---

# 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, 2001

Commission file number 1-12193

ARDEN
REALTY, INC.

(Exact name of registrant as specified in its charter)

Maryland                                                                                                                                 
                                          95-4578533
(State or other jurisdiction of incorporation                              
                                          
                                       (I.R.S. Employer Identification No.)
or organization)

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 8, 2001 there
were 63,757,033 shares of the registrants common stock, $.01 par value,
issued and outstanding.

---

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

PAGE NO.

## PART I.        
FINANCIAL INFORMATION

Item 1.      Financial Statements
                                         Consolidated Balance Sheets as of June 30, 2001
(unaudited) and
                                            
December 31, 2000.............................................................................................................................................    3

Consolidated
Statements of Income for the three and six months ended
                                            June 30, 2001 and 2000 (unaudited)...................................................................................................................    4

Consolidated
Statements of Cash Flows for the six months ended
                                            June 30, 2001 and 2000 (unaudited)...................................................................................................................    5

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

Item 2.
     Management's Discussion and Analysis of Financial
                                            Condition and Results of Operations.................................................................................................................  10

Item
3.     Quantitative and Qualitative Disclosures about Market Risk................................................................................  24

PART II.
      OTHER INFORMATION......................................................................................................................................................  25

SIGNATURES
 .......................................................................................................................................................................  26

## Part I.    FINANCIAL
INFORMATION

## Item 1.  
Financial Statements

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

`June 30,        December 31,
                                                                                               2001              2000
                                                                                            -----------       -----------
Assets                                                                                      (unaudited)
Investment in real estate:
   Land............................................................................         $   468,766       $   466,426
   Buildings and improvements......................................................           1,999,088         1,985,950
   Tenant improvements and leasing commissions.....................................             247,490           225,620
                                                                                            -----------       -----------
                                                                                              2,715,344         2,677,996
   Less:  accumulated depreciation and amortization................................            (265,712)         (227,463)
                                                                                            -----------       -----------
                                                                                              2,449,632         2,450,533
   Properties under development....................................................             138,071            93,384
   Properties held for disposition, net............................................              38,659            59,649
                                                                                            -----------       -----------
     Net investment in real estate.................................................           2,626,362         2,603,566

Cash and cash equivalents..........................................................               7,419             5,432
Restricted cash....................................................................              19,738            19,367
Rent and other receivables.........................................................              11,700            13,198
Mortgage notes receivable, net of discount.........................................              13,623            13,761
Deferred rent......................................................................              34,701            31,588
Prepaid financing costs, expenses and other assets, net of amortization............              20,341            18,685
                                                                                            -----------       -----------
     Total assets..................................................................         $ 2,733,884       $ 2,705,597
                                                                                            ===========       ===========

Liabilities
Mortgage loans payable.............................................................         $   574,738       $   576,055
Unsecured lines of credit..........................................................             293,350           253,350
Unsecured senior notes, net of discount............................................             348,478           348,364
Accounts payable and accrued expenses..............................................              34,508            37,415
Security deposits..................................................................              19,765            19,470
Dividends payable..................................................................              31,195            29,596
                                                                                            -----------       -----------
     Total liabilities.............................................................           1,302,034         1,264,250

Minority interests.................................................................              85,564            86,176

Stockholders' Equity
Preferred stock, $.01 par value 20,000,000 shares authorized, none issued..........                  --                --
Common stock, $.01 par value, 100,000,000 shares authorized,
   63,662,533 and 63,646,871 issued and outstanding, respectively..................                 638               637
Additional paid-in capital.........................................................           1,353,511         1,363,407
Deferred compensation..............................................................              (7,863)           (8,873)
                                                                                            -----------       -----------
     Total stockholders' equity....................................................           1,346,286         1,355,171
                                                                                            -----------       -----------
     Total liabilities and stockholders' equity....................................         $ 2,733,884       $ 2,705,597
                                                                                            ===========       ===========

                                     See accompanying notes to consolidated financial statements.`

Consolidated Statements of
Income
                                                 (in thousands, except per share
data)
                                                              (unaudited)

`Three Months Ended                      Six Months Ended
                                                                    June 30,                               June 30,
                                                          ---------------------------           ----------------------------
                                                             2001             2000                 2001              2000
                                                          ----------       ----------           ----------        ----------

Revenue..............................................      $ 102,980        $  92,856            $ 206,101         $ 182,534
Property operating expenses..........................         29,274           26,721               59,116            52,068
                                                          ----------       ----------           ----------        ----------
                                                              73,706           66,135              146,985           130,466

General and administrative expenses..................          2,716            1,838                5,582             3,659
Interest expense.....................................         21,081           18,770               42,239            36,622
Depreciation and amortization........................         24,176           21,277               48,322            41,424
Interest and other income............................           (764)            (770)              (1,625)           (1,625)
                                                          ----------       ----------           ----------        ----------
Income before gain and minority interests............         26,497           25,020               52,467            50,386
Gain on sale of properties...........................          3,551               --                3,551                --
                                                          ----------       ----------           ----------        ----------
Income before minority interests.....................         30,048           25,020               56,018            50,386
Minority interests...................................         (2,031)          (1,822)              (3,928)           (3,697)
                                                          ----------       ----------           ----------        ----------
Net income...........................................      $  28,017        $  23,198            $  52,090         $  46,689
                                                          ==========       ==========           ==========        ==========

Net income per common share:
     Basic...........................................      $    0.44        $    0.37            $    0.82         $    0.74
                                                          ==========       ==========           ==========        ==========
     Diluted.........................................      $    0.44        $    0.37            $    0.81         $    0.74
                                                          ==========       ==========           ==========        ==========

Weighted average common shares outstanding:
     Basic...........................................         63,659           63,316               63,657            63,328
                                                          ==========       ==========           ==========        ==========
     Diluted.........................................         63,964           63,507               63,919            63,473
                                                          ==========       ==========           ==========        ==========


                                     See accompanying notes to consolidated financial statements.`

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

`Six Months Ended
                                                                                                       June 30,
                                                                                           -----------------------------

                                                                                               2001             2000
                                                                                           ------------     ------------
Operating Activities:
  Net income.......................................................................        $  52,090          $  46,689
  Adjustments to reconcile net income to net cash
    provided by operating activities:

    Minority interests.............................................................            3,928              3,697
    Gain on sale of properties.....................................................           (3,551)               --
    Depreciation and amortization..................................................           48,322             41,424
    Amortization of loan costs.....................................................            1,753              1,772
    Non-cash compensation expense..................................................              850                --
    Changes in operating assets and liabilities:
       Rent and other receivables..................................................            1,636              1,048
       Deferred rent...............................................................           (3,113)            (3,342)
       Prepaid financing costs, expenses and other assets..........................           (3,295)            (7,938)
       Accounts payable and accrued expenses.......................................           (2,906)             3,567
       Security deposits...........................................................              295              3,831
                                                                                          ----------         ----------
  Net cash provided by operating activities........................................           96,009             90,748
                                                                                          ----------         ----------
Investing Activities:
  Improvements to investment in real estate........................................          (86,162)          (123,128)
  Proceeds from disposition of properties..........................................           18,755                 --
                                                                                          ----------         ----------
  Net cash used in investing activities............................................          (67,407)          (123,128)
                                                                                          ----------         ----------
Financing Activities:
  Proceeds from mortgage loans.....................................................               --             11,885
  Repayments of mortgage loans.....................................................           (1,317)          (126,825)
  Proceeds from unsecured lines of credit..........................................           99,500             68,000
  Repayments of unsecured lines of credit..........................................          (59,500)          (111,500)
  Proceeds from issuance of common stock...........................................               89                 --
  Proceeds from unsecured senior notes, net of discount............................               --            249,079
  Distributions to preferred operating partnership unit holders....................           (2,156)            (2,156)
  Increase in restricted cash......................................................             (371)            (1,027)
  Distributions to minority interests..............................................           (2,071)            (1,958)
  Dividends paid...................................................................          (60,789)           (57,637)
                                                                                          ----------         ----------
  Net cash (used in) provided by financing activities..............................          (26,615)            27,861
                                                                                          ----------         ----------
  Net increase (decrease) in cash and cash equivalents.............................            1,987             (4,519)
  Cash and cash equivalents at beginning of period.................................            5,432              7,056
                                                                                          ----------         ----------
  Cash and cash equivalents at end of period.......................................        $   7,419          $   2,537
                                                                                          ==========         ==========

Supplemental Disclosure of Cash Flow Information:
    Cash paid during the period for interest, net of amount capitalized............        $  42,638          $  35,261
                                                                                          ==========         ==========

                               See accompanying notes to consolidated financial statements.`

Arden Realty,
Inc.
Notes to
Consolidated Condensed Financial Statements
June 30, 2001
(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, 2001, our portfolio was
comprised of 140 primarily  suburban office  properties with  approximately  18.4 million net rentable square feet and three properties
with approximately 725,000 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, 2001 and December 31, 2000  consisted of limited  partnership  interests in the  Operating
Partnership of approximately 3.3%, exclusive of ownership interests of our preferred unit holders.

## 2.   Interim
Financial Data

The accompanying  consolidated  condensed  financial  statements  should be read in conjunction with our 2000 Annual Report on
Form 10-K as filed with the Securities and Exchange  Commission.  The  accompanying  financial  information  reflects all  adjustments,
which are, in our opinion,  of a normal recurring nature and necessary for a fair  presentation of our financial  position,  results of
operations and cash flows for the interim  periods.  Interim results of operations are not necessarily  indicative of the results to be
expected for the full year.

## 3.   New
Accounting Standards

In June 1998,  June 1999 and June 2000,  respectively,  the Financial  Accounting  Standards  Board issued  Statement No. 133,
"Accounting for Derivative  Instruments and Hedging Activities,"  Statement No. 137, "Accounting for Derivative Instruments and Hedging
Activities  - Deferral of the  Effective  Date of  Statement  No.  133," and  Statement  No. 138,  "Accounting  for Certain  Derivative
Instruments  and Certain Hedging  Activities - an Amendment of Statement No. 133." These  statements  outline the accounting  treatment
for all derivative  activity.  In October 2000, the SEC issued  "Frequently  Asked  Questions on Staff  Accounting  Bulletin No, 101 on
Revenue  Recognition."  This  document  formalizes  the position of the SEC staff  regarding  key topics about income  recognition.  We
adopted SAB 101, as  amended,  on October 1, 2000 and  Statement  No.  133,  on January 1, 2001 and their  adoption  did not impact our
consolidated results of operations or financial position.

As of June 30, 2001 we had no outstanding interest rate cap or swaps or other types of derivative instruments.

## 4.   Property
Dispositions

The following table set forth information regarding our disposition activities for the three and
six months ended June 30, 2001.

`Property                            Sales Price
        Property                 County         Submarket       Date of Sale       Type           Square Feet      (in thousands)
        -------------            ------         ---------       ------------    ----------        -----------      --------------
        One Venture           Orange County    South County      May 1, 2001      Office             43,324            $ 8,232

        Ontario Airport
          Commerce Center    San Bernardino      Ontario         May 1, 2001     Industrial         213,127             11,000
                                                                                                    -------            -------
             Total                                                                                  256,451            $19,232
                                                                                                    =======            =======`

We recorded an approximate $3.6 million gain on the sale of these properties.

## 5.   Mortgage Loans Payable, Unsecured Lines of Credit and Unsecured Senior Notes

A summary of our outstanding indebtedness
as of June 30, 2001 and December 31, 2000 is as follows:

`Stated Annual
                                 June 30,                     Interest Rate at                            Number of      Maturity
                                   2001       December 31,     June 30, 2001         Rate                Properties       Month/
Type of Debt                    (unaudited)       2000           (unaudited)    Fixed/Floating          Securing Loan      Year
------------                    -----------  ------------     ---------------   --------------          -------------     ------
                                      (in thousands)
Mortgage Loans Payable:
Fixed Rate
Mortgage Financing I(1)....    $   175,000    $   175,000           7.52%       Fixed                         18           6/04
Mortgage Financing III(2)..        136,100        136,100           6.74%       Fixed                         22           4/08
Mortgage Financing IV(2)...        111,200        111,200           6.61%       Fixed                         12           4/08
Mortgage Financing V(3)....        111,239        112,212           6.94%       Fixed                         12           4/09
Mortgage Financing VI(3)...         22,134         22,241           7.54%       Fixed                          3           4/09
Activity Business Center(3)          7,811          7,881           8.85%       Fixed                          1           5/06
145 South Fairfax(3).......          4,004          4,021           8.93%       Fixed                          1           1/27
Marin Corporate Center(3)..          3,011          3,071           9.00%       Fixed                          1           7/15
Conejo Business Center(3)..          2,956          3,017           8.75%       Fixed                    (Note 4)          7/15
Conejo Business Center(3)..          1,283          1,312           7.88%       Fixed                    (Note 4)          7/15
                               -----------    -----------
                                   574,738        576,055

Unsecured Lines of Credit:
Floating Rate
Wells Fargo(1).............        218,350        172,350           5.07%       LIBOR + 1.15% (Note           --           4/03
                                                                                5)
Lehman Brothers(1),(6).....         75,000         75,000           5.30%       LIBOR + 1.30%                 --           7/02
City National Bank(1)......             --          6,000             --        Prime Rate - 0.875%           --           8/02
                               -----------    -----------
                                   293,350        253,350
Unsecured Senior Notes:
Fixed Rate
2005 Notes(7)..............        199,616        199,564           8.88%       Fixed                         --           3/05
2010 Notes(7)..............         49,642         49,622           9.15%       Fixed                         --           3/10
2010 Notes(7)..............         99,220         99,178           8.50%       Fixed                         --          11/10
                               -----------    -----------
                                   348,478        348,364
                               -----------    -----------

   Total Debt..............    $ 1,216,566    $ 1,177,769
                               ===========    ===========

----------`

(1)        Requires monthly payments of interest only, with outstanding principal balance due upon maturity.

(2)        Requires monthly payments of interest only for five years and monthly payments of principal and interest thereafter.

(3)        Requires monthly payments of principal and interest.

(4)        Both mortgage loans are secured by the Conejo Business Center property.

(5)        This line of credit also has an annual 25 basis point facility fee on the entire $275 million commitment amount.

(6)        This line of credit has a one-year extension option.

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

On June 27, 2001,  Arden  Realty  and the  Operating  Partnership  filed a Form S-3  shelf  registration  statement  with the
Securities  and Exchange  Commission,  or SEC,  providing  for the issuance of up to $400 million of debt  securities  by the Operating
Partnership  and  $257.2  million  of our $.01 par  value  common  stock  or our $.01 par value  preferred  stock.  The terms of these
securities,  if issued,  will be determined at the time of any such debt or equity offering.  This registration  statement was declared
effective by the SEC on July 24, 2001.

## 6.  Stockholders' Equity

On June 19, 2001, we declared a second quarter  dividend of $0.49 per share to stockholders of record on June 29, 2001,  which
equates to $1.96 per share on an annualized basis.

## 7.  
Revenue from Rental Operations and Property Expenses

`Three Months                          Six Months
                                                                  Ended June 30,                       Ended June 30,
                                                        -----------------------------------  ------------------------------------
                                                             2001               2000               2001               2000
                                                        ----------------   ----------------  -----------------   ----------------
                                                                                      (unaudited)
Revenue from Rental Operations:
   Rental............................................     $  87,374          $  80,003         $ 174,841           $ 157,516
   Tenant reimbursements.............................         5,352              4,218            10,902               7,810
   Parking, net of expenses .........................         5,558              4,415            10,863               8,387
   Other rental operations...........................         4,696              4,220             9,495               8,821
                                                          ---------          ---------         ---------           ---------
                                                            102,980             92,856           206,101             182,534
                                                          ---------          ---------         ---------           ---------
Property Expenses:
   Repairs and maintenance...........................         9,228              8,895            18,236              17,297
   Utilities.........................................         7,366              6,526            14,758              12,636
   Real estate taxes.................................         7,272              6,328            14,686              12,592
   Insurance.........................................         1,495              1,043             2,711               2,084
   Ground rent.......................................           233                596             1,384                 794
   Administrative....................................         3,680              3,333             7,341               6,665
                                                        -----------        -----------       -----------         -----------
                                                             29,274             26,721            59,116              52,068
                                                        -----------        -----------       -----------         -----------
                                                          $  73,706          $  66,135         $ 146,985           $ 130,466
                                                          =========          =========         =========           =========`

## 8.   Subsequent
Events

On July 2, 2001 we issued a total of 94,500 restricted stock awards to several key executive  officers and outside  directors.
Holders of these shares have full voting rights and will receive any dividends  paid but are  prohibited  from selling or  transferring
unvested  shares.  These  shares  vest  equally  over five  years on the  anniversary  date of the  award.  We will  record a  deferred
compensation  charge of  approximately  $2.5 million,  based on the market value of these shares on the date of award and will amortize
such charge to expense on a straight-line basis over the five year vesting period.

## 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 2000 Annual Report on Form 10-K.

We are a self-administered and self-managed real estate investment trust that owns, manages, leases,  develops,  renovates and
acquires commercial  properties located in Southern  California.  We are a full-service real estate  organization  managed by 11 senior
executive  officers who have experience in the real estate industry ranging from 8 to 30 years and who collectively  have an average of
18 years experience. We perform all property management,  construction management,  accounting,  finance and acquisition activities and
a majority of our leasing transactions with our staff of approximately 300 employees.

As of June 30, 2001, we are Southern  California's  largest  publicly traded office landlord as measured by total net rentable
square feet owned. As of that date, our portfolio consisted of 140 primarily suburban office properties  containing  approximately 18.4
million net rentable square feet and three  properties with  approximately  725,000 net rentable square feet under  development.  As of
June 30, 2001, our properties were approximately 94.3% occupied.

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

## RESULTS OF
OPERATIONS

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

Comparison  of the three months ended June 30, 2001 to the three months ended June 30, 2000 (in  thousands,  except  number of
properties and percentages):

`Three Months Ended
                                                               June 30,
                                                      ----------------------------             Dollar          Percent
                                                          2001             2000                Change          Change
                                                      ----------        ----------            --------        --------
                                                               (unaudited)
Revenue
  Revenue from rental operations:
    Rental.....................................       $  87,374         $  80,003             $   7,371             9%
    Tenant reimbursements......................           5,352             4,218                 1,134            27
    Parking, net of expense....................           5,558             4,415                 1,143            26
    Other rental operations....................           4,696             4,220                   476            11
                                                      ---------         ---------             ---------          ----
      Total....................................         102,980            92,856                10,124            11
  Interest and other income.....................            764               770                    (6)           (1)
                                                      ---------         ---------             ---------          ----
      Total revenue............................       $ 103,744         $  93,626             $  10,118            11%
                                                      =========         =========             =========          ====

Expenses
  Property expenses:
    Repairs and maintenance....................       $   9,228         $   8,895             $     333             4%
    Utilities..................................           7,366             6,526                   840            13
    Real estate taxes..........................           7,272             6,328                   944            15
    Insurance..................................           1,495             1,043                   452            43
    Ground rent................................             233               596                  (363)          (61)
    Administrative.............................           3,680             3,333                   347            10
                                                      ---------         ---------             ---------          ----
      Total property expenses..................          29,274            26,721                 2,553            10%

  General and administrative...................           2,716             1,838                   878            48%
  Interest.....................................          21,081            18,770                 2,311            12
  Depreciation and amortization................          24,176            21,277                 2,899            14
                                                      ---------         ---------             ---------          ----
      Total expenses...........................       $  77,247         $  68,606             $   8,641            13%
                                                      =========         =========             =========          ====

Number of Properties:
  Sold during period............................             (2)               --
  Owned at end of period........................            140               142

Net Rentable Square Feet:
  Sold during period............................           (256)               --
  Owned at end of period........................         18,402            18,492`

General and administrative  expenses increased  approximately $878,000 for the three months ended June 30, 2001 as compared to
the same period in 2000. This increase was primarily  related to higher personnel costs in 2001,  including  approximately  $376,000 in
non-cash  compensation  expense  from  restricted  stock  awards  granted to several key  executives  in July and  December of 2000 and
approximately $200,000 in salaries for employees hired after April 1, 2000.

Interest expense increased  approximately  $2.3 million or 12% during the three months ended June 30, 2001, as compared to the
same period in 2000.  This increase was  primarily due to higher  outstanding  balances in 2001,  resulting  from the funding of tenant
improvements and leasing  commission costs and development and renovation  projects placed in service  subsequent to April 1, 2000 which
were partially offset by lower effective interest rates in 2001.

Depreciation and amortization  expense  increased by approximately  $2.9 million or 14% during the three months ended June 30,
2001 compared to the same period in 2000,  primarily due to  depreciation  related to newly  developed  and renovated  properties,  and
capital expenditures, tenant improvements and leasing commissions placed in service subsequent to April 1, 2000.

## Variances for
Revenue from Rental Operations and Property Expenses

The increase in revenue from rental  operations and property  expenses for the three months ended June 30, 2001 as compared to
the same period in 2000 was  partially due to a  development  property  placed in service in the third quarter of 2000, a property sold
in the fourth quarter of 2000, two properties  sold in the second quarter of 2001 and three  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 maintained during the renovation.

Following is a summary of the increase in revenue from rental operations and property  operating  expenses that relates to the
seven  properties  that were either sold or placed in service after April 1, 2000 or were under  renovation for all or a portion of the
period  beginning  after  April 1, 2000 and for the 136  non-renovation/development  properties  we owned  for all of the  three  month
periods ended June 30, 2001 and 2000 (unaudited and in thousands, except for number of properties).

`Properties Sold, Placed        Non-Renovation/Development
                                                                        in Service or          Properties Owned for all of the
                                                                      Under Renovation                Three Months Ended
                                                 Total Variance      after April  1, 2000         June 30, 2001 and 2000 (1)
                                                 --------------    ------------------------    -------------------------------

Revenue from Rental Operations:
   Rental...................................      $   7,371              $   3,929                       $   3,442
   Tenant reimbursements....................          1,134                     61                           1,073
   Parking, net of operations...............          1,143                    280                             863
   Other rental operations..................            476                   (116)                            592
                                                  ---------              ---------                       ---------
                                                  $  10,124              $   4,154                       $   5,970
                                                  =========              =========                       =========

Property Expenses:
   Repairs and maintenance..................      $     333              $     339                       $      (6)
   Utilities................................            840                    190                             650
   Real estate taxes........................            944                    359                             585
   Insurance................................            452                     42                             410
   Ground rent..............................           (363)                  (376)                             13
   Administrative...........................            347                    108                             239
                                                  ---------              ---------                       ---------
                                                  $   2,553              $     662                       $   1,891
                                                  =========              =========                       =========

Other Data:
   Number of properties.....................                                     7                             136
   Net rentable square feet.................                                 1,216                          17,518
----------

(1)  See analysis for these properties below.`

## Non-Renovation/Development Properties Owned for all of 2000 and
2001

Following is a comparison of property  operating  data computed  under the GAAP basis and cash basis of accounting for the 136
non-renovation/development  properties we owned for the entire three month periods ended June 30, 2001 and 2000 (in  thousands,  except
number of properties and percentages):

`Three Months Ended
                                                                   June 30,
                                                        -------------------------------        Dollar         Percent
                                                            2001              2000             Change          Change
                                                        --------------    -------------     -------------    ------------
                                                                  (unaudited)
GAAP Basis:
Revenue from rental operations.....................     $  95,088          $  89,118         $  5,970             6.7%
Property expenses..................................        27,363             25,472            1,891             7.4%
                                                        ---------          ---------         --------        ---------
                                                        $  67,725          $  63,646         $  4,079             6.4%
                                                        =========          =========         ========        =========

Cash Basis (1):

Revenue from rental operations.....................     $  93,161          $  86,903         $  6,258             7.2%
Property expenses..................................        27,363             25,472            1,891             7.4%
                                                        ---------          ---------         --------        ---------
                                                        $  65,798          $  61,431         $  4,367             7.1%
                                                        =========          =========         ========        =========

Number of non-renovation/development properties....           136                136
Average occupancy..................................         94.9%              94.4%
Net rentable square feet...........................        17,518             17,518
----------

(1)  Excludes straight-line rent adjustments.`

Revenue from rental operations for these properties,  computed on a GAAP basis,  increased by approximately  $6.0 million,  or
6.7%, during the three months ended June 30, 2001,  compared to the same period in 2000.  Approximately $3.4 million of this difference
was related to higher rental  revenue in 2001,  of which $3.7 million was related to scheduled  rents,  partially  offset by a $300,000
decrease in  straight-line  rents.  Approximately  80% of the increase in scheduled  rents was due to increases in rental rates in 2001
and the  remaining  20% was related to higher  average  occupancy  in 2001.  Revenue from rental  operations  was also higher due to an
approximate $1.1 million increase in tenant  reimbursements,  an $863,000 increase in parking income and a $592,000 increase in revenue
from other rental  operations.  Tenant  reimbursements  were higher  primarily  due to higher  operating  expenses in 2001, as discussed
below,  which were  partially  offset by the timing of prior year  reimbursement  reconciliations.  Parking  income  increased  in 2001
primarily  due to increases in parking  rates as well as to the 0.5%  increase in average  occupancy,  while  revenue from other rental
operations  increased  due to the timing of revenues  from  recurring  non-scheduled  sources.  Revenue  from other  rental  operations
includes among others, after-hour utility billings, signage and lease termination settlements.

Excluding only the  straight-line  rent adjustment for these  properties,  revenue from rental operations for the three months
ended June 30, 2001, computed on a cash basis, increased by approximately $6.3 million or 7.2%.

Property expenses for these properties  increased by approximately  $1.9 million,  or 7.4%, during the three months ended June
30, 2001,  compared to the same period in 2000,  primarily due to an  approximate  $650,000  increase in utility  expenses,  a $585,000
increase  in real  estate  taxes and a $410,000  increase in  insurance  expense in 2001.  The  increase  in utility  expenses  was due
primarily to rate  increases in 2001.  Real estate taxes  increased in 2001 due to normal  annual  increases and final  assessments  on
certain  properties,  while insurance expense increased due to increases in industry-wide  insurance rates in 2001. As noted above, the
increase in property expenses was the primary reason for the $1.1 million increase in tenant reimbursements.

Comparison  of the six months  ended June 30,  2001 to the six months  ended June 30,  2000 (in  thousands,  except  number of
properties and percentages):

`Six Months Ended
                                                              June 30,
                                                   ----------------------------            Dollar           Percent
                                                       2001             2000               Change            Change
                                                   ----------        ----------           --------          --------
                                                            (unaudited)
Revenue
  Revenue from rental operations:
    Rental.................................      $   174,841       $   157,516          $   17,325              11%
    Tenant reimbursements..................           10,902             7,810               3,092              40
    Parking, net of expenses...............           10,863             8,387               2,476              30
    Other rental operations................            9,495             8,821                 674               8
                                                 -----------       -----------          ----------            ----
                                                     206,101           182,534              23,567              13
  Interest and other income................            1,625             1,625                  --              --
                                                 -----------       -----------          ----------            ----
    Total revenue..........................      $   207,726       $   184,159              23,567              13%
                                                 ===========       ===========          ==========            ====

Expenses
  Property operating expenses:
    Repairs and maintenance................      $    18,236       $    17,297                 939               5%
    Utilities..............................           14,758            12,636               2,122              17
    Real estate taxes......................           14,686            12,592               2,094              17
    Insurance..............................            2,711             2,084                 627              30
    Ground rent............................            1,384               794                 590              74
    Marketing and other....................            7,341             6,665                 676              10
                                                 -----------       -----------          ----------            ----
       Total property operating expenses...           59,116            52,068               7,048              14
  General and administrative...............            5,582             3,659               1,923              53
  Interest.................................           42,239            36,622               5,617              15
  Depreciation and amortization............           48,322            41,424               6,898              17
                                                 -----------       -----------          ----------            ----
    Total expenses.........................      $   155,259       $   133,773          $   21,486              16%
                                                 ===========       ===========          ==========            ====

Number of Properties:
  Sold during period.......................               (2)               --
  Owned at end of period...................              140               142

Net Rentable Square Feet:
  Sold during period.......................             (256)               --
  Owned at end of period...................           18,402            18,492`

General and administrative  expenses  increased  approximately $1.9 million for the six months ended June 30, 2001 as compared
to the same period in 2000. This increase was primarily  related to higher personnel costs in 2001,  including  approximately  $757,000
in non-cash  compensation  expense from  restricted  stock awards  granted to several key  executives  in July and December of 2000 and
approximately $325,000 in salaries for employees hired after January 1, 2000.

Interest  expense  increased  approximately  $5.6 million or 15% during the six months ended June 30, 2001, as compared to the
same period in 2000.  This increase was  primarily due to higher  outstanding  balances in 2001,  resulting  from the funding of tenant
improvements and leasing  commission costs and development and renovation  projects placed in service  subsequent to January 1, 2000 which
was partially offset by lower effective interest rates in 2001.

Depreciation and  amortization  expense  increased by  approximately  $6.9 million or 17% during the six months ended June 30,
2001 compared to the same period in 2000,  primarily due to  depreciation  related to newly  developed  and renovated  properties,  and
capital expenditures, tenant improvements and leasing commissions placed in
service subsequent to January 1, 2000.

The  increase in revenue from rental  operations  and  property  operating  expenses for the six months ended June 30, 2001 as
compared to the same period in 2000 was  partially  due to a  development  property  placed in service in the third  quarter of 2000, a
property sold in the fourth quarter of 2000, two properties sold in the second quarter of 2001 and three  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 maintained during the renovation.

Following is a summary of the increase in revenue from rental operations and property  operating  expenses that relates to the
seven  properties we either sold or placed in service or were under  renovation  after  January 1, 2000 and for the 136  non-renovation
properties  we owned for all of the six month periods ended June 30, 2001 and 2000  (unaudited  and in thousands,  except for number of
properties).

`Non-Renovation/Development
                                                                       Properties Sold,           Properties Owned
                                                                     Placed in Service or          for all of the
                                                                       Under Renovation           Six Months Ended
                                                  Total Variance     after January 1, 2000    June 30, 2001 and 2000 (1)
                                                  --------------     ---------------------    --------------------------


Revenue from Rental Operations:
   Rental.......................................       $  17,325             $   9,030                 $   8,295
   Tenant reimbursements........................           3,092                   156                     2,936
   Parking, net of operations...................           2,476                   609                     1,867
   Other rental operations......................             674                   966                      (292)
                                                       ---------             ---------                 ---------
                                                       $  23,567             $  10,761                 $  12,806
                                                       =========             =========                 =========

Property Operating Expenses:
   Repairs and maintenance......................       $     939             $     651                 $     288
   Utilities....................................           2,122                   493                     1,629
   Real estate taxes............................           2,094                   745                     1,349
   Insurance....................................             627                    77                       550
   Ground rent..................................             590                   384                       206
   Administrative...............................             676                   355                       321
                                                       ---------             ---------                 ---------
                                                       $   7,048             $   2,705                 $   4,343
                                                       =========             =========                 =========

Other Data:
   Number of properties.........................                                     7                       136
   Net rentable square feet.....................                                 1,216                    17,518
----------

(1)  See analysis for these properties below.`

## Same Properties

Following  is a  comparison  of  property  operating  data  computed  under  the  GAAP  Basis  and  Cash  Basis  for  the  136
non-renovation/development  properties  we owned for the entire six month periods  ended June 30, 2001 and 2000 (in  thousands,  except
number of properties and percentages):

`Six Months Ended
                                                               June 30,
                                                    -------------------------------       Dollar            Percent
                                                        2001              2000            Change            Change
                                                    -------------     -------------     ---------         ---------
                                                              (unaudited)
GAAP Basis:
Revenue from rental operations.................     $ 189,402          $ 176,596        $ 12,806              7.3%
Property operating expenses....................        54,690             50,347           4,343              8.6%
                                                    ---------          ---------        --------          --------
                                                    $ 134,712          $ 126,249        $  8,463              6.7%
                                                    =========          =========        ========          ========

Cash Basis (1):

Revenue from rental operations.................     $ 185,855          $ 172,999        $ 12,856              7.4%
Property operating expenses....................        54,690             50,347           4,343              8.6%
                                                    ---------          ---------        --------          --------
                                                    $ 131,165          $ 122,652        $  8,513              6.9%
                                                    =========          =========        ========          ========

Number of non-renovation/development properties...        136                136
Average occupancy..............................         95.0%              94.2%
Net rentable square feet.......................        17,518             17,518

----------

(1)  Excludes straight-line rent adjustments.`

Revenue from rental operations for these properties,  computed on a GAAP basis,  increased by approximately  $12.8 million, or
7.3%,  during the six months ended June 30, 2001,  compared to the same period in 2000.  Approximately  $8.3 million of this difference
was related to higher rental revenue in 2001.  Approximately  80% of this increase was due to increases in rental rates in 2001 and the
remaining  20% was related to the  approximate  .8% increase in average  occupancy in 2001.  Revenue  from rental  operations  was also
higher due to an  approximate  $2.9 million  increase in tenant  reimbursements  and an  approximate  $1.9 million  increase in parking
income.  Tenant  reimbursements  increased  primarily due to higher  operating  expenses in 2001, as discussed  below.  Parking  income
increased in 2001 primarily due to increases in parking rates as well as the 0.8% increase in average occupancy.

Straight-line rents for these properties in 2001 was approximately $50,000 less than in 2000.

Property  expenses for these properties  increased by approximately  $4.3 million,  or 8.6%,  during the six months ended June
30, 2001,  compared to the same period in 2000,  primarily due to a $1.6 million increase in utility expenses,  a $1.3 million increase
in real estate  taxes and a $550,000  increase in  insurance  expense in 2001.  The  increase in utility  expenses was due to both rate
increases  and higher  utility  usage related to the increase in average  occupancy  for these  properties  in 2001.  Real estate taxes
increased in 2001 due to normal annual increases and final  assessments on certain  properties and insurance  expense  increased due to
increases in  industry-wide  insurance  rates in 2001. As noted above,  the increase in operating  expenses was the primary  reason for
the $2.9 million increase in tenant reimbursements.

## Liquidity and
Capital Resources

## Cash
Flows

Cash provided by operating  activities  increased by approximately  $5.3 million to inflow of $96.0 million for the six months
ended June 30,  2001,  as compared  to an inflow of $90.7  million for the same  period in 2000,  primarily  due to improved  operating
results for the 136 properties we owned for both six month periods  presented as well as the four  properties we developed or renovated
subsequent  to January 1, 2000.  This increase was  partially  offset by the loss of operating  cash flows on a property we sold in the
fourth quarter of 2000 and two properties we sold in the second quarter of 2001.

Cash used in investing  activities  decreased  by  approximately  $55.7  million,  to an outflow of $67.4  million for the six
months ended June 30, 2001  compared to an outflow of $123.1  million for the same period in 2000.  This  decrease was primarily due to
the completion of several of our development and renovation  projects after June 30, 2000,  which was partially  offset by the proceeds
from the sale of two properties in 2001.

Cash from  financing  activities  decreased by  approximately  $54.5 million to an outflow of $26.6 million for the six months
ended June 30, 2001,  as compared to an inflow of $27.9  million for the same period in 2000.  This  decrease was  primarily due to the
timing of the issuance of $250 million in senior unsecured notes in March of 2000.

## Available Borrowings, Cash Balance and Capital Resources

We have an unsecured line of credit with a group of banks led by Wells Fargo.  This 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 on this line of credit 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. As of June 30, 2001,
there was  approximately  $218.4  million  outstanding  on this line of credit  and  approximately  $56.6  million  was  available  for
additional borrowings.

We also have a $75 million  unsecured line of credit with Lehman Brothers.  Borrowings on this line of credit 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. As of June 30, 2001, there was $75 million outstanding on this line of credit.

We also 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,  2002.  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, 2001,  there was no outstanding  balance on this line of credit and $10
million was available for additional borrowings.

On November 20, 2000,  the Operating  Partnership  completed a private  placement of $100 million 8.50% senior notes due 2010,
with interest  payable  semi-annually  on November 15 and May 15 of each year. We used the net proceeds from this private  placement to
reduce the outstanding  balance on one of our unsecured lines of credit and to repay a construction  loan related to our development of
the 6060 Center Drive  Project.  These senior  unsecured  notes were issued in a private  placement in reliance upon an exemption  from
registration  provided by Rule 144A under the Securities  Act. The Operating  Partnership  filed a  registration  statement that became
effective on March 29, 2001 and all privately placed notes were subsequently exchanged for notes registered under the Securities Act.

On May 2, 2001, as part of our capital recycling  program,  we sold an approximate  43,000 square foot office property located
in Irvine,  California  for  approximately  $8.1 million.  On that date, we also sold an  approximate  213,000  square foot  industrial
property located in Ontario,  California for approximately $10.7 million.  The net proceeds from these dispositions were used to reduce
the outstanding balance on our Wells Fargo unsecured line of credit.

On June 27, 2001,  Arden  Realty  and the  Operating  Partnership  filed a Form S-3  shelf  registration  statement  with the
Securities  and Exchange  Commission,  or SEC,  providing  for the issuance of up to $400 million of debt  securities  by the Operating
Partnership  and  $257.2  million  of our $.01 par  value  common  stock  or our $.01 par value  preferred  stock.  The terms of these
securities,  if issued,  will be determined at the time of any such debt or equity offering.  This registration  statement was declared
effective by the SEC on July 24, 2001.

`Year                                                                          Amount
---------                                                                   --------------

   2001..................................................................   $     1,289
   2002..................................................................        77,618(1)
   2003..................................................................       223,804(2)
   2004..................................................................       182,218
   2005..................................................................       207,834
   2006..................................................................        15,220
   2007..................................................................         8,812
   2008..................................................................       230,305
   2009..................................................................       111,980
   2010..................................................................       150,565
   Thereafter............................................................         6,921
                                                                            -----------
     Total...............................................................   $ 1,216,566
                                                                            ===========
----------`

(1)   Consists primarily of $75.0 million outstanding on our Lehman Brothers line of credit which has a
    one-year extension option.

(2)   Consists primarily of $218.4 million outstanding on our Wells Fargo line of credit.

Following is certain other  information  related to our  indebtedness  as of June 30, 2001 (in  thousands,  except  percentage
data):

`Unsecured and Secured Debt:
         --------------------------

                                                                                       Weighted
                                                                                        Average
                                                   Balance           Percent        Interest Rate (1)
                                                ---------------  ----------------  ------------------

         Unsecured Debt......................    $   641,828             53%             7.54%
         Secured Debt........................        574,738             47%             7.36%
                                                 -----------         -------           -------
         Total Debt..........................    $ 1,216,566            100%             7.45%
                                                 ===========         =======           =======

         Floating and Fixed Rate Debt:
         ----------------------------

                                                                                       Weighted
                                                                                        Average
                                                   Balance           Percent        Interest Rate (1)
                                                ---------------  ----------------  ------------------
         Floating Rate Debt..................    $   293,350             24%             5.69%
         Fixed Rate Debt.....................        923,216             76%             8.02%
                                                 -----------         -------           -------
         Total Debt..........................    $ 1,216,566            100%             7.45%
                                                 ===========         =======           =======
----------`

(1)    Includes amortization of prepaid financing costs.

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

`For the Three Months Ended June 30,     For the Six Months Ended June 30,
                                                   -----------------------------------     ---------------------------------
                                                      2001                    2000            2001                  2000
                                                    -------                 --------        --------              ------

         Total interest incurred............      $  23,449                $  22,491       $  47,195             $  43,184
         Amount capitalized.................         (2,368)                  (3,721)         (4,956)               (6,562)
                                                  ---------                ---------       ---------             ---------
         Amount expensed....................      $  21,081                $  18,770       $  42,239             $  36,622
                                                  =========                =========       =========             =========`

As of June 30,  2001,  we had $27.2  million  in cash and cash  equivalents,  including  $19.7  million  in  restricted  cash.
Restricted  cash consisted of $13.6 million in interest  bearing cash deposits  required by five of our mortgage loans payable and $6.1
million in cash impound accounts for real estate taxes and insurance as required by several of our mortgage loans payable.

We may sell mature or slow growth assets over the next 12 to 24 months.  Due to market  conditions  beyond our control,  it is
difficult to predict the actual period and amount of these asset sales.  At the time any such sales  proceeds are  realized,  we expect
to redeploy  such amounts into  investments  that we believe will  generate  higher  yields,  which may include  development  of office
buildings,  acquisitions  or  repurchase  of our common  stock.  In  addition,  we expect to use a portion of any  proceeds to pay down
portions of our debt in order to maintain our leverage and coverage ratios.

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 or proceeds  from asset sales.  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-terms  liquidity  needs over the next twelve
months, including recurring non-revenue enhancing capital expenditures, tenant improvements and leasing commissions.

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

## Funds from
Operations and Funds Available for Distribution

The following table reflects the calculation of our funds from  operations and our funds  available for  distribution  for the
three-month periods ended June 30, 2001 and 2000 (in thousands):

`For the                               For the
                                                        Three Months Ended June 30,           Six Months Ended June 30,
                                                       -----------------------------        -----------------------------
                                                         2001                 2000            2001                 2000
                                                       --------             --------        --------             --------
Funds From Operations:(1)                                                          (unaudited)

  Net income.....................................     $  28,017           $  23,198        $  52,090           $  46,689
  Depreciation and amortization of real estate           24,176              21,277           48,322              41,424
assets...........................................
  Gain on sale of properties.....................        (3,551)                 --           (3,551)                 --
  Minority interest..............................         2,031               1,822            3,928               3,697
  Income allocated to preferred units............        (1,078)             (1,078)          (2,156)             (2,156)
                                                      ---------           ---------        ---------           ---------
Funds From Operations............................     $  49,595(2)        $  45,219        $  98,633(2)        $  89,654
                                                      =========           =========        =========           =========

Funds Available for Distribution:(3)

   Funds From Operations.........................     $  49,595           $  45,219        $  98,633           $  89,654
   Straight-line rent adjustment.................        (2,149)             (1,944)          (4,510)             (3,342)
   Capital expenditure, tenant improvement
     and leasing commission reserve..............        (7,800)             (7,700)         (15,500)            (15,494)
                                                      ---------           ---------        ---------           ---------
Funds Available for Distribution.................     $  39,646           $  35,575        $  78,623           $  70,818
                                                      =========           =========        =========           =========

Weighted average shares and common
     units outstanding - Diluted.................        66,127              65,657           66,084              65,623
                                                      =========           =========        =========           =========
----------`

|(1) | We consider funds from operations,  as defined by the National  Association of Real Estate  Investment  Trusts,  or
       NAREIT,  to be a useful  financial  measure of our  operating  performance.  We believe that funds from  operations
       provides  investors with an additional  basis to evaluate our ability to service debt and to fund  acquisitions and
       other capital expenditures.  Funds from operations should not be considered an alternative to net income determined
       in  accordance  with GAAP,  as an  indicator  of our  financial  performance,  as a  substitute  for cash flow from
       operating  activities  determined in accordance  with GAAP or as a measure of our liquidity.  Funds from operations
       also is not necessarily  indicative of funds available to fund our cash needs, including our ability to service our
       debt.

       The White Paper on funds from  operations  approved by the Board of  Governors  of NAREIT in 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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes non-cash  compensation  expense of $425,000 and $850,000 for the three and six months ended June 30, 2001,
       respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|(3) | Funds available for distribution  consists of funds from operations,  excluding  straight-line rent adjustments and
       less a reserve for capital expenditures, tenant improvements and leasing commissions.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

## Portfolio and Lease Information

`PORTFOLIO SUMMARY


                                                                                                    Net Operating Income
                                                                                            -------------------------------------
                                                                                             For the Three        For the Six
                                                      Approximate Net Rentable Square Feet    Months Ended        Months Ended
      Location             Number of Properties                  (in thousands)               June 30, 2001       June 30, 2001
-------------------- ------------------------------- -------------------------------------- ------------------  ------------------
                                                                                                 (in thousands and unaudited)

                           Industrial                         Industrial
                              and              % of              and               % of               % of                % of
                     Office  Retail    Total  Total   Office    Retail    Total    Total     Total    Total     Total     Total
                     ------  ------    -----  -----   ------    ------    -----    -----     -----    -----     -----     -----




Los Angeles County
  West..............    28       1      29      21%     4,536      37      4,573     25%    $ 26,006    35%     $ 51,532    35%
  North.............    33       -      33      24%     3,410       -      3,410     18%      12,552    17%       24,908    17%
  South.............    16       -      16      11%     2,689       -      2,689     15%       8,613    12%       17,866    12%
                     -----   -----   -----    -----   -------  ------   --------   -----   ---------    ---    ---------    ---

   Subtotal.........    77       1      78      56%    10,635      37     10,672     58%      47,171    64%       94,306    64%

Orange County.......    24       -      24      17%     3,709       -      3,709     20%      13,241    18%       26,180    18%
San Diego County....    21       -      21      15%     2,487       -      2,487     14%       9,268    13%       18,194    12%
Ventura/Kern
Counties............     6       -       6       4%       778       -        778      4%       2,183     3%        4,590     3%
Riverside/San
  Bernardino
    Counties........     8       3      11       8%       554     202        756      4%       1,843     2%        3,715     3%
                     -----   -----   -----    -----   -------  ------   --------   -----   ---------  -----    ---------   ----
   Total............   136       4     140(1)  100%    18,163     239     18,402(1) 100%    $ 73,706   100%     $146,985   100%
----------           =====   =====   =====    =====   =======  ======   ========   =====    ========  =====     ========   ====`

|(1) | Including three office properties currently under development, our total portfolio consists of 143 properties and
     approximately 19.1 million rentable square feet.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

`PORTFOLIO OCCUPANCY AND LEASING SUMMARY

                                                                                                     Annualized Base Rent
       Location                       Percent Occupied                Percent Leased               Per Leased Square Foot (1)
-----------------------------    ---------------------------    --------------------------    -----------------------------------
                                                                                                                         Full
                                         Industrial                   Industrial                    Industrial          Service
                                             and                          and                           and              Gross
                                 Office    Retail     Total     Office   Retail    Total      Office  Retail   Total   Leases (2)
                                 ------    ------     -----     ------   ------    -----      ------  ------   -----   ----------

Los Angeles County:
  West......................      94.1%     100.0%   94.1%       94.8%     100.0%  94.8%     $ 26.93  $ 24.60  $ 26.91   $ 26.93

  North.....................      90.2%       -      90.2%       91.0%       -     91.0%       20.71      -      20.71     21.64

  South.....................      94.5%       -      94.5%       95.8%       -     95.8%       18.07      -      18.07     19.19

Orange County...............      97.3%       -      97.3%       97.4%       -     97.4%       17.41      -      17.41     20.36

San Diego County............      97.8%       -      97.8%       97.8%       -     97.8%       17.28      -      17.28     20.53

Ventura/Kern Counties.......      92.7%       -      92.7%       95.0%       -     95.0%       17.61      -      17.61     17.69

Riverside/San
  Bernardino Counties.......      86.1%      92.0%   87.7%       88.4%      92.0%  89.4%       15.89    11.62    14.72     18.72
                                 ------     ------  ------      ------     ------ ------     -------   ------  -------   -------

 Total/ Weighted Average....      94.3%      93.2%   94.3%       95.0%      93.2%  95.0%     $ 20.42  $ 20.34  $ 13.78   $ 22.35
                                 ======     ======  ======      ======     ====== ======     =======  =======  =======   =======
----------`

|(1) | Based on monthly  contractual base rent under existing leases as of June 30, 2001,  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 45 properties and approximately 3.9 million square feet under triple net and modified gross leases.
|--- | ------------------------------------------------------------------------------------------------------------

LEASE
EXPIRATIONS

                                                          As of June 30, 2001

`Percentage of      Annualized Base
                              Square Footage      Aggregate            Rent of        Estimated Market
                               of Expiring        Portfolio           Expiring        Rent of Expiring    Estimated      Estimated
                                  Leases            Leased             Leases              Leases         Cash Rent      GAAP Rent
Year of Lease Expiration      (in thousands)      Square Feet    (per square foot)  (per square foot)(1)    Growth         Growth 
-------------------------    -----------------  ---------------  ----------------   ------------------  -----------   -------------

2001 (2)................           980                6%            $   21.32             $  26.15            23%           31%
2002....................         2,607               15%            $   18.95             $  25.44            34%           43%
2003....................         3,086               18%            $   20.56             $  26.32            28%           36%
2004....................         2,995               17%            $   20.88             $  26.40            27%           35%
2005....................         2,821               16%            $   22.00             $  28.38            29%           37%
----------`

|(1) | Represents estimated annualized initial cash market rent of expiring leases.
Calculation is based on our estimate of current market rental rates and
estimated annual increases in such rates of 2% for the remaining six months of
2001, and 3% annually thereafter. 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, 2001 through December 31, 2001.
|--- | -----------------------------------------------------------------------

LEASING ACTIVITY
                                           For the Three and Six Months Ended June 30, 2001

`Weighted
                                                                                           Average        Tenant Improvements
                   Net Absorption                           Cash Rent     GAAP Rent       Lease Term        and Commissions
                   (square feet)     Retention Rate (1)     Growth (2)    Growth (3)      (in months)      (per square foot)
                  ---------------  ---------------------  -------------  ------------    -------------    -------------------

                                                                                                          New (4)      Renewal
                                                                                                          -------      -------

Three Months
   Ended 6/30/01         (20,532)                73%                24%            32%             52      $ 14.11     $ 14.24
                      ==========           =========          =========      =========      =========      =======     =======
Six Months
   Ended 6/30/01          (4,453)                75%                24%            32%             52      $  8.56     $  8.80
                      ==========           =========          =========      =========      =========      =======     =======
----------`

|(1) | Percentage of leased square feet in which tenants were retained at lease expiration.
|--- | ------------------------------------------------------------------------------------

|(2) | Represents the difference between initial market rents on new and renewal leases
as compared to the expiring cash rents on the same space.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents estimated cash rent growth adjusted for straight-line rents.
|--- | -----------------------------------------------------------------------

|(4) | Excludes all first generation space.
|--- | ------------------------------------

DEVELOPMENT SUMMARY

                                                          As of June 30,
2001

`Estimated
                                    Costs                   Percent  Estimated                   Year 1      Estimated   Estimated
                                  Incurred      Estimated    Leased    Shell     Estimated     Stabilized     Year 1       Year 1
                        Square     To Date     Total Cost(1)   at   Completion Stabilization  Cash NOI(3)     Annual      Annual
Property                 Feet  (in thousands) (in thousands) 8/1/01    Date       Date(2)    (in thousands) Cash Yield GAAP Yield(4)
--------                -----  -------------- -------------- ------ ---------  ------------- -------------- ---------- -------------

Howard Hughes
 Center
  Univision Building....  159,000  $ 37,089    $  51,700     100%      Complete   3rd Qtr 2001    $ 5,200     10.1%     11.9%
  6080 Center Drive..     283,000    61,477       73,500      76%(5)   Complete   4th Qtr 2001    $ 8,400     11.4%     12.4%
  6100 Center Drive..     283,000    24,798       79,000      --     2nd Qtr 2002 2nd Qtr 2003    $ 8,850     11.2%     12.2%
  Unallocated
Acquisition                    --    14,707       19,800
                          -------  --------    ---------
 Master Plan  Costs (1)
Total Development
 Properties.............  725,000  $138,071    $ 224,000
                         ========  ========    =========

----------`

|(1) | Estimated total cost includes purchase and closing costs, capital expenditures,
tenant improvements, leasing commissions and carrying costs during development,
as well as an allocation of land and master plan costs. Unallocated acