<PAGE>   1
================================================================================

                       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 June 30, 2000

                         Commission file number 1-12193

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


                MARYLAND                               95-4578533
      (State or other jurisdiction                  (I.R.S. Employer
    of incorporation or organization)              Identification 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 August 9, 2000 there were 63,506,871 shares of the registrant's Common
Stock, $.01 par value, issued and outstanding.

================================================================================
<PAGE>   2
                               ARDEN REALTY, INC.
                                    FORM 10-Q
                                TABLE OF CONTENTS

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

          Item 1.  Financial Statements
                   Consolidated Balance Sheets as of June 30, 2000 (Unaudited) and December 31, 1999.....     3

                   Consolidated Statements of Income for the three and six months ended
                     June 30, 2000 and 1999 (Unaudited)..................................................     4

                   Consolidated Statements of Cash Flows for the six months ended
                     June 30, 2000 and 1999 (Unaudited)..................................................     5

                   Notes to Consolidated Financial Statements............................................     6

          Item 2.  Management's Discussion and Analysis of Financial
                     Condition and Results of Operations.................................................     9

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

PART II.  OTHER INFORMATION..............................................................................    23

          SIGNATURES.....................................................................................    25
</TABLE>


                                       2
<PAGE>   3
PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                               ARDEN REALTY, INC.
                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                   JUNE 30,      DECEMBER 31,
                                                                                     2000            1999
                                                                                 ------------    ------------
                                                                                  (UNAUDITED)
<S>                                                                              <C>             <C>
ASSETS
Investment in real estate:
   Land ......................................................................   $    468,757    $    467,157
   Buildings and improvements ................................................      1,870,439       1,833,052
   Tenant improvements and leasing commissions ...............................        192,179         153,161
                                                                                 ------------    ------------
                                                                                    2,531,375       2,453,370
   Less:  accumulated depreciation ...........................................       (199,112)       (157,608)
                                                                                 ------------    ------------
                                                                                    2,332,263       2,295,762
   Properties under development ..............................................        220,116         183,349
                                                                                 ------------    ------------
     Net investment in real estate ...........................................      2,552,379       2,479,111

Cash and cash equivalents ....................................................          2,537           7,056
Restricted cash ..............................................................         19,540          18,513
Rent and other receivables ...................................................         10,965          11,785
Mortgage notes receivable, net of discount ...................................         13,807          13,847
Deferred rent ................................................................         27,274          23,932
Prepaid financing costs, expenses and other assets, net of amortization ......         22,339          16,214
                                                                                 ------------    ------------
     Total assets ............................................................   $  2,648,841    $  2,570,458
                                                                                 ============    ============
LIABILITIES
Mortgage loans payable .......................................................   $    625,866    $    740,806
Unsecured lines of credit ....................................................        245,350         288,850
Unsecured senior notes, net of discount ......................................        249,114              --
Accounts payable and accrued expenses ........................................         29,624          34,482
Security deposits ............................................................         19,904          16,073
Dividends payable ............................................................         29,442          28,195
                                                                                 ------------    ------------
     Total liabilities .......................................................      1,199,300       1,108,406
                                                                                 ------------    ------------
Minority interests ...........................................................         85,877          86,294

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 20,000,000 shares authorized, none issued ...             --              --
Common stock, $.01 par value, 100,000,000 shares authorized,
  63,316,424 and 63,358,977 issued and outstanding, respectively .............            633             633

Additional paid-in capital ...................................................      1,364,143       1,377,292
Notes receivable from officers for purchase of common stock ..................         (1,112)         (2,167)
                                                                                 ------------    ------------
     Total stockholders' equity ..............................................      1,363,664       1,375,758
                                                                                 ------------    ------------
     Total liabilities and stockholders' equity ..............................   $  2,648,841    $  2,570,458
                                                                                 ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>   4
                               ARDEN REALTY, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                JUNE 30,                 JUNE 30,
                                                         ---------------------    -----------------------
                                                           2000        1999          2000         1999
                                                         --------   ----------    ----------   ----------
<S>                                                      <C>        <C>           <C>          <C>
Revenue ...............................................  $ 92,856   $   82,712    $  182,534   $  162,048
Property operating expenses ...........................    26,721       24,444        52,068       47,954
                                                         --------   ----------    ----------   ----------
                                                           66,135       58,268       130,466      114,094

General and administrative expenses ...................     1,838        1,687         3,659        3,183
Interest expense ......................................    18,770       14,455        36,622       27,638
Depreciation and amortization .........................    21,277       17,173        41,424       33,388
Interest and other income .............................      (770)        (671)       (1,625)      (1,341)
                                                         --------   ----------    ----------   ----------
Income before minority interest .......................    25,020       25,624        50,386       51,226
Minority interests ....................................    (1,822)        (971)       (3,697)      (2,182)
                                                         --------   ----------    ----------   ----------
Net income ............................................  $ 23,198   $   24,653    $   46,689   $   49,044
                                                         ========   ==========    ==========   ==========
Net income per common share:
     Basic ............................................  $   0.37   $     0.39    $     0.74   $     0.78
                                                         ========   ==========    ==========   ==========
     Diluted ..........................................  $   0.37   $     0.39    $     0.74   $     0.78
                                                         ========   ==========    ==========   ==========
Weighted average common shares outstanding:
     Basic ............................................    63,316       62,984        63,328       62,755
                                                         ========   ==========    ==========   ==========
     Diluted ..........................................    63,507       63,136        63,473       62,879
                                                         ========   ==========    ==========   ==========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       4
<PAGE>   5
                               ARDEN REALTY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         SIX MONTHS ENDED
                                                                                             JUNE 30,
                                                                                    ---------------------------
                                                                                       2000             1999
                                                                                    ----------       ----------
<S>                                                                                 <C>              <C>
OPERATING ACTIVITIES:
  Net income .....................................................................  $   46,689       $   49,044
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Minority interests ...........................................................       3,697            2,182
    Depreciation and amortization ................................................      41,424           33,388
    Amortization of loan costs ...................................................       1,772            1,239
    Changes in operating assets and liabilities:
       Rent and other receivables ................................................       1,048               63
       Deferred rent .............................................................      (3,342)          (3,567)
       Prepaid financing costs, expenses and other assets ........................      (7,938)          (6,012)
       Accounts payable and accrued expenses .....................................       3,567            8,513
       Security deposits .........................................................       3,831              493
                                                                                    ----------       ----------
  Net cash provided by operating activities ......................................      90,748           85,343
                                                                                    ----------       ----------
INVESTING ACTIVITIES:
  Acquisitions and improvements to investment in real estate .....................    (123,128)        (150,959)
                                                                                    ----------       ----------
FINANCING ACTIVITIES:
  Proceeds from mortgage loans ...................................................      11,885          229,888
  Repayments of mortgage loans ...................................................    (126,825)        (111,737)
  Proceeds from unsecured lines of credit ........................................      68,000          130,461
  Repayments of unsecured lines of credit ........................................    (111,500)        (120,298)
  Proceeds from unsecured senior notes, net of discount ..........................     249,079               --
  Distributions to preferred operating partnership unit holders ..................      (2,156)              --
  Increase in restricted cash ....................................................      (1,027)          (5,150)
  Distributions to minority interests ............................................      (1,958)          (2,683)
  Dividends paid .................................................................     (57,637)         (53,983)
                                                                                    ----------       ----------
  Net cash provided by financing activities ......................................      27,861           66,498
                                                                                    ----------       ----------
  Net (decrease) increase in cash and cash equivalents ...........................      (4,519)             882
  Cash and cash equivalents at beginning of period ...............................       7,056            4,578
                                                                                    ----------       ----------
  Cash and cash equivalents at end of period .....................................  $    2,537       $    5,460
                                                                                    ==========       ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during the period for interest, net of amount capitalized ..........  $   35,261       $   30,318
                                                                                    ==========       ==========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       5
<PAGE>   6
                               ARDEN REALTY, INC.
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  JUNE 30, 2000
                                   (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 June 30, 2000, our portfolio
was comprised of 142 primarily suburban office properties or the "Properties,"
with approximately 18.5 million net rentable square feet and three properties
with approximately 700,000 net rentable square feet under development.

