (in thousands and unaudited)
|                                     |          |            |    |           |     |                        |    | % of               |     |                    |    |              |     | % of  |    |               |     |              |           | % of       |            |       |    |    |     | % of |        |                              |        |  |    | % of
|                                     |          |            |    | Total     |     | Total                  |    | Total              |     | Total              |    | Total        |     | Total |    | Total         |     | Total        |           | Total      |            | Total
|                                     |          |            |    |           |     |                        |    |                    |     |                    |    |              |     |       |    |               |     |              |           |            |            |      
|Los Angeles County                   |          |            |    |           |     |                        |    |                    |     |                    |    |              |     |       |    |               |     |              |           |            |            |       |    |    |     |      |        |                              |        |  |    |      |     |   |        |         |         |  |    |   
|                                     | West(1)  |            |    | 30        |     |                        |    | 22                 | %   |                    |    | 32           |     |       |    | 15            | %   |              |           | 4,734,567  |            |       |    | 25 | %   |      | $      | 27,085                       |        |  |    | 39   | %   |   | $      | 83,625  |         |  |    | 39 | %  
|                                     | North    |            |    | 29        |     |                        |    | 22                 | %   |                    |    | 46           |     |       |    | 21            | %   |              |           | 3,231,591  |            |       |    | 17 | %   |      |        | 10,684                       |        |  |    | 16   | %   |   |        | 34,609  |         |  |    | 16 | %  
|                                     | South    |            |    | 16        |     |                        |    | 12                 | %   |                    |    | 21           |     |       |    | 9             | %   |              |           | 3,057,925  |            |       |    | 16 | %   |      |        | 8,480                        |        |  |    | 12   | %   |   |        | 24,137  |         |  |    | 12 | %  
|                                     |          |            |    |           |     |                        |    |                    |     |                    |    |              |     |       |    |               |     |              |           |            |            |       |    |    |     |      |        |                              |        |  |    |      |     |   |        |         |         |  |    |    |    
|                                     | Subtotal |            |    | 75        |     |                        |    | 56                 | %   |                    |    | 99           |     |       |    | 45            | %   |              |           | 11,024,083 |            |       |    | 58 | %   |      |        | 46,249                       |        |  |    | 67   | %   |   |        | 142,371 |         |  |    | 67 | %  
|Orange County                        |          |            | 24 |           |     |                        | 18 | %                  |     |                    | 57 |              |     |       | 25 | %             |     |              | 3,708,926 |            |            |       | 20 | %  |     |      | 11,348 |                              |        |  | 16 | %    |     |   | 35,946 |         |         |  | 17 | % 
|San Diego County                     |          |            | 25 |           |     |                        | 18 | %                  |     |                    | 40 |              |     |       | 18 | %             |     |              | 2,857,195 |            |            |       | 15 | %  |     |      | 8,586  |                              |        |  | 12 | %    |     |   | 24,440 |         |         |  | 11 | % 
|Ventura/Kern
Counties                |          |            | 6  |           |     |                        | 4  | %                  |     |                    | 17 |              |     |       | 8  | %             |     |              | 778,363   |            |            |       | 4  | %  |     |      | 2,168  |                              |        |  | 3  | %    |     |   | 7,006  |         |         |  | 3  | % 
|Riverside/San
Bernardino
Counties(2) |          |            | 5  |           |     |                        | 4  | %                  |     |                    | 8  |              |     |       | 4  | %             |     |              | 476,461   |            |            |       | 3  | %  |     |      | 1,092  |                              |        |  | 2  | %    |     |   | 3,435  |         |         |  | 2  | % 
|                                     |          |            |    |           |     |                        |    |                    |     |                    |    |              |     |       |    |               |     |              |           |            |            |       |    |    |     |      |        |                              |        |  |    |      |     |   |        |         |         |  |    |    |    
|                                     |          | Total      |    |           | 135 | (3)                    |    |                    | 100 | %                  |    |              | 221 | (3)   |    |               | 100 | %            |           |            | 18,845,028 | (3)   |    |    | 100 | %    |        | $                            | 69,443 |  |    |      | 100 | % |        | $       | 213,198 |  |    |    | 100 | %
|                                     |          |            |    |           |     |                        |    |                    |     |                    |    |              |     |       |    |               |     |              |           |            |            |       |    |    |     |      |        |                              |        |  |    |      |     |   |        |         |         |  |    |    |    



---

|(1) |  | Includes a retail property with approximately 37,000 net rentable square
feet.                                                                                                       
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Includes a retail property with approximately 133,000 net rentable square
feet.                                                                                                      
|   
|   
|   
|   
|(3) |  | Including two development properties currently under lease-up, our total
portfolio consists of 137 properties with 223 buildings and approximately
19.4 million rentable square feet.

PORTFOLIO OCCUPANCY AND IN-PLACE RENTS
As of September 30, 2002

|                                  |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                 |       |              |       | 
|--------------------------------- | ----- | ---------------------- | ---- | -------------- | ---- | ------------------------- | ---- | ---- | ---- | - | ----- | -------------------- | ----- | --------------- | ----- | ------------ | ----- | 
|                                  |       |                        |      |                |      |                           |      |      |      |   |       | Annualized Base Rent
|Location                          |       | Percent Occupied       |      | Percent Leased |      | Per Leased Square Foot(1)
|                                  |       |                        |      |                |      |                          
|                                  |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                 |       | Full Service
|                                  |       |                        |      |                |      |                           |      |      |      |   |       | Portfolio Total      |       | Gross Leases(2)
|                                  |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                
|Los Angeles County                |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                 |       |             
|                                  | West  |                        |      | 89.2           | %    |                           |      | 90.9 | %    |   | $     | 27.76                |       |                 | $     | 27.88        |      
|                                  | North |                        |      | 87.2           | %    |                           |      | 87.8 | %    |   |       | 21.29                |       |                 |       | 22.39        |      
|                                  | South |                        |      | 88.1           | %    |                           |      | 89.7 | %    |   |       | 19.18                |       |                 |       | 20.25        |      
|Orange County                     |       |                        | 93.4 | %              |      |                           | 94.7 | %    |      |   | 18.19 |                      |       |                 | 21.37 |             
|San Diego County                  |       |                        | 88.3 | %              |      |                           | 88.6 | %    |      |   | 18.35 |                      |       |                 | 22.66 |             
|Ventura/Kern Counties             |       |                        | 95.4 | %              |      |                           | 96.9 | %    |      |   | 18.28 |                      |       |                 | 18.53 |             
|Riverside/San
Bernardino Counties |       |                        | 93.4 | %              |      |                           | 93.4 | %    |      |   | 16.67 |                      |       |                 | 18.92 |             
|                                  |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                 |       |             
|                                  |       | Total/Weighted Average |      |                | 89.7 | %                         |      |      | 90.9 | % |       | $                    | 21.26 |                 |       | $            | 23.28 | 
|                                  |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                 |       |             



---

|(1) |  | Based on monthly contractual base rent under existing leases as of September
30, 2002, multiplied by 12 and divided by leased net rentable square feet; for
those leases where rent has not yet commenced or which are in a free rent
period, the first month in which rent is to be received is used to determine
annualized base rent.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Excludes 38 properties and approximately 3.9 million square feet under
triple net and modified gross leases.                                                                                                                                                                                                                            

21



---



##### Table of Contents



TEN LARGEST TENANTS
As of September 30, 2002

|                            |  |           |     |            |  |             |     |              |  |               |       |                |  |  |       |            |  |  |           |  |  |   |        | 
|--------------------------- |  | --------- | --- | ---------- |  | ----------- | --- | ------------ |  | ------------- | ----- | -------------- |  |  | ----- | ---------- |  |  | --------- |  |  | - | ------ | 
|                            |  |           |     |            |  | Weighted    |     | Percentage   |  | Percentage of |       |                |  |  |       |            |  | 
|                            |  |           |     |            |  | Average     |     | of Aggregate |  | Aggregate     |       |                |  |  |       |            |  | 
|                            |  |           |     |            |  | Remaining   |     | Portfolio    |  | Portfolio     |       |                |  |  |       | Annualized
|                            |  | Number of |     | Lease Term |  | Leased      |     | Annualized   |  | Net Rentable  |       | Base Rent     
|Tenant                      |  | Leases    |     | In Months  |  | Square Feet |     | Base Rent(1) |  | Square Feet   |       | (in thousands)
|                            |  |           |     |            |  |             |     |              |  |               |       |               
|Vivendi Universal           |  |           | 4   |            |  |             | 91  |              |  |               | 1.33  | %              |  |  | 2.17  | %          |  |  | 231,681   |  |  | $ | 8,111  | 
|State of California         |  |           | 40  |            |  |             | 47  |              |  |               | 1.94  |                |  |  | 1.90  |            |  |  | 337,118   |  |  |   | 7,078  | 
|University of Phoenix       |  |           | 20  |            |  |             | 25  |              |  |               | 1.38  |                |  |  | 1.23  |            |  |  | 240,162   |  |  |   | 4,605  | 
|Univision                   |  |           | 2   |            |  |             | 229 |              |  |               | 0.96  |                |  |  | 1.14  |            |  |  | 166,363   |  |  |   | 4,247  | 
|Ceridian Corporation        |  |           | 5   |            |  |             | 83  |              |  |               | 0.93  |                |  |  | 0.96  |            |  |  | 160,805   |  |  |   | 3,589  | 
|SBC Communications          |  |           | 8   |            |  |             | 31  |              |  |               | 0.83  |                |  |  | 0.84  |            |  |  | 144,927   |  |  |   | 3,138  | 
|Atlantic Richfield          |  |           | 13  |            |  |             | 47  |              |  |               | 0.73  |                |  |  | 0.71  |            |  |  | 126,830   |  |  |   | 2,658  | 
|Verizon Communications Inc. |  |           | 8   |            |  |             | 23  |              |  |               | 0.90  |                |  |  | 0.71  |            |  |  | 156,612   |  |  |   | 2,655  | 
|U.S. Government             |  |           | 22  |            |  |             | 42  |              |  |               | 0.69  |                |  |  | 0.71  |            |  |  | 119,829   |  |  |   | 2,651  | 
|Sony                        |  |           | 7   |            |  |             | 19  |              |  |               | 0.67  |                |  |  | 0.70  |            |  |  | 116,729   |  |  |   | 2,597  | 
|                            |  |           |     |            |  |             |     |              |  |               |       |                |  |  |       |            |  |  |           |  |  |   |        | 
|Total/Weighted Average(2)   |  |           | 129 |            |  |             | 64  |              |  |               | 10.36 | %              |  |  | 11.07 | %          |  |  | 1,801,056 |  |  | $ | 41,329 | 
|                            |  |           |     |            |  |             |     |              |  |               |       |                |  |  |       |            |  |  |           |  |  |   |        | 



---

|(1) |  | Annualized base rent is calculated as monthly contractual base rent under
existing leases as of September 30, 2002, multiplied by 12; for those leases
where rent has not yet commenced or which are in a free rent period, the first
month in which rent is to be received is used to determine annualized base rent.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | The weighted average calculation is based on net rentable square footage
leased by each tenant.                                                                                                                                                                                                                       

LEASING ACTIVITY

|                                                       |                  |  |                    |       |                    |  |          |       |  
|------------------------------------------------------ | ---------------- |  | ------------------ | ----- | ------------------ |  | -------- | ----- | -
|                                                       |                  |  | For the            |       | For the           
|                                                       |                  |  | Three Months Ended |       | Nine Months Ended 
|                                                       |                  |  | September 30, 2002 |       | September 30, 2002
|                                                       |                  |  |                    |       |                   
|Net Absorption (square feet)                           |                  |  | (57,988            | )     |                    |  | (482,436 | )    
|                                                       |                  |  |                    |       |                    |  |          |      
|Retention Rate                                         |                  |  | 68.9               | %     |                    |  | 69.9     | %    
|                                                       |                  |  |                    |       |                    |  |          |      
|Cash Rent Growth(1):                                   |                  |  |                    |       |                    |  |          |      
|                                                       | Expiring Rate    |  | $                  | 15.47 |                    |  | $        | 17.90 |  
|                                                       |                  |  |                    |       |                    |  |          |      
|                                                       | New/Renewed Rate |  | $                  | 16.83 |                    |  | $        | 19.90 |  
|                                                       |                  |  |                    |       |                    |  |          |      
|                                                       | Increase         |  |                    | 9     | %(2)               |  |          | 11    | %
|                                                       |                  |  |                    |       |                    |  |          |      
|GAAP Rent Growth(3):                                   |                  |  |                    |       |                    |  |          |      
|                                                       | Expiring Rate    |  | $                  | 15.02 |                    |  | $        | 17.38 |  
|                                                       |                  |  |                    |       |                    |  |          |      
|                                                       | New/Renewed Rate |  | $                  | 17.51 |                    |  | $        | 20.71 |  
|                                                       |                  |  |                    |       |                    |  |          |      
|                                                       | Increase         |  |                    | 17    | %(2)               |  |          | 19    | %
|                                                       |                  |  |                    |       |                    |  |          |      
|Weighted Average Lease Term in Months                  |                  |  | 62                 |       |                    |  | 56       |      
|                                                       |                  |  |                    |       |                    |  |          |      
|Tenant Improvements and Commissions (per square foot): |                  |  |                    |       |                    |  |          |      
|                                                       | New(4)           |  | $                  | 14.91 |                    |  | $        | 15.98 |  
|                                                       |                  |  |                    |       |                    |  |          |      
|                                                       | Renewal          |  | $                  | 7.04  |                    |  | $        | 8.10  |  
|                                                       |                  |  |                    |       |                    |  |          |      
|Capital Expenditures (per square foot):                |                  |  |                    |       |                    |  |          |      
|                                                       | Recurring        |  | $                  | 0.04  |                    |  | $        | 0.16  |  
|                                                       |                  |  |                    |       |                    |  |          |      
|                                                       | Non-recurring    |  | $                  | 0.04  |                    |  | $        | 0.13  |  
|                                                       |                  |  |                    |       |                    |  |          |      



---

|(1) |  | Represents the difference between initial market rents on new and renewed
leases as compared to the expiring cash rents on the same space.                                                
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Excluding a new triple net lease signed during the third quarter, Cash Rent
Growth and GAAP Rent Growth increased 12% and 20% respectively, for the three
months ended September 30, 2002.
|   
|   
|   
|   
|(3) |  | Represents estimated cash rent growth adjusted for straight-line rents.                                                                                                                   
|   
|   
|   
|   
|(4) |  | Excludes all newly developed or renovated square footage or square footage
vacant at acquisition.                                                                                         

22



---



##### Table of Contents



LEASE EXPIRATIONS
As of September 30, 2002

|                  |                    |                   |                |   |         |         |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          |  | 
|----------------- | ------------------ | ----------------- | -------------- | - | ------- | ------- | ---- | - | --------- | --------- | ---- | - | --------- | --------- | ---- | - | ---------- | --------- |  | - | --------- | --------- |  | - | --------- | --------- | -------- |  | 
|                  |                    |                   |                |   |         |         |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           | 2007 and
|                  |                    |                   |                |   |         |         | 2002 |   | 2003      |           | 2004 |   | 2005      |           | 2006 |   | Thereafter
|                  |                    |                   |                |   |         |         |      |   |           |           |      |   |           |           |      |   |           
|Los Angeles West  |                    | Expiring SF(1)    |                |   | 154,981 |         |      |   | 603,717   |           |      |   | 847,575   |           |      |   | 939,120    |           |  |   | 430,908   |           |  |   | 1,653,970 |          
|                  |                    | % of Leased SF(2) |                |   | 0.9     | %       |      |   | 3.5       | %         |      |   | 5.0       | %         |      |   | 5.5        | %         |  |   | 2.5       | %         |  |   | 9.6       | %        
|                  |                    | Rent per SF(3)    |                | $ | 23.05   |         |      | $ | 26.46     |           |      | $ | 26.49     |           |      | $ | 28.16      |           |  | $ | 30.21     |           |  | $ | 34.23     |          
|Los Angeles North |                    | Expiring SF(1)    |                |   | 73,477  |         |      |   | 422,142   |           |      |   | 636,394   |           |      |   | 416,108    |           |  |   | 340,667   |           |  |   | 874,526   |          
|                  |                    | % of Leased SF(2) |                |   | 0.4     | %       |      |   | 2.5       | %         |      |   | 3.7       | %         |      |   | 2.4        | %         |  |   | 2.0       | %         |  |   | 5.1       | %        
|                  |                    | Rent per SF(3)    |                | $ | 23.10   |         |      | $ | 21.19     |           |      | $ | 21.64     |           |      | $ | 22.65      |           |  | $ | 24.59     |           |  | $ | 23.71     |          
|Los Angeles South |                    | Expiring SF(1)    |                |   | 92,792  |         |      |   | 292,664   |           |      |   | 487,372   |           |      |   | 626,139    |           |  |   | 243,294   |           |  |   | 591,445   |          
|                  |                    | % of Leased SF(2) |                |   | 0.6     | %       |      |   | 1.7       | %         |      |   | 2.8       | %         |      |   | 3.7        | %         |  |   | 1.4       | %         |  |   | 3.5       | %        
|                  |                    | Rent per SF(3)    |                | $ | 18.82   |         |      | $ | 18.89     |           |      | $ | 20.28     |           |      | $ | 15.42      |           |  | $ | 22.38     |           |  | $ | 22.85     |          
|                  |                    |                   |                |   |         |         |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 
|Subtotal -        |                    |                   |                |   |         |         |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 
|                  | Los Angeles County |                   | Expiring SF(1) |   |         | 321,250 |      |   |           | 1,318,523 |      |   |           | 1,971,341 |      |   |            | 1,981,367 |  |   |           | 1,014,869 |  |   |           | 3,119,941 |         
|                  |                    | % of Leased SF(2) |                |   | 1.9     | %       |      |   | 7.7       | %         |      |   | 11.5      | %         |      |   | 11.6       | %         |  |   | 5.9       | %         |  |   | 18.2      | %        
|                  |                    | Rent per SF(3)    |                | $ | 21.84   |         |      | $ | 23.09     |           |      | $ | 23.39     |           |      | $ | 22.98      |           |  | $ | 26.45     |           |  | $ | 29.12     |          
|                  | Orange County      |                   | Expiring SF(1) |   |         | 188,902 |      |   |           | 798,980   |      |   |           | 665,294   |      |   |            | 497,644   |  |   |           | 631,073   |  |   |           | 700,899   |         
|                  |                    | % of Leased SF(2) |                |   | 1.1     | %       |      |   | 4.7       | %         |      |   | 3.9       | %         |      |   | 2.9        | %         |  |   | 3.7       | %         |  |   | 4.1       | %        
|                  |                    | Rent per SF(3)    |                | $ | 14.99   |         |      | $ | 16.99     |           |      | $ | 17.63     |           |      | $ | 21.54      |           |  | $ | 20.44     |           |  | $ | 23.22     |          
|                  | San Diego County   |                   | Expiring SF(1) |   |         | 57,872  |      |   |           | 573,289   |      |   |           | 358,973   |      |   |            | 496,178   |  |   |           | 243,122   |  |   |           | 775,176   |         
|                  |                    | % of Leased SF(2) |                |   | 0.4     | %       |      |   | 3.3       | %         |      |   | 2.1       | %         |      |   | 2.9        | %         |  |   | 1.4       | %         |  |   | 4.5       | %        
|                  |                    | Rent per SF(3)    |                | $ | 19.25   |         |      | $ | 18.88     |           |      | $ | 20.51     |           |      | $ | 18.01      |           |  | $ | 25.18     |           |  | $ | 21.93     |          
|                  | All Others         |                   | Expiring SF(1) |   |         | 8,085   |      |   |           | 169,204   |      |   |           | 347,869   |      |   |            | 165,066   |  |   |           | 223,125   |  |   |           | 273,281   |         
|                  |                    | % of Leased SF(2) |                |   | 0.0     | %       |      |   | 1.0       | %         |      |   | 2.0       | %         |      |   | 0.9        | %         |  |   | 1.3       | %         |  |   | 1.6       | %        
|                  |                    | Rent per SF(3)    |                | $ | 18.09   |         |      | $ | 19.28     |           |      | $ | 18.26     |           |      | $ | 19.79      |           |  | $ | 19.14     |           |  | $ | 18.41     |          
|                  |                    |                   |                |   |         |         |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 
|Total Portfolio   |                    | Expiring SF(1)    |                |   | 576,109 |         |      |   | 2,859,996 |           |      |   | 3,343,477 |           |      |   | 3,140,255  |           |  |   | 2,112,189 |           |  |   | 4,869,297 |          
|                  |                    |                   |                |   |         |         |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 
|                  |                    | % of Leased SF(2) |                |   | 3.4     | %       |      |   | 16.7      | %         |      |   | 19.5      | %         |      |   | 18.3       | %         |  |   | 12.3      | %         |  |   | 28.4      | %        
|                  |                    |                   |                |   |         |         |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 
|                  |                    | Rent per SF(3)    |                | $ | 19.28   |         |      | $ | 20.32     |           |      | $ | 21.40     |           |      | $ | 21.80      |           |  | $ | 23.73     |           |  | $ | 26.53     |          
|                  |                    |                   |                |   |         |         |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 



---

|(1) |  | Represents the rentable square footage of expiring leases. For 2002,
represents expirations from October 1, 2002 through December 31, 2002, not
including month-to-month tenants.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Percentage of total rentable square footage expiring during the period.                                                                                                          
|   
|   
|   
|   
|(3) |  | Represents annualized ending cash rents of expiring leases.                                                                                                                      

LEASE EXPIRATIONS BY QUARTER
As of September 30, 2002

|                    |                    |                   |                |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  |  | 
|------------------- | ------------------ | ----------------- | -------------- | - | ------- | ------- | ----- | - | ------- | ------- | ----- | - | ------- | ------- |  | - | ------- | ------- |  |  | 
|                    |                    |                   |                |   |         |         | Q1-03 |   | Q2-03   |         | Q3-03 |   | Q4-03  
|                    |                    |                   |                |   |         |         |       |   |         |         |       |   |        
|Los Angeles County: |                    |                   |                |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|                    | West               |                   | Expiring SF(1) |   |         | 132,515 |       |   |         | 94,309  |       |   |         | 194,434 |  |   |         | 182,459 | 
|                    |                    | % of Leased SF(2) |                |   | 0.8     | %       |       |   | 0.5     | %       |       |   | 1.1     | %       |  |   | 1.1     | %      
|                    |                    | Rent per SF(3)    |                | $ | 25.69   |         |       | $ | 25.68   |         |       | $ | 24.37   |         |  | $ | 29.66   |        
|                    | North              |                   | Expiring SF(1) |   |         | 58,111  |       |   |         | 135,777 |       |   |         | 63,260  |  |   |         | 164,994 | 
|                    |                    | % of Leased SF(2) |                |   | 0.3     | %       |       |   | 0.8     | %       |       |   | 0.4     | %       |  |   | 1.0     | %      
|                    |                    | Rent per SF(3)    |                | $ | 22.76   |         |       | $ | 18.15   |         |       | $ | 23.28   |         |  | $ | 22.34   |        
|                    | South              |                   | Expiring SF(1) |   |         | 45,799  |       |   |         | 50,723  |       |   |         | 138,267 |  |   |         | 57,875  | 
|                    |                    | % of Leased SF(2) |                |   | 0.3     | %       |       |   | 0.3     | %       |       |   | 0.8     | %       |  |   | 0.3     | %      
|                    |                    | Rent per SF(3)    |                | $ | 20.76   |         |       | $ | 19.81   |         |       | $ | 17.35   |         |  | $ | 20.27   |        
|                    |                    |                   |                |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|Subtotal -          |                    |                   |                |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|                    | Los Angeles County |                   | Expiring SF(1) |   |         | 236,425 |       |   |         | 280,809 |       |   |         | 395,961 |  |   |         | 405,328 | 
|                    |                    | % of Leased SF(2) |                |   | 1.4     | %       |       |   | 1.6     | %       |       |   | 2.3     | %       |  |   | 2.4     | %      
|                    |                    | Rent per SF(3)    |                | $ | 24.02   |         |       | $ | 20.98   |         |       | $ | 21.74   |         |  | $ | 25.34   |        
|                    | Orange County      |                   | Expiring SF(1) |   |         | 84,295  |       |   |         | 144,801 |       |   |         | 374,776 |  |   |         | 195,108 | 
|                    |                    | % of Leased SF(2) |                |   | 0.5     | %       |       |   | 0.9     | %       |       |   | 2.2     | %       |  |   | 1.1     | %      
|                    |                    | Rent per SF(3)    |                | $ | 17.07   |         |       | $ | 16.36   |         |       | $ | 17.29   |         |  | $ | 16.85   |        
|                    | San Diego County   |                   | Expiring SF(1) |   |         | 289,895 |       |   |         | 101,684 |       |   |         | 89,271  |  |   |         | 92,439  | 
|                    |                    | % of Leased SF(2) |                |   | 1.7     | %       |       |   | 0.6     | %       |       |   | 0.5     | %       |  |   | 0.5     | %      
|                    |                    | Rent per SF(3)    |                | $ | 17.94   |         |       | $ | 20.46   |         |       | $ | 17.62   |         |  | $ | 21.32   |        
|                    | All Others         |                   | Expiring SF(1) |   |         | 21,713  |       |   |         | 54,447  |       |   |         | 47,423  |  |   |         | 45,621  | 
|                    |                    | % of Leased SF(2) |                |   | 0.1     | %       |       |   | 0.3     | %       |       |   | 0.3     | %       |  |   | 0.3     | %      
|                    |                    | Rent per SF(3)    |                | $ | 20.76   |         |       | $ | 16.90   |         |       | $ | 19.18   |         |  | $ | 21.53   |        
|                    |                    |                   |                |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|Total Portfolio     |                    | Expiring SF(1)    |                |   | 632,328 |         |       |   | 581,741 |         |       |   | 907,431 |         |  |   | 738,496 |        
|                    |                    |                   |                |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|                    |                    | % of Leased SF(2) |                |   | 3.7     | %       |       |   | 3.4     | %       |       |   | 5.3     | %       |  |   | 4.3     | %      
|                    |                    |                   |                |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|                    |                    | Rent per SF(3)    |                | $ | 20.19   |         |       | $ | 19.35   |         |       | $ | 19.36   |         |  | $ | 22.36   |        
|                    |                    |                   |                |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 



---

|(1) |  | Excludes month-to-month tenants.                              
|--- |  | --------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Percentage of total rentable space expiring during the period.
|   
|   
|   
|   
|(3) |  | Represents annualized ending cash rents of expiring leases.   

23



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##### Table of Contents



DEVELOPMENT SUMMARY
As of September 30, 2002

|                      |                                                  |                              |  |                |         |                |   |                |         |           |   |            |         |                |  |              |      |                |          |           |              |        |   |       |   |       |  |           |   |      |   |      |   |      |   |  |  | 
|--------------------- | ------------------------------------------------ | ---------------------------- |  | -------------- | ------- | -------------- | - | -------------- | ------- | --------- | - | ---------- | ------- | -------------- |  | ------------ | ---- | -------------- | -------- | --------- | ------------ | ------ | - | ----- | - | ----- |  | --------- | - | ---- | - | ---- | - | ---- | - |  |  | 
|                      |                                                  |                              |  |                |         |                |   |                |         |           |   |            |         |                |  |              |      |                |          |           |              |        |   |       |   |       |  | Estimated |   |      |   |      |   |      |   | 
|                      |                                                  |                              |  |                |         |                |   | Costs          |         |           |   |            |         | Percent        |  | Estimated    |      |                |          |           |              | Year 1 |   |       |   |       |  | Estimated
|                      |                                                  |                              |  |                |         |                |   | Incurred       |         | Estimated |   | Leased     |         | Shell          |  | Estimated    |      | Stabilized     |          | Estimated |              | Year 1
|                      |                                                  |                              |  | Square         |         | To Date        |   | Total Cost (1) |         | at        |   | Completion |         | Stabilization  |  | Cash NOI (3) |      | Year 1 Annual  |          | Annual   
|Property              |                                                  | Feet                         |  | (in thousands) |         | (in thousands) |   | 10/28/02       |         | Date      |   | Date (2)   |         | (in thousands) |  | Cash Yield   |      | GAAP Yield (4)
|                      |                                                  |                              |  |                |         |                |   |                |         |           |   |            |         |                |  |              |      |               
|Howard Hughes Center: |                                                  |                              |  |                |         |                |   |                |         |           |   |            |         |                |  |              |      |                |          |           |              |        |   |       |   |       |  |           |   |      |   |      |   |      |   | 
|                      | 6080 Center Drive                                |                              |  | 283,000        |         |                | $ | 74,047         |         |           | $ | 77,100     |         |                |  | 96           | %(5) |                | Complete |           |              | (5     | ) |       | $ | 8,200 |  |           |   | 10.6 | % |      |   | 11.8 | %
|                      | 6100 Center Drive                                |                              |  | 283,000        |         |                |   | 63,558         |         |           |   | 81,500     |         |                |  |             |      |                | Complete |           | 2nd Qtr 2003 |        | $ | 7,500 |   |       |  | 9.2       | % |      |   | 10.2 | %
|                      | Unallocated Acquisition
And Master Plan Costs(1) |                              |  |               |         |                |   | 17,285         |         |           |   | 19,800     |         |                |  |              |      |                |          |           |              |        |   |       |   |       |  |           |   |      |   |      |   |      |   |  | 
|                      |                                                  |                              |  |                |         |                |   |                |         |           |   |            |         |                |  |              |      |                |          |           |              |        |   |       |   |       |  |           |   |      |   |      |   |      |   | 
|                      |                                                  | Total Development
Properties |  |                | 566,000 |                |   | $              | 154,890 |           |   | $          | 178,400 |                |  |              |      |                |          |           |              |        |   |       |   |       |  |           |   |      |   |      |   |      |   |  |  | 
|                      |                                                  |                              |  |                |         |                |   |                |         |           |   |            |         |                |  |              |      |                |          |           |              |        |   |       |   |       |  |           |   |      |   |      |   |      |   | 



---

|(1) |  | Estimated total cost includes purchase and closing costs, capital
expenditures, tenant improvements, leasing commissions and carrying
costs during development, as well as an allocation of land and master
plan costs. Unallocated acquisition and master plan costs consists of
unallocated land costs and master plan costs that will be allocated to
future development projects at the Howard Hughes Center. We have
entitlements to construct an additional approximately 425,000 net
rentable square feet of office space and have two parcels entitled for
hotel development at the Howard Hughes Center.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | We consider a property to be stabilized in the quarter when the
property is at least 95% leased.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|   
|   
|   
|(3) |  | We consider Stabilized Cash NOI to be the rental revenues from the
property less the operating expenses of the property on a cash basis
before deducting financing costs (interest and principal payments) after
the property is at least 95% leased.                                                                                                                                                                                                                                                                                                                                                            
|   
|   
|   
|   
|(4) |  | We consider the Estimated Year 1 Annual GAAP Yield to be the propertys
Stabilized Cash NOI adjusted for straight-line rents during its first
year in service over the propertys estimated total costs.                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|   
|   
|   
|(5) |  | This property stabilized on October 23, 2002 at 96% leased and is
currently 89% occupied.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

In addition to the properties above, we have preliminary architectural
designs completed for additional build-to-suit buildings at the Howard Hughes
Center totaling approximately 425,000 net rentable square feet of office space.
Build-to-suit buildings consist of properties constructed to the tenants
specifications in return for the tenants long-term commitment to the property.
We do not intend to commence construction on any additional build-to-suit
buildings at the Howard Hughes Center until development plans and budgets are
finalized and build-to-suit tenant leases are signed with terms allowing us to
achieve yields commensurate with the projects development risk.

In addition to our development at the Howard Hughes Center, we have
completed preliminary designs and are marketing an approximate 170,000 square
foot build-to-suit office building at our Long Beach Airport Business Park.
Also as part of our Gateway Towers acquisition in August 2002, we acquired a
5-acre developable land parcel in Torrance, California that we intend to market
for a build-to-suit office building. We do not intend to commence construction
on these projects until build-to-suit tenant leases are signed with terms
allowing us to achieve yields commensurate with the projects development risk.

We expect to finance our development activities over the next 24 months
through net cash provided by operating activities, proceeds from asset sales
and proceeds from our unsecured lines of credit.

Business Strategy

Our primary business strategy is to actively manage our portfolio to
achieve gains in rental rates and occupancy, control operating expenses and to
maximize income from ancillary operations and services. Depending on market
conditions, we may also develop, renovate, acquire or divest properties.

We continue to seek to build a tenant base of smaller, diverse companies
that limit our exposure to any single tenant or industry. Smaller tenants
typically translate into shorter-term leases. Shorter-term leases provide
greater opportunity for renewing a substantial portion of our portfolio at
higher rental rates each year during strong markets, but create challenges to
maintain occupancy and rates when markets weaken. The average term of
our leases is 4 to 5 years resulting in approximately 15% to 20% of our leases
turning over annually.

We closely monitor our operating expenses and capital expenditures to
sustain or improve operating margins and dividend coverage. We may defer
discretionary capital expenditures until market conditions improve.

When market conditions permit, we may selectively develop or acquire new
properties that add value and fit strategically into our portfolio. We may also
sell existing properties and redeploy the proceeds into investments that we
believe will generate higher long-term value.

Current Economic Climate

Our short and long-term liquidity, ability to refinance existing
indebtedness, ability to issue long-term debt and equity securities
at favorable rates and our dividend
policy are significantly impacted by the operating results of our properties,
all of which are located in Southern California. Our

24



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##### Table of Contents



ability to lease available space and increase rates when leases expire is
largely dependent on the demand for office space in the markets where our
properties are located. We believe current uncertainty over the national and
Southern California economic environment is exerting downward pressures on the
demand for Southern California commercial office space. We are experiencing
these downward pressures due to several factors as follows:



| |  |  | Occupancy and rental rates have decreased in recent months, and
are expected to decrease further due to the state of the local
economy and competition from other office landlords;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Larger tenants are taking more time to make their leasing decisions reflecting the uncertainty in the economy;                                                                     
|
| |  |  | Some tenants are under-utilizing their existing space and can therefore expand internally before they need new space;                                                              
|
| |  |  | Tenant concessions have increased and are expected to further increase as a result of competition for prospective tenants;                                                         
|
| |  |  | Sublease space, although
stabilizing, stands at about 2.5% of total inventory throughout Southern California; and                                                                  
|
| |  |  | Over-building has increased vacancy
rates in some submarkets.                                                                                                                      

These factors have contributed to a decrease in the occupancy of our
portfolio from 92.2% as of December 31, 2001 to 89.7% as of September 30, 2002.

Overall market rental rates in Southern California declined 1 to 2% during
the three months ended September 30, 2002. Given the current trends, including
the expected continued occupancy pressures and more aggressive pricing for
sublease space, we expect market rates will decline an additional 1 to 2%
during the remainder of 2002. Concessions also rose 3 to 5% during the three
months ended September 30, 2002. As occupancy pressures continue, we expect
concessions in either free rent or higher tenant improvement allowances to
rise.

The timing and extent of future changes in the national and local economy
and their effects on our properties and results of operations are difficult to
accurately predict. It is possible, however, that these national and regional
issues may more directly affect us and our operating results in the future,
making it more difficult for us to lease and renew available space, to increase
or maintain rental rates as leases expire and to collect amounts due from our
tenants. For additional information, see Risk Factors  Further declines in
the economic activity of Southern California will adversely affect our
operating results,  The financial condition and solvency of our tenants may
reduce our cash flow, and  Rising energy costs and power outages in
California may have an adverse effect on our operations and revenue sections
of our 2001 annual report on Form 10-K.




Item 3. Quantitative and Qualitative Disclosure about Market Risk

Market risk is the exposure or loss resulting from changes in interest
rates, foreign currency exchange rates, commodity prices and equity prices.
The primary market risk to which we are exposed is interest rate risk, which is
sensitive to many factors, including governmental monetary and tax policies,
domestic and international economic and political considerations and other
factors that are beyond our control.

Interest Rate Risk

Even though we currently have no such agreements, in order to modify and
manage the interest characteristics of our outstanding debt and limit the
effects of interest rates on our operations, we may use a variety of financial
instruments, including interest rate swaps, caps, floors and other interest
rate exchange contracts. The use of these types of instruments to hedge our
exposure to changes in interest rates carries additional risks such as
counter-party credit risk and legal enforceability of hedging contracts. We do
not enter into any transactions for speculative or trading purposes.

Some of our future earnings, cash flows and fair values relating to
financial instruments are dependent upon prevailing market rates of interest,
such as LIBOR. Based on interest rates and outstanding balances as of
September 30, 2002, a 1% increase in interest rates on our $299.6 million of
floating rate debt would decrease annual future earnings and cash flows by
approximately $3.0 million and would not have an impact on the fair value of
the floating rate debt. Conversely, a 1% decrease in interest rates on our
$299.6 million of floating rate debt would increase annual future earnings and
cash flows by approximately $3.0 million and would not have an impact on the
fair value of the floating rate debt. The weighted average interest rate on
our floating debt as of September 30, 2002 was 3.47%.

Our fixed rate debt totaled $1,069.4 million as of September 30, 2002 with
a weighted average interest rate of 7.91% and a total fair value of
approximately $1,143.2 million. A 1% decrease in interest rates would
increase the fair value of our fixed rate debt by approximately $46.1 million
and would not have an impact on future earnings and cash flows. A 1% increase
in interest rates would decrease the fair value of our fixed rated debt by
approximately $43.7 million and would not have an impact on future earnings and
cash flows.

25



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##### Table of Contents



These amounts are determined by considering the impact of hypothetical
interest rates on our borrowing cost. These analyses do not consider the
effects of the reduced level of overall economic activity that could exist in
that environment. Further, in the event of a change of this magnitude, we
would consider taking actions to further mitigate our exposure to the change.
Due to the uncertainty of the specific actions that would be taken and their
possible effects, however, this sensitive analysis assumes no changes in our
capital structure.




Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our Securities Exchange Act of
1934 reports is recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms, and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and our Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, our management recognized that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and our
management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Also, we have
an investment in an unconsolidated entity. Because we do not control or manage
this entity, our disclosure controls and procedures with respect to such an
entity is necessarily substantially more limited than those we maintain with
respect to our consolidated subsidiaries.

Within 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on the foregoing, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were
effective.

There have been no significant changes in our internal controls or in
other factors that could significantly affect the internal controls subsequent
to the date we completed our evaluation.

26



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##### Table of Contents






Part II. OTHER INFORMATION

Item 1. Legal Proceedings

We are presently subject to various lawsuits, claims and proceedings of a
nature considered normal to our ordinary course of business. We expect most
of these legal proceedings to be covered by our liability insurance. The most
significant of these contingencies not covered by insurance is described
below.

In December 2001, the owner of the entertainment center at our Howard
Hughes Center project asserted a claim against us for indemnification arising
out of a Los Angeles Superior Court judgment against them, which invalidated a
transfer of in-lieu credits that we made in August of 1999 as part of our sale
of the land for the entertainment center. The value of these in-lieu credits
was approximately $6.0 million and were transferred to satisfy certain
Transportation Impact Assessment fees related to the entertainment center. The
owner of the entertainment center is currently appealing the judgment.

Based on our review of the current facts and circumstances and advice of
our outside counsel, we are not able to express an opinion as to the ultimate
outcome of this matter. However, we do not believe that the resolution of this
matter or any of our ongoing legal proceedings will have a material adverse
effect on our consolidated results of operations, cash flow or financial
position.

Item 2. Changes in Securities

During the three months ended September 30, 2002, we redeemed an aggregate of
13,000 common operating partnership units of the Operating Partnership for
shares of our common stock. The redemption of limited partnership units for
shares of our common stock was exempt from the registration requirement of the
Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506 of
Regulation D.

Item 3. Defaults Upon Senior Securities  None

Item 4. Submission of Matters to a Vote of Securities Holders  None

Item 5. Other Information  None

Item 6. Exhibits and Reports on Form 8



|(a) |  | Exhibits
|--- |  | --------

|       |  |                                                                                                                                                                          
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.40* |  | Third Amended and Restated Revolving Credit Agreement between
Arden Realty Limited Partnership and a group of lenders led by Wells
Fargo Bank dated as of August 9, 2002.
|      
|      
|      
|      
|10.41* |  | Term Loan Agreement between Arden Realty Limited Partnership and
Wells Fargo Bank, National Association dated as of September 19,
2002.                                  



---

|(*) |  | Incorporated by reference from Arden Realty Limited
Partnerships quarterly report on Form 10-Q filed with the
Securities and Exchange Commission on November 12, 2002.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) |  | Reports on Form 8-K
|--- |  | -------------------
|   
|    |  | None               

27



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##### Table of Contents






SIGNATURES

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

|                        |                                                                             |                    
|----------------------- | --------------------------------------------------------------------------- | -------------------
|                        | ARDEN REALTY, INC.                                                         
|                       
|Date: November 12, 2002 | By:                                                                         | /s/ Andrew J. Sobel
|                        |                                                                            
|                        | Andrew J. Sobel
Executive Vice President  Strategic Planningand Operations

|                        |                                                                    |                     
|----------------------- | ------------------------------------------------------------------ | --------------------
|Date: November 12, 2002 | By:                                                                | /s/ Richard S. Davis
|                        |                                                                   
|                        | Richard S. Davis
Senior Vice President and
Chief Financial Officer

28



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##### Table of Contents






OFFICERS CERTIFICATIONS

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Richard S. Ziman, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                                                                                
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report;                                                           
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                                                                              
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                                                                                
|  
|a) |  | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;                                                                                          
|  
|b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                                                                                                            
|  
|c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                                                                                                                  
|  
|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):                                                                                                                                       
|  
|a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and                                                                                           
|  
|b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                                                                                                                   
|  
|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 12, 2002



| | /s/ Richard S. ZimanRichard S. Ziman
Chairman of the Board and Chief Executive Officer
Arden Realty, Inc.
| | ---------------------------------------------------------------------------------------------------------

29



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##### Table of Contents



CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Richard S. Davis, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                                                                                
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;                                                           
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                                                                              
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                                                                                
|  
|a) |  | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;                                                                                          
|  
|b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                                                                                                            
|  
|c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                                                                                                                  
|  
|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):                                                                                                                                       
|  
|a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and                                                                                           
|  
|b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                                                                                                                   
|  
|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 12, 2002



| | /s/ Richard S. DavisRichard S. Davis
Senior Vice President and Chief Financial Officer
Arden Realty, Inc.
| | ---------------------------------------------------------------------------------------------------------

30



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##### Table of Contents



CERTIFICATION OF CHIEF OPERATING OFFICER

I, Victor J. Coleman, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                                                                                
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;                                                           
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                                                                              
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                                                                                
|  
|a) |  | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;                                                                                          
|  
|b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                                                                                                            
|  
|c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                                                                                                                  
|  
|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):                                                                                                                                       
|  
|a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and                                                                                           
|  
|b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                                                                                                                   
|  
|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 12, 2002



| | /s/ Victor J. ColemanVictor J. Coleman
President and Chief Operating Officer
Arden Realty, Inc.
| | -----------------------------------------------------------------------------------------------

31



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##### Table of Contents



CERTIFICATION OF EXECUTIVE VICE PRESIDENT

I, Andrew J. Sobel, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                                                                                
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;                                                           
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                                                                              
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                                                                                
|  
|a) |  | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;                                                                                          
|  
|b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                                                                                                            
|  
|c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                                                                                                                  
|  
|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):                                                                                                                                       
|  
|a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and                                                                                           
|  
|b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                                                                                                                   
|  
|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 12, 2002



| | /s/ Andrew J. SobelAndrew J. Sobel
Executive Vice President  Strategic Planning and Operations
Arden Realty, Inc.
| | ------------------------------------------------------------------------------------------------------------------

32



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##### Table of Contents



CERTIFICATION OF SENIOR VICE PRESIDENT

I, Robert C. Peddicord, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                                                                                
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;                                                           
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                                                                              
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                                                                                
|  
|a) |  | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;                                                                                          
|  
|b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                                                                                                            
|  
|c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                                                                                                                  
|  
|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):                                                                                                                                       
|  
|a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and                                                                                           
|  
|b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                                                                                                                   
|  
|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 12, 2002



| | /s/ Robert C. PeddicordRobert C. Peddicord
Senior Vice President  Leasing and Property Operations
Arden Realty, Inc.
| | ---------------------------------------------------------------------------------------------------------------------

33



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##### Table of Contents



CERTIFICATION OF GENERAL COUNSEL

I, David A. Swartz, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                                                                                
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;                                                           
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                                                                              
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                                                                                
|  
|a) |  | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;                                                                                          
|  
|b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                                                                                                            
|  
|c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                                                                                                                  
|  
|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):                                                                                                                                       
|  
|a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and                                                                                           
|  
|b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                                                                                                                   
|  
|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 12, 2002



| | /s/ David A. SwartzDavid A. Swartz
General Counsel and Secretary
Arden Realty, Inc.
| | -----------------------------------------------------------------------------------

34