         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 June 30, 2000 and December 31, 1999 consisted
of limited partnership interests in the Operating Partnership of approximately
3.3%, exclusive of ownership interests of our preferred units holder.

2.   INTERIM FINANCIAL DATA

         The accompanying consolidated condensed financial statements should be
read in conjunction with our 1999 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.

         Certain prior period amounts have been reclassified to conform with the
current period presentation.


                                       6
<PAGE>   7
3.   MORTGAGE LOANS PAYABLE, UNSECURED LINES OF CREDIT AND UNSECURED SENIOR
     NOTES

         A summary of our outstanding indebtedness as of June 30, 2000 and
December 31, 1999 is as follows:

<TABLE>
<CAPTION>
                                                               STATED ANNUAL                       NUMBER OF
                                 JUNE 30,                     INTEREST RATE AT  FIXED/             PROPERTIES        MATURITY
                                   2000        DECEMBER 31,     JUNE 30, 2000  FLOATING             SECURING          MONTH/
TYPE OF DEBT                    (UNAUDITED)       1999           (UNAUDITED)     RATE                 LOAN            YEAR
------------                    -----------   -------------   ---------------  --------            ----------        --------
                                     (IN THOUSANDS)
<S>                            <C>            <C>             <C>              <C>                  <C>              <C>
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)....        113,130        114,016           6.94        Fixed                      12           4/09
Mortgage Financing VI(3)...         22,331         22,426           7.54        Fixed                       3           4/09
Westwood Center(3).........         14,696         14,859           8.09        Fixed                       1           5/03
Activity Business
  Center(3) ...............          7,948          8,003           8.85        Fixed                       1           5/06
145 South Fairfax(3).......          4,035          4,050           8.93        Fixed                       1           1/27
Marin Corporate Center(3)..          3,113          3,168           9.00        Fixed                       1           7/15
Conejo Business Center(4)..          3,059          3,114           8.75        Fixed                 (Note 4)          7/15
Conejo Business Center(4)..          1,331          1,358           7.88        Fixed                 (Note 4)          7/15
299 North Euclid(1)........             --          5,000             --        Fixed                       1           7/02
                               -----------    -----------
                                   591,943        598,294
Floating Rate
Construction Loan(5).......         33,923         22,037           8.68        LIBOR + 2.00%         (Note 6)         12/00
Lehman Prepayable Term
   Loan II and III(1)......             --        120,475             --        LIBOR + 2.25%               9          11/00
                               -----------    -----------
                                   625,866        740,806
UNSECURED LINES OF
  CREDIT(8):
Floating Rate
Wells Fargo(1).............        243,350        280,850           7.84        LIBOR + 1.15%              --           4/03
City National Bank(1)......          2,000          8,000           8.62        Prime Rate - 0.875%        --           8/01
                               -----------    -----------
                                   245,350        288,850
UNSECURED SENIOR NOTES:
Fixed Rate
2005 Notes(7)..............        199,513             --           8.87        Fixed                      --           3/05
2010 Notes(7)..............         49,601             --           9.15        Fixed                      --           3/10
                               -----------    -----------
                                   249,114             --
                               -----------    -----------
   Total Debt..............    $ 1,120,330    $ 1,029,656
                               ===========    ===========
</TABLE>

----------

(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)   All interest and principal due upon maturity. This loan matures in
      December 2000 with two one-year extension options.

(6)   This loan is secured by certain property and construction improvements
      relating to the 6060 Center Drive office building in the Howard Hughes
      Center.

(7)   Requires semi-annual interest payments only, with principal balance due
      upon maturity.

(8)   See footnote 6 below for discussion of our new line of credit.

         On January 25, 2000, we expanded one of our two prepayable term loans
with an affiliate of Lehman Brothers totaling $120.5 million by $25.0 million,
resulting in a combined outstanding balance of $145.5 million for both loans.

         On March 17, 2000, the Operating Partnership issued $250 million of
senior unsecured notes in two tranches. One tranche was for $200 million at an
interest rate of 8.87% due in March 2005 and the other tranche was for $50
million at an interest rate of 9.15% due in March 2010. These notes are the
Operating Partnership's senior unsecured obligations and pay interest
semi-annually on March 1, and September 1, of each year. Net proceeds from this
offering were used to repay two prepayable term loans to an affiliate of Lehman
Brothers described above totaling $145.5 million, a $5.0 million mortgage loan
and approximately $96.1 million under our unsecured lines of credit. These
senior unsecured notes were issued in a private placement and resold in reliance
upon an exemption from registration provided by Rule 144A under the Securities
Act. As part of issuing these notes, the Operating Partnership filed a


                                       7
<PAGE>   8
registration statement with the Securities and Exchange Commission enabling the
holders of the notes to exchange the privately placed notes for publicly traded
notes. This registration statement became effective on May 10, 2000 and by June
5, 2000 all holders of the privately placed notes had exchanged such notes for
the Operating Partnership's registered notes.

         On May 3, 2000, we extended our unsecured line of credit with a group
of banks led by Wells Fargo, or the Lenders. The extended line of credit
provides for borrowings up to $275 million with an option to increase the amount
to $325 million and bears interest at a rate ranging between LIBOR plus 1.15%
and LIBOR plus 1.80% (including an annual facility fee ranging from .20% to .40%
based on the aggregate amount of the facility) depending on our unsecured debt
rating. In addition, as long as we maintain 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 $137.5 million
of the unsecured line of credit. Under certain circumstances, we also have the
option to convert the interest rate on this line of credit to the prime rate
plus 0.5%. This line of credit matures in April 2003 with an option to extend
the maturity date for one year.

4.   STOCKHOLDERS' EQUITY

         On June 13, 2000, we declared a second quarter dividend of $0.465 per
share to shareholders of record on June 30, 2000.

5.   REVENUE FROM RENTAL OPERATIONS AND PROPERTY OPERATING EXPENSES

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

<TABLE>
<CAPTION>
                                                        THREE MONTHS                 SIX MONTHS
                                                       ENDED JUNE 30,              ENDED JUNE 30,
                                                   ----------------------      ----------------------
                                                     2000          1999          2000          1999
                                                   --------      --------      --------      --------
                                                                       (UNAUDITED)
<S>                                                <C>           <C>           <C>           <C>
Revenue from Rental Operations:
   Rental ...................................      $ 80,003      $ 72,331      $157,516      $141,841
   Tenant reimbursements ....................         4,218         2,869         7,810         6,336
   Parking, net of expenses .................         4,415         3,575         8,387         6,757
   Other rental operations ..................         4,220         3,937         8,821         7,114
                                                   --------      --------      --------      --------
                                                     92,856        82,712       182,534       162,048
                                                   --------      --------      --------      --------
Property Operating Expenses:
   Repairs and maintenance ..................         8,895         8,255        17,297        15,925
   Utilities ................................         6,526         6,538        12,636        12,879
   Real estate taxes ........................         6,328         5,669        12,592        11,416
   Insurance ................................         1,043           988         2,084         1,970
   Ground rent ..............................           596           313           794           494
   Marketing and other ......................         3,333         2,681         6,665         5,270
                                                   --------      --------      --------      --------
                                                     26,721        24,444        52,068        47,954
                                                   --------      --------      --------      --------
                                                   $ 66,135      $ 58,268      $130,466      $114,094
                                                   ========      ========      ========      ========
</TABLE>

6.   SUBSEQUENT EVENTS

         Ms. Diana Laing resigned as Executive Vice President and Chief
Financial Officer effective July 1, 2000 to become Executive Vice President and
Chief Financial Officer of a technology company. At the time of her resignation,
Ms. Laing surrendered stock options valued at approximately $59,000 as well as
42,553 shares of our common stock underlying a promissory note in the amount of
$1.0 million payable to Arden Realty, Inc. The value of the options and shares
surrendered by Ms. Laing equaled the unpaid principal and interest of her
promissory note.

         In July 2000, we closed on a $75 million unsecured line of credit with
Lehman Brothers, Inc. Borrowings on this new line of credit will bear interest
at a rate ranging between LIBOR plus 1.05% and LIBOR plus 1.70%, depending on
our unsecured debt rating. We also have the option to convert the interest rate
to the prime rate plus 0.5%. This line of credit matures in July 2002 with an
option to extend the maturity date for one year. Proceeds from this line of
credit will be used to paydown a portion of our Wells Fargo unsecured line of
credit.


                                       8
<PAGE>   9
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 1999 Annual Report on Form 10-K.

         We are a self-administered and self-managed real estate investment
trust, or REIT, that owns, manages, leases, develops, renovates and acquires
commercial properties located in Southern California. We are a full-service real
estate organization managed by 11 senior executive officers who have an average
of over 15 years of experience in the real estate industry. We perform all
property management, accounting, finance and acquisition activities and a
majority of our leasing transactions with our own staff of approximately 300
employees.

         We are Southern California's largest publicly traded office landlord as
measured by total net rentable square feet owned, as of June 30, 2000. As of
that date, our portfolio consisted of 142 primarily suburban office properties
containing approximately 18.5 million net rentable square feet and three
properties with approximately 700,000 net rentable square feet under
development. As of June 30, 2000, our properties were approximately 95.7%
leased, excluding two existing properties under renovation.

         Our primary business strategy is to actively manage our portfolio to
achieve gains in occupancy and rental rates, control operating expenses and to
maximize income from ancillary operations and services. When market conditions
permit, we may also acquire new properties that add value and fit strategically
into our portfolio, but we will continue to be very selective and will evaluate
any potential acquisition with alternative uses of our capital.


                                       9
<PAGE>   10
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, financial data from period to period will be affected by the timing
of significant property renovations, development and acquisitions.

         Comparison of the three months ended June 30, 2000 to the three months
ended June 30, 1999 (in thousands, except number of properties and percentages):

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED
                                                              JUNE 30,
                                                        ----------------------       DOLLAR       PERCENT
                                                          2000          1999         CHANGE       CHANGE
                                                        --------      --------      --------      -------
                                                            (unaudited)
<S>                                                     <C>           <C>           <C>           <C>
REVENUE
  Revenue from rental operations:
    Rental .......................................      $ 80,003      $ 72,331      $  7,672         11%
    Tenant reimbursements ........................         4,218         2,869         1,349         47%
    Parking, net of expenses .....................         4,415         3,575           840         23%
    Other rental operations ......................         4,220         3,937           283          7%
                                                        --------      --------      --------        ---
                                                          92,856        82,712        10,144         12%
  Interest and other income ......................           770           671            99         15%
                                                        --------      --------      --------        ---
    Total revenue ................................      $ 93,626      $ 83,383      $ 10,243         12%
                                                        ========      ========      ========        ===
EXPENSES
  Property operating expenses:
    Repairs and maintenance ......................      $  8,895      $  8,255      $    640          8%
    Utilities ....................................         6,526         6,538           (12)        (0)%
    Real estate taxes ............................         6,328         5,669           659         12%
    Insurance ....................................         1,043           988            55          6%
    Ground rent ..................................           596           313           283         90%
    Marketing and other ..........................         3,333         2,681           652         24%
                                                        --------      --------      --------        ---
       Total property operating expenses .........        26,721        24,444         2,277          9%
  General and administrative .....................         1,838         1,687           151          9%
  Interest .......................................        18,770        14,455         4,315         30%
  Depreciation and amortization ..................        21,277        17,173         4,104         24%
                                                        --------      --------      --------        ---
    Total expenses ...............................      $ 68,606      $ 57,759      $ 10,847         19%
                                                        ========      ========      ========        ===
OTHER DATA:
NUMBER OF PROPERTIES
  Acquired during period .........................            --             2
  Owned at end of period .........................           142           141

NET RENTABLE SQUARE FEET:
  Acquired during period .........................            --           363
  Owned at end of period .........................        18,492        18,391
</TABLE>


                                       10
<PAGE>   11
         The increase in revenue from rental operations and property operating
expenses for the three months ended June 30, 2000 as compared to the same period
in 1999 was partially due to the 3 properties we acquired after April 1, 1999
and 5 properties under renovation for all or a portion of the periods presented.
Operating results for properties under renovation may significantly vary from
period to period depending on the status of the renovation and occupancy levels.

         Following is a summary of the increase in revenue from rental
operations and property operating expenses that relates to the 8 properties we
acquired or were under renovation after April 1, 1999 and for the 134
non-renovation properties we owned for all of the three month periods ended June
30, 2000 and 1999 (in thousands, except number of properties).

<TABLE>
<CAPTION>
                                                                                                  PROPERTIES OWNED
                                                                    PROPERTIES ACQUIRED OR         FOR ALL OF THE
                                                                      UNDER RENOVATION            THREE MONTHS ENDED
                                                   TOTAL VARIANCE    AFTER APRIL 1, 1999       JUNE 30, 2000 AND 1999(1)
                                                   --------------   ----------------------     -------------------------
<S>                                                <C>              <C>                        <C>
REVENUE FROM RENTAL OPERATIONS:
   Rental .....................................       $  7,672                $3,556                    $  4,116
   Tenant reimbursements ......................          1,349                     5                       1,344
   Parking, net of operations .................            840                   322                         518
   Other rental operations ....................            283                   329                         (46)
                                                      --------                ------                    --------
                                                      $ 10,144                $4,212                    $  5,932
                                                      ========                ======                    ========
PROPERTY OPERATING EXPENSES:
   Repairs and maintenance ....................       $    640                $  469                    $    171
   Utilities ..................................            (12)                  367                        (379)
   Real estate taxes ..........................            659                   272                         387
   Insurance ..................................             55                    46                           9
   Ground rent ................................            283                    --                         283
   Marketing and other ........................            652                   149                         503
                                                      --------                ------                    --------
                                                      $  2,277                $1,303                    $    974
                                                      ========                ======                    ========
OTHER DATA:
   Number of properties .......................            142                     8                         134
   Net rentable square feet ...................         18,492                 1,532                      16,960
</TABLE>

----------

(1)   See the Same Properties analysis below.

         Interest and other income increased by approximately $99,000 or 15% for
the three months ended June 30, 2000, as compared to the same period in 1999,
primarily due to higher interest income earned in 2000 on higher restricted cash
balances required by certain mortgage loans entered into after April 1, 1999.

         General and administrative expenses as a percentage of total revenues
were approximately 2.0% of total revenues for the three months ended June 30,
2000, which is consistent with general and administrative expenses of 2.0% of
total revenues for the same period in 1999.

         Interest expense increased approximately $4.3 million or 30% during the
three months ended June 30, 2000, as compared to the same period in 1999. This
increase was due to higher outstanding debt balances in 2000, primarily used to
fund capital expenditures, tenant improvements and for the three properties we
acquired after April 1, 1999, as well as higher effective interest rates in
2000.

         Depreciation and amortization expense increased by approximately $4.1
million during the three months ended June 30, 2000, primarily due to
depreciation related to properties acquired after April 1, 1999 and for capital
expenditures, tenant improvements and leasing commissions placed in service
after July 1, 1999.


                                       11
<PAGE>   12
SAME PROPERTIES

         Following is a comparison of property operating data computed under
generally accepted accounting principles, or "GAAP Basis," and excluding the
straight-line rent adjustment, or "Cash Basis", for the 134 non-renovation
properties we owned for the entire three month periods ended June 30, 2000 and
1999 (in thousands, except number of properties and percentages):


<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED
                                                          JUNE 30,
                                                  -----------------------        DOLLAR      PERCENT
                                                    2000           1999          CHANGE      CHANGE
                                                  --------       --------       --------     -------
                                                       (Unaudited)
<S>                                               <C>            <C>            <C>          <C>
GAAP BASIS:
Revenue from rental operations .............      $ 86,454       $ 80,522       $  5,932       7.4%
Property operating expenses ................        24,704         23,730            974       4.1%
                                                  --------       --------       --------      ----
       Net .................................      $ 61,750       $ 56,792       $  4,958       8.7%
                                                  ========       ========       ========      ====
CASH BASIS(1):
Revenue from rental operations .............      $ 84,483       $ 78,488       $  5,995       7.6%
Property operating expenses ................        24,704         23,730            974       4.1%
                                                  --------       --------       --------      ----
       Net .................................      $ 59,779       $ 54,758       $  5,021       9.2%
                                                  ========       ========       ========      ====

Number of stabilized properties ............           134            134
Average occupancy ..........................          94.7%          91.0%
Net rentable square feet ...................        16,960         16,960
Percentage of total portfolio ..............          91.7%          92.2%
</TABLE>

----------

(1)   Excludes straight-line rent adjustments.

         Revenue from rental operations for these properties, computed on a GAAP
basis, increased by approximately $5.9 million, or 7.4%, during the three months
ended June 30, 2000, compared to the same period in 1999, primarily due to a
3.7% increase in average occupancy and an increase in average rental rates. This
increase in occupancy not only contributed to higher rental revenue but also
resulted in higher parking income and tenant reimbursements.

         Excluding only the straight-line rent adjustment for these properties,
revenue from rental operations for the three months ended June 30, 2000,
computed on a Cash Basis, increased by approximately $6.0 million or 8%.

         Property operating expenses for these properties increased by
approximately $1.0 million, or 4.1%, during the three months ended June 30,
2000, compared to the same period in 1999, primarily due to higher repair and
maintenance, real estate tax, contingent ground rent, and marketing and other
expenses in 2000, these increases were partially offset by lower utilities
expense in 2000. Increases in certain repair and maintenance expense items were
primarily due to the approximate 3.7% increase in average occupancy for these
properties in 2000. Real estate taxes increased by $387,000 in 2000 due to
normal annual increases and final assessments on certain properties. Ground rent
expense increased by $283,000 due to higher operating income from one of our
properties with a participating ground lease. Due to our continued focus on
raising our portfolio wide occupancy, marketing and tenant retention related
expenses were also higher in 2000. These increases in property operating
expenses in 2000 were partially offset by a $379,000 decrease in utility expense
as a result of savings achieved from energy enhancing capital improvements
completed during 1999.


                                       12
<PAGE>   13
         Comparison of the six months ended June 30, 2000 to the six months
ended June 30, 1999 (in thousands, except number of properties and percentages):

<TABLE>
<CAPTION>
                                                           SIX MONTHS ENDED
                                                               JUNE 30,
                                                        ----------------------       DOLLAR        PERCENT
                                                          2000          1999         CHANGE        CHANGE
                                                        --------      --------      --------       -------
                                                              (unaudited)
<S>                                                     <C>           <C>           <C>            <C>
REVENUE
  Revenue from rental operations:
    Rental .......................................      $157,516      $141,841      $ 15,675          11%
    Tenant reimbursements ........................         7,810         6,336         1,474          23%
    Parking, net of expenses .....................         8,387         6,757         1,630          24%
    Other rental operations ......................         8,821         7,114         1,707          24%
                                                        --------      --------      --------        ----
                                                         182,534       162,048        20,486          13%
  Interest and other income ......................         1,625         1,341           284          21%
                                                        --------      --------      --------        ----
    Total revenue ................................      $184,159      $163,389        20,770          13%
                                                        ========      ========      ========        ====

EXPENSES
  Property operating expenses:
    Repairs and maintenance ......................      $ 17,297      $ 15,925         1,372           9%
    Utilities ....................................        12,636        12,879          (243)         (2)%
    Real estate taxes ............................        12,592        11,416         1,176          10%
    Insurance ....................................         2,084         1,970           114           6%
    Ground rent ..................................           794           494           300          61%
    Marketing and other ..........................         6,665         5,270         1,395          26%
                                                        --------      --------      --------        ----
       Total property operating expenses .........        52,068        47,954         4,114           9%
  General and administrative .....................         3,659         3,183           476          15%
  Interest .......................................        36,622        27,638         8,984          33%
  Depreciation and amortization ..................        41,424        33,388         8,036          24%
                                                        --------      --------      --------        ----
    Total expenses ...............................      $133,773      $112,163      $ 21,610          19%
                                                        ========      ========      ========        ====
OTHER DATA:
NUMBER OF PROPERTIES
  Acquired during period .........................            --             3
  Owned at end of period .........................           142           141

NET RENTABLE SQUARE FEET:
  Acquired during period .........................            --           423
  Owned at end of period .........................        18,492        18,391
</TABLE>


                                       13
<PAGE>   14
         The increase in revenue from rental operations and property operating
expenses for the six months ended June 30, 2000 as compared to the same period
in 1999 was partially due to the 4 properties we acquired and the 5 properties
under renovation for all or a portion of the periods presented. Operating
results for properties under renovation may significantly vary from period to
period depending on the status of the renovation and occupancy levels.

         Following is a summary of the increase in revenue from rental
operations and property operating expenses that relates to the 9 properties we
acquired or were under renovation after April 1, 1999 and for the 133
non-renovation properties we owned for all of the six month periods ended June
30, 2000 and 1999 (in thousands, except number of properties).


<TABLE>
<CAPTION>
                                                                                                PROPERTIES OWNED
                                                                   PROPERTIES ACQUIRED OR       FOR ALL OF THE
                                                                      UNDER RENOVATION          SIX MONTHS ENDED
                                                TOTAL VARIANCE      AFTER JANUARY 1, 1999    JUNE 30, 2000 AND 1999(1)
                                                --------------     -----------------------   -------------------------
<S>                                             <C>                <C>                       <C>
REVENUE FROM RENTAL OPERATIONS:
   Rental ...............................          $ 15,675                $ 7,701                    $  7,974
   Tenant reimbursements ................             1,474                    330                       1,144
   Parking, net of operations ...........             1,630                    651                         979
   Other rental operations ..............             1,707                    850                         857
                                                   --------                -------                    --------
                                                   $ 20,486                $ 9,532                    $ 10,954
                                                   ========                =======                    ========
PROPERTY OPERATING EXPENSES:
   Repairs and maintenance ..............          $  1,372                $   990                    $    382
   Utilities ............................              (243)                   777                      (1,020)
   Real estate taxes ....................             1,176                    599                         577
   Insurance ............................               114                     99                          15
   Ground rent ..........................               300                     --                         300
   Marketing and other ..................             1,395                    349                       1,046
                                                   --------                -------                    --------
                                                   $  4,114                $ 2,814                    $  1,300
                                                   ========                =======                    ========
OTHER DATA:
   Number of properties .................               142                      9                         133
   Net rentable square feet .............            18,492                  1,592                      16,900
</TABLE>

----------

(1)  See the Same Properties analysis below.

         Interest and other income increased by approximately $284,000 or 21%
during the six months ended June 30, 2000, as compared to the same period in
1999, primarily due to higher interest income earned in 2000 on higher
restricted cash balances required by certain mortgage loans entered into after
April 1, 1999.

         General and administrative expenses as a percentage of total revenues
were approximately 2.0% of total revenues for the six months ended June 30,
2000, which is consistent with general and administrative expenses of 1.9% of
total revenues for the same period in 1999.

         Interest expense increased approximately $9.0 million or 33% during the
six months ended June 30, 2000, as compared to the same period in 1999. This
increase was due to higher outstanding debt balances in 2000, primarily used to
fund capital expenditures, tenant improvements and for the four properties we
acquired in 1999, as well as higher effective interest rates in 2000.

         Depreciation and amortization expense increased by approximately $8.0
million during the six months ended June 30, 2000, primarily due to depreciation
related to properties acquired in 1999 and for capital expenditures, tenant
improvements and leasing commissions placed in service after June 30, 1999.


                                       14
<PAGE>   15
SAME PROPERTIES

         Following is a comparison of property operating data computed under the
GAAP Basis and Cash Basis for the 133 non-renovation properties we owned for the
entire six month periods ended June 30, 2000 and 1999 (in thousands, except
number of properties and percentages):

<TABLE>
<CAPTION>
                                                   SIX MONTHS ENDED
                                                        JUNE 30,
                                                ----------------------    DOLLAR    PERCENT
                                                  2000           1999     CHANGE    CHANGE
                                                --------       --------   --------  ------
                                                      (Unaudited)
<S>                                             <C>            <C>        <C>        <C>
GAAP BASIS:
Revenue from rental operations ..............   $169,373       $158,419   $ 10,954    6.9%
Property operating expenses .................     48,115         46,815      1,300    2.8%
                                                --------       --------   --------   ----
       Net ..................................   $121,258       $111,604      9,654    8.7%
                                                ========       ========   ========   ====
CASH BASIS(1):
Revenue from rental operations ..............   $166,252       $154,829   $ 11,423    7.4%
Property operating expenses .................     48,115         46,815      1,300    2.8%
                                                --------       --------   --------   ----
       Net ..................................   $118,137       $108,014     10,123    9.4%
                                                ========       ========   ========   ====

Number of stabilized properties .............        133            133
Average occupancy ...........................       94.6%          91.0%
Net rentable square feet ....................     16,900         16,900
Percentage of total portfolio ...............       91.4%          91.9%
</TABLE>

----------

Excludes straight-line rent adjustments.

         Revenue from rental operations for these properties, computed on a GAAP
basis, increased by approximately $11.0 million, or 6.9%, during the six months
ended June 30, 2000, compared to the same period in 1999, primarily due to a
3.6% increase in average occupancy and an increase in average rental rates. This
increase in occupancy not only contributed to higher rental revenue but also
resulted in higher parking income, tenant reimbursements and miscellaneous
tenant charges including after-hour utility billings, signage and satellite
income.

         Excluding only the straight-line rent adjustment for these properties,
revenue from rental operations for the six months ended June 30, 2000, computed
on a Cash Basis, increased by approximately $11.4 million or 7.4%.

         Property operating expenses for these properties increased by
approximately $1.0 million, or 4.1%, during the three months ended June 30,
2000, compared to the same period in 1999, primarily due to higher repair and
maintenance, real estate tax, contingent ground rent, and marketing and other
expenses in 2000, these increases were partially offset by lower utilities
expense in 2000. Increases in certain repair and maintenance expense items were
primarily due to the approximate 3.7% increase in average occupancy for these
properties in 2000. Real estate taxes increased by $387,000 in 2000 due to
normal annual increases and final assessments on certain properties. Ground rent
expense increased by $283,000 due to higher operating income from one of our
properties with a participating ground lease. Due to our continued focus on
raising our portfolio wide occupancy, marketing and tenant retention related
expenses were also higher in 2000. These increases in property operating
expenses in 2000 were partially offset by a $379,000 decrease in utility expense
as a result of savings achieved from energy enhancing capital improvements
completed during 1999.


                                       15
<PAGE>   16
LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS

         Cash provided by operating activities increased by approximately $5.4
million to $90.7 million for the six months ended June 30, 2000, as compared to
$85.3 million for the same period in 1999, primarily due to improved operating
results from our property portfolio from increases in both occupancy and rental
rates throughout our portfolio.

         Cash used in investing activities decreased by approximately $27.8
million, to $123.1 million for the six months ended June 30, 2000 compared to
$150.9 million for the same period in 1999. The decrease was due to $69.5
million in funds used in 1999 to acquire three properties which was partially
offset by an increase of approximately $42.1 million in funds used in 2000 for
capital improvements due to our increased development, renovation activity and
tenant improvements build out.

         Cash provided by financing activities decreased by approximately $38.6
million to an inflow of $27.9 million for the six months ended June 30, 2000, as
compared to an inflow of $66.5 million for the same period in 1999. Cash
provided by financing activities for the six months ended June 30, 2000
consisted primarily of net proceeds from the Operating Partnership's offering of
unsecured senior notes partially offset by repayments of mortgage loans,
paydowns of our unsecured lines of credit and distributions to stockholders and
minority interests.
                                            .
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, 2001. 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 June 30, 2000, there was
$2.0 million outstanding on this line of credit and $8.0 million was available
for additional borrowings.

         On January 25, 2000, we expanded one of our two prepayable term loans
with an affiliate of Lehman Brothers totaling $120.5 million by $25 million,
resulting in a combined outstanding balance of $145.5 million for both loans.
The total outstanding balance on these loans was repaid on March 17, 2000 with
the proceeds from the issuance of $250 million in senior unsecured notes
described below.

         On March 17, 2000, the Operating Partnership issued $250 million of
senior unsecured notes in two tranches. One tranche was for $200 million at an
interest rate of 8.875% due in March 2005 and the other tranche was for $50
million at an interest rate of 9.150% due in March 2010. These notes are the
Operating Partnership's senior unsecured obligations and pay interest
semi-annually on March 1, and September 1, of each year. Net proceeds from this
offering were used to repay the two prepayable term loans to an affiliate of
Lehman Brothers described above totaling $145.5 million, a $5.0 million mortgage
loan and approximately $96.1 million under our unsecured lines of credit.

         On May 3, 2000, we extended our unsecured line of credit with a group
of banks led by Wells Fargo, or the Lenders. The extended line of credit
provides for borrowings up to $275 million with an option to increase the amount
to $325 million and bears interest at a rate ranging between LIBOR plus 1.15%
and LIBOR plus 1.80% (including an annual facility fee ranging from .20% to .40%
based on the aggregate amount of the facility) depending on our unsecured debt
rating. In addition, as long as we maintain 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 $137.5 million
of the unsecured line of credit. Under certain circumstances, we also have the
option to convert the interest rate on this line of credit to the prime rate
plus 0.5%. This line of credit matures in April 2003 with an option to extend
the maturity date for one year. As of June 30, 2000, there was approximately
$243.4 million outstanding on this line of credit and approximately $31.6
million was available for additional borrowings.

         In July 2000, we closed on a $75 million unsecured line of credit with
Lehman Brothers, Inc. Borrowings on this new line of credit will bear interest
at a rate ranging between LIBOR plus 1.05% and LIBOR plus 1.70%, depending on
our unsecured debt rating. We also have the option to convert the interest rate
to the prime rate plus 0.5%. This line of credit matures in July 2002 with an
option to extend the maturity date for one year. Proceeds from this line of
credit will be used to paydown a portion of our Wells Fargo unsecured line of
credit.


                                       16
<PAGE>   17
         Following is a summary of scheduled principal payments for our total
debt outstanding as of June 30, 2000 (in thousands):

<TABLE>
<CAPTION>
   YEAR                                                      AMOUNT
   ----                                                   -----------
<S>                                                       <C>
   2000.................................................  $    35,287
   2001.................................................        4,861
   2002.................................................        3,093
   2003.................................................      262,664
   2004.................................................      182,302
   2005.................................................      207,918
   2006.................................................       15,303
   2007.................................................        8,895
   2008.................................................      230,388
   2009.................................................      112,063
   Thereafter...........................................       57,556
                                                           ----------
     Total..............................................   $1,120,330
                                                           ==========
</TABLE>

         Following is certain other information related to our indebtedness as
of June 30, 2000 (in thousands, except percentage data):

         UNSECURED AND SECURED DEBT ANALYSIS:

<TABLE>
<CAPTION>
                                                                 WEIGHTED
                                                                  AVERAGE
                                       BALANCE     PERCENT    INTEREST RATE(1)
                                      ----------   -------    ----------------
<S>                                   <C>          <C>        <C>
         Unsecured Debt ..........    $  494,464       44%          8.72%
         Secured Debt ............       625,866       56%          7.51%
                                      ----------     ----           ----
         Total Debt ..............    $1,120,330      100%          8.04%
                                      ==========     ====           ====
</TABLE>

         FLOATING AND FIXED RATE DEBT ANALYSIS:

<TABLE>
<CAPTION>
                                                                       WEIGHTED
                                                                       AVERAGE
                                            BALANCE      PERCENT   INTEREST RATE(1)
                                           ----------    -------   ----------------
<S>                                        <C>           <C>       <C>
         Floating Rate Debt ..........     $  279,273        25%         8.45%
         Fixed Rate Debt .............        841,057        75%         7.91%
                                           ----------      ----          ----
         Total Debt ..................     $1,120,330       100%         8.04%
                                           ==========      ====          ====
</TABLE>

----------

(1)   Includes amortization of prepaid financing costs.

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

<TABLE>
<CAPTION>
                                            FOR THE THREE               FOR THE SIX
                                         MONTHS ENDED JUNE 30,      MONTHS ENDED JUNE 30,
                                        -----------------------    -----------------------
                                          2000           1999        2000           1999
                                        --------       --------    --------       --------
<S>                                     <C>            <C>         <C>            <C>
         Total interest incurred .....  $ 22,491       $ 16,859    $ 43,184       $ 32,346
         Amount capitalized ..........    (3,721)        (2,404)     (6,562)        (4,708)
                                        --------       --------    --------       --------
         Amount expensed .............  $ 18,770       $ 14,455    $ 36,622       $ 27,638
                                        ========       ========    ========       ========
</TABLE>

         As of June 30, 2000, we had $22.1 million in cash and cash equivalents,
including $13.8 million in restricted cash representing interest bearing cash
deposits required by five of our mortgage loans payable. Also included in cash
and cash equivalents were $5.7 million in cash impound accounts for real estate
taxes and insurance as required by several of our mortgage loans payable.

         As of June 30, 2000, we had $39.6 million available under our lines of
credit. Also, see discussion above regarding our new $75 million line of credit
closed in July 2000.


                                       17
<PAGE>   18
         We expect to continue meeting our short-term liquidity and capital
requirements generally through net cash provided by operating activities and
proceeds from our lines of credit. We believe that the net cash provided by
operating activities will continue to be sufficient to pay any distributions
necessary to enable us to continue qualifying as a REIT. We also believe the
foregoing sources of liquidity will be sufficient to fund our short-term
liquidity needs for the foreseeable future, 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, renovation costs, property acquisitions and
other non-recurring capital expenditures through the refinancing of existing
indebtedness and/or the issuance of long-term debt and equity securities.


                                       18
<PAGE>   19
FUNDS FROM OPERATIONS

         The following table reflects the calculation of our funds from
operations for the three month periods ended June 30, 2000 and 1999 (in
thousands):

<TABLE>
<CAPTION>
                                                                     FOR THE                           FOR THE
                                                            THREE MONTHS ENDED JUNE 30,       SIX MONTHS ENDED JUNE 30,
                                                            ---------------------------       -------------------------
                                                               2000             1999            2000            1999
                                                            ---------         ---------       --------         --------
                                                                                    (unaudited)
<S>                                                          <C>              <C>             <C>              <C>
        FUNDS FROM OPERATIONS(1):
        Net income ..................................        $ 23,198         $ 24,653        $ 46,689         $ 49,044
        Depreciation and amortization
          of real estate assets .....................          21,277           17,173          41,424           33,388
        Minority interest ...........................           1,822              971           3,697            2,182
        Income allocated to Preferred
          Operating Partnership Units ...............          (1,078)              --          (2,156)              --
                                                             --------         --------        --------         --------
             Funds From Operations ..................        $ 45,219         $ 42,797        $ 89,654         $ 84,614
                                                             ========         ========        ========         ========
</TABLE>

----------

(1)   We consider funds from operations, as defined by 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 October 1999 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.

PORTFOLIO AND LEASE INFORMATION

         The following tables set forth certain information regarding our
Properties as of June 30, 2000.

                                PORTFOLIO SUMMARY

<TABLE>
<CAPTION>
                                                                                                 APPROXIMATE
                                                                                           NET RENTABLE SQUARE FEET
                                                  NUMBER OF PROPERTIES                          (IN THOUSANDS)
                                         ---------------------------------------    -------------------------------------
                                                   Industrial                       Industrial
                                                      and                  % of        and                          % of
LOCATION                                 Office      Retail      Total     Total      Office    Retail   Total      Total
--------                                 ------    ----------    -----     -----    ----------  ------   ------     -----
<S>                                      <C>       <C>           <C>       <C>      <C>         <C>      <C>         <C>
Los Angeles County
  West .............................        28           1          29        20%      4,684       37     4,721        26%
  North ............................        32          --          32        23%      2,876       --     2,876        16%
  South ............................        16          --          16        12%      2,202       --     2,202        12%
  Central ..........................         3          --           3         2%        609       --       609         3%
                                          ----        ----        ----      ----      ------     ----    ------      ----
   Subtotal ........................        79           1          80        57%     10,371       37    10,408        57%

Orange County ......................        21          --          21        15%      3,317       --     3,317        18%
San Diego County ...................        21          --          21        15%      2,487       --     2,487        13%
Ventura County .....................         4          --           4         3%        562       --       562         3%
Riverside/San Bernardino Counties ..         8           4          12         8%        554      415       969         6%
Kern County ........................         2          --           2         1%        216       --       216         1%
                                          ----        ----        ----      ----      ------     ----    ------      ----
   Subtotal ........................       135           5         140        99%     17,507      452    17,959        98%
Renovation Properties ..............         2          --           2         1%        533       --       533         2%
                                          ----        ----        ----      ----      ------     ----    ------      ----
   Total ...........................       137           5         142(1)    100%     18,040      452    18,492(1)    100%
                                          ====        ====        ====      ====      ======     ====    ======      ====
</TABLE>

<TABLE>
<CAPTION>
                                               NET OPERATING INCOME
                                           (IN THOUSANDS AND UNAUDITED)
                                        ----------------------------------
                                         FOR THE THREE       FOR THE SIX
                                         MONTHS ENDED        MONTHS ENDED
                                         JUNE 30, 2000      JUNE 30, 2000
                                        ---------------    ---------------
                                                  % of               % of
LOCATION                                 Total    Total     Total    Total
--------                                --------  -----    --------  -----
<S>                                     <C>       <C>      <C>       <C>
Los Angeles County
  West .............................    $ 21,633     33%   $ 45,163    34%
  North ............................      11,100     17%     21,061    16%
  South ............................       7,667     11%     13,824    11%
  Central ..........................       2,111      3%      3,847     3%
                                        --------   ----    --------  ----
   Subtotal ........................      42,511     64%     83,895    64%

Orange County ......................      10,816     17%     21,580    17%
San Diego County ...................       8,332     12%     16,158    12%
Ventura County .....................       1,693      3%      3,341     3%
Riverside/San Bernardino Counties ..       1,755      3%      3,645     3%
Kern County ........................         704      1%      1,477     1%
                                        --------   ----    --------  ----
   Subtotal ........................      65,811    100%    130,096   100%
Renovation Properties ..............     324,778      0%    370,778     0%
                                        --------   ----    --------  ----
   Total ...........................    $ 66,135    100%   $130,466   100%
                                        ========   ====    ========  ====
</TABLE>

----------

(1)  Including three properties currently under development, our total portfolio
     consists of 145 properties and approximately 19.2 million rentable square
     feet.


                                       19
<PAGE>   20
                     PORTFOLIO OCCUPANCY AND LEASING SUMMARY

<TABLE>
<CAPTION>
                                   PERCENT OCCUPIED                        PERCENT LEASED
                                      AT 6/30/00                            AT 6/30/00
                           --------------------------------       --------------------------------

                                      Industrial                             Industrial
                                         and                                    and
LOCATION                   Office       Retail        Total        Office      Retail        Total
---------------------      ------     ----------     ------       ------     ----------     ------
<S>                        <C>        <C>            <C>          <C>        <C>            <C>
Los Angeles County:
  West ..............        95.0%       100.0%        95.1%        95.8%       100.0%        95.8%
  North .............        92.8%          --         92.8%        94.5%          --         94.5%
  South .............        95.0%          --         95.0%        95.7%          --         95.7%
  Central ...........        90.1%          --         90.1%        95.3%          --         95.3%
Orange County .......        95.4%          --         95.4%        97.0%          --         97.0%
San Diego County ....        98.0%          --         98.0%        98.1%          --         98.1%
Ventura County ......        98.2%          --         98.2%        99.3%          --         99.3%
Riverside/San
  Bernardino Counties        81.4%        95.7%        87.5%        82.7%        96.5%        88.6%
Kern County .........        88.7%          --         88.7%        89.9%          --         89.9%
                           ------       ------       ------       ------       ------       ------
   SUBTOTAL/WEIGHTED
   AVERAGE ..........        94.6%        96.1%        94.6%        95.7%        96.8%        95.7%
Renovation Properties        41.8%          --         41.8%        68.7%          --         68.7%
                           ------       ------       ------       ------       ------       ------
   TOTAL/WEIGHTED
     AVERAGE ........        93.0%        96.1%        93.1%        94.9%        96.8%        95.0%
                           ======       ======       ======       ======       ======       ======
</TABLE>

<TABLE>
<CAPTION>
                                      ANNUALIZED BASE RENT
                                    PER LEASED SQUARE FOOT(1)
                          --------------------------------------------
                                                              Full
                                    Industrial               Service
                                       and                    Gross
LOCATION                  Office      Retail      Total      Leases(2)
---------------------     ------    ----------    ------     ---------
<S>                       <C>       <C>           <C>        <C>
Los Angeles County:
  West ..............     $22.75      $24.60      $22.77      $22.75
  North .............      19.97          --       19.97       21.45
  South .............      17.77          --       17.77       19.20
  Central ...........      19.79          --       19.79       19.79
Orange County .......      16.55          --       16.55       19.42
San Diego County ....      15.97          --       15.97       18.88
Ventura County ......      16.96          --       16.96       16.96
Riverside/San
  Bernardino Counties      14.70        8.64       11.87       17.46
Kern County .........      18.81          --       18.81          --
                          ------      ------      ------      ------
   SUBTOTAL/WEIGHTED
   AVERAGE ..........      18.94        9.98       18.71       20.71
Renovation Properties      34.01          --       34.01       34.01
                          ------      ------      ------      ------
   TOTAL/WEIGHTED
     AVERAGE ........     $19.26      $ 9.98      $19.03      $21.08
                          ======      ======      ======      ======
</TABLE>
----------

(1)   Based on monthly contractual base rent under existing leases as of June
      30, 2000, 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 48 properties and 4,722,281 net rentable square feet under triple
      net and modified gross leases.

                                LEASE EXPIRATIONS

                               As of June 30, 2000

<TABLE>
<CAPTION>
                                                    SQUARE        PERCENTAGE OF        ANNUALIZED       ESTIMATED MARKET
                                    NUMBER        FOOTAGE OF        AGGREGATE          BASE RENT            RENT OF
                                      OF           EXPIRING         PORTFOLIO         OF EXPIRING       EXPIRING LEASES
                                    LEASES          LEASES            LEASED             LEASES           (PER SQUARE
YEAR OF LEASE EXPIRATION           EXPIRING     (IN THOUSANDS)     SQUARE FEET      (PER SQUARE FOOT)       FOOT)(1)
-------------------------          --------     --------------    -------------     -----------------   ----------------
<S>                                <C>          <C>               <C>               <C>                 <C>
Month-to-Month                        185             339               2%                $20.75            $23.81
2000 (2)......................        310           1,109               6%                $17.56            $21.26
2001..........................        654           2,283              13%                $19.06            $23.77
2002..........................        631           2,821              16%                $18.48            $25.23
2003..........................        517           3,005              17%                $20.04            $26.31
2004..........................        404           2,720              15%                $20.46            $26.68
</TABLE>

----------

(1)   Calculation based on our estimate of current market rental rates and
      annual increases in such rates of 8%, 6%, 4%, 3% and 3%, in 2000, 2001,
      2002, 2003 and 2004, respectively. Our estimates of these rental rates are
      based on current trends which could change or reverse at any time as a
      result of future events. Our ability to rent expiring lease space at
      estimated levels is highly dependent upon many factors over which we have
      no control. We undertake no obligation to update or correct these
      estimates if future events prove them to be inaccurate.

(2)   Represents leases expiring from July 1, 2000 through December 31, 2000.


                                       20
<PAGE>   21
                                LEASING ACTIVITY

                For the Three and Six Months Ended June 30, 2000

<TABLE>
<CAPTION>
                                                                             TENANT IMPROVEMENTS
                                                                               AND COMMISSIONS
                                                        WEIGHTED AVERAGE     (PER SQUARE FOOT)(2)
                   NET ABSORPTION                          LEASE TERM      ----------------------
                   (SQUARE FEET)    RETENTION RATE(1)      (IN MONTHS)       New           Renewal
                   --------------   -----------------   -----------------  --------       --------
<S>                <C>              <C>                 <C>                 <C>            <C>
Three Months
  Ended 6/30/00       119,558               75%                 54.3        $15.62         $10.59
                      =======             ====                  ====        ======         ======
Six Months
  Ended 6/30/00       410,141               73%                 58.2        $15.73         $ 0.43
                      =======             ====                  ====        ======         ======
</TABLE>

----------

(1)   Percentage of leases in which tenants were retained at lease expiration.

(2)   Excludes properties under renovation and development.

                         DEVELOPMENT/RENOVATION SUMMARY

                               As of June 30, 2000

<TABLE>
<CAPTION>
                                             COSTS                       PERCENT    ESTIMATED
                                            INCURRED      ESTIMATED       LEASED   CONSTRUCTION
                               SQUARE       TO DATE      TOTAL COST(1)      AT      COMPLETION
PROPERTY                        FEET     (IN THOUSANDS) (IN THOUSANDS)   7/31/00       DATE
--------                     ----------  -------------- --------------   -------   ------------
<S>                          <C>         <C>             <C>             <C>        <C>
DEVELOPMENT:
  HOWARD HUGHES CENTER
    6060 CENTER DRIVE          240,724    $   47,829      $   56,000      100%        Complete
    UNIVISION BUILDING         158,473        10,058          51,700      100%      3rd Qtr 2001
    6080 CENTER DRIVE          283,204        21,831          75,330        0%      2nd Qtr 2001
UNALLOCATED ACQUISITION
  AND MASTER PLAN
       COSTS(1),(2)                 --        21,391          34,600
                             ---------    ----------      ----------
  TOTAL DEVELOPMENT
    PROPERTIES                 682,401       101,109         217,630

  RENOVATION:
  WESTWOOD CENTER              313,000        86,634          91,122       98%        Complete
  TOURNEY POINTE               219,991        32,373          33,500       46%        Complete
                             ---------    ----------      ----------
    TOTAL PROPERTIES UNDER
     RENOVATION                532,991       119,007         124,622
                             ---------    ----------      ----------
  TOTAL PROPERTIES UNDER
    DEVELOPMENT AND
       RENOVATION            1,215,392    $  220,116      $  342,252
                             =========    ==========      ==========
</TABLE>

<TABLE>
<CAPTION>
                                                 ESTIMATED
                                                   YEAR 1
                                 ESTIMATED      STABILIZED      ESTIMATED
                               STABILIZATION        NOI          ANNUAL
PROPERTY                           DATE        (IN THOUSANDS)     YIELD
--------                       ------------    -------------    --------
<S>                            <C>             <C>              <C>
DEVELOPMENT:
  HOWARD HUGHES CENTER
    6060 CENTER DRIVE          3rd Qtr 2000         $6,250        11.2%
    UNIVISION BUILDING         3rd Qtr 2001         $5,199        10.1%
    6080 CENTER DRIVE          4th Qtr 2002         $8,288        11.0%
UNALLOCATED ACQUISITION
  AND MASTER PLAN
       COSTS(1),(2)

  TOTAL DEVELOPMENT
    PROPERTIES

  RENOVATION:
  WESTWOOD CENTER              4th Qtr 2000         $9,568        10.5%
  TOURNEY POINTE               4th Qtr 2000         $2,943         8.8%

    TOTAL PROPERTIES UNDER
     RENOVATION

  TOTAL PROPERTIES UNDER
    DEVELOPMENT AND
       RENOVATION
</TABLE>

----------

(1)   Estimated total cost includes purchase and closing costs, capital
      expenditures, tenant improvements, leasing commissions and carrying costs
      during renovation or development, and for the Howard Hughes Center
      development properties also includes an allocation of land and Master Plan
      costs. Master Plan costs include the costs of road and bridge construction
      and other Howard Hughes Center infrastructure and master planning costs.

(2)   We acquired the undeveloped commercial property portions of the Howard
      Hughes Center for $28.5 million. In August 1999, subject to a sales
      agreement entered into upon our initial acquisition, we sold approximately
      5.4 acres for $7.5 million to a third party who is currently developing a
      250,000 square foot retail and entertainment complex. This amount also
      excludes approximately $4.3 million allocated to 6060 Center Drive, $5.1
      million allocated to 6080 Center Drive, and approximately $1.6 million
      allocated to the Univision building. We have entitlements to construct an
      additional approximately 720,000 net rentable square feet of office space
      at the Howard Hughes Center.


                                       21
<PAGE>   22
         Our ability to rent expiring lease space at estimated levels is highly
dependent upon many factors over which we have no control. These factors include
the national economic climate, perceptions of prospective tenants of the
attractiveness of our properties, and our ability to maintain and manage our
properties. We also have numerous competitors and some of the competing
properties may be newer, better located or owned by parties better capitalized
than us. As new commercial properties are developed and the number of
competitive commercial properties in a particular area increases, competitive
pressures will increase as well. Additionally, all of our properties are located
in Southern California. Our ability to charge estimated rents may be adversely
affected by the local economic climate (which could be adversely impacted by
business layoffs or downsizing, industry slowdowns, changing demographics and
other factors) and local real estate conditions (such as oversupply of or
reduced demand for office and other competing commercial properties). The
preceding discussion is not intended as an exhaustive list of the risks
associated with rent rate projections and should be read in conjunction with
"Risk Factors--Real Estate Investment Risks," "--An Inability To Retain Tenants
Or Rent Space Upon Lease Expirations May Adversely Affect Our Ability To Service
Our Debt," "--Because Real Estate Investments Are Illiquid, We May Not Be Able
To Sell Properties When Appropriate," "--Competition Affects Occupancy Levels
And Rents Which Could Adversely Affect Our Revenue," and "--Our Operating
Performance And Property Values Will Be Affected By Changes In The Economic
Climate In Southern California" in our most recent Annual Report on Form 10-K.

         We undertake no obligation to update or correct these estimates if
future events prove them to be inaccurate.

         As a result of the foregoing, you should not unduly rely on these
estimated rental rates.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Market risk is the exposure to 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 utilize 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.

         Certain 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 at June 30,
2000, a one percentage point increase in interest rates on our $279.3 million of
floating rate debt would decrease annual future earnings and cash flows by
approximately $2.8 million and would not have an impact on the floating rate
debt fair value. A one percentage point decrease in interest rates on our $279.3
million of floating rate debt would increase annual future earnings and cash
flows by approximately $2.8 million and would not have an impact on the floating
rate debt fair value. A one percentage point increase or decrease in interest
rates on our secured note receivable would not have a material impact on annual
future earnings, cash flows and its fair value.

         These amounts are determined by considering the impact of the
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 such an environment. Further, in the event of a change of such
magnitude, we would consider taking actions to further mitigate our exposure to
the change. However, due to the uncertainty of the specific actions that would
be taken and their possible effects, this sensitivity analysis assumes no
changes in our capital structure.


                                       22
<PAGE>   23
PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS - NONE

ITEM 2. CHANGES IN SECURITIES - NONE

ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

        On May 22, 2000 we held our annual meeting of shareholders in Santa
        Monica, California. The matters voted on at the meeting and the results
        were as follows:

        1.      To elect three Directors to serve as such until the annual
                meeting of shareholders in the year 2003 and until their
                successors are duly elected and qualified.

<TABLE>
<CAPTION>
                                                       NUMBER OF SHARES       NUMBER OF
                                                          VOTED FOR        SHARES WITHHELD
                                                       ----------------    ---------------
<S>               <C>                                  <C>                 <C>
                  Director #1 - Carl D. Covitz            52,561,863           944,765
                  Director #2 - Larry D. Flax             52,563,738           942,890
                  Director #3 - Kenneth B. Roath          52,565,863           940,765
</TABLE>

        2.      To amend the 1996 Stock Option and Amendment of Arden Realty,
                Inc. and Arden Realty Limited Partnership to increase the number
                of shares reserved for issuance from 4,200,000 to 6,500,000. A
                total of 43,358,341 shares voted for, with 9,940,308 shares
                voted against and 207,979 shares abstained.

        3.      To request the Board of Directors to redeem the shareholder
                purchase rights issued in August 1998. A total of 35,768,114
                shares voted for, with 9,557,594 shares voted against and
                302,062 shares abstained.

ITEM 5. OTHER INFORMATION - NONE

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)     EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
 NUMBER    DESCRIPTION
--------   -----------
<S>        <C>
  3.1      Amended and Restated Articles of Incorporation as filed as an exhibit
           to Registration Statement on Form S-11 (No. 333-8163) and
           incorporated herein by reference.

  3.2      Articles Supplementary of the Class A Junior Participating Preferred
           Stock as an exhibit to the current report on Form 8-K, dated August
           26, 1999, and incorporated herein by reference.

  3.3      Articles Supplementary of the 8-5/8 Series B Cumulative Redeemable
           Preferred Stock dated September 7, 1999, filed as an exhibit to our
           annual report on Form 10-K filed with the Commission of March 27,
           2000 and incorporated herein by reference.

  3.4      Bylaws of Registrant as filed as an exhibit to Registration Statement
           on Form S-11 (No. 333-8163) and incorporated herein by reference
</TABLE>


                                       23
<PAGE>   24
<TABLE>
<S>        <C>
  3.5      Certificate of Amendment of the Bylaws of Arden Realty, Inc. dated
           July 14, 1999, filed as an exhibit to our quarterly report on Form
           10-Q filed with the Commission on August 14, 1999, and incorporated
           herein by reference.

  3.6      Certificate of Amendment of the Bylaws of Arden Realty, Inc., dated
           March 17, 2000, filed as an exhibit on Form 10-Q, filed with the
           Commission on May 11, 2000 and incorporated herein by reference

  4.1      Rights Agreement, dated as of August 14, 1999, between Arden Realty,
           Inc. and The Bank of New York as filed as an exhibit to the current
           report on Form 8-K, dated August 26, 1999, and incorporated herein by
           reference.

 10.1      Second Amended and Restated Agreement of Limited Partnership of the
           Arden Realty Limited Partnership dated as of September 7, 1999, filed
           as an exhibit on Form 10-Q, filed with the Commission on May 11, 2000
           and incorporated herein by reference.

 10.29     Amended and Restated Employment Agreement dated May 27, 1999, between
           Arden Realty and Mr. Robert Peddicord.

 27.1      Financial Data Schedule.
</TABLE>

(b)        REPORTS ON FORM 8-K

           None


                                       24
<PAGE>   25
                                   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: August 10, 2000                     By: /s/  Daniel S. Bothe
                                              ----------------------------------
                                              Daniel S. Bothe
                                              Senior Vice President
                                              Co-Chief Financial Officer

Date: August 10, 2000                     By: /s/  Richard S. Davis
                                              ----------------------------------
                                              Richard S. Davis
                                              Senior Vice President,
                                              Co-Chief Financial Officer and
                                              Treasurer


                                       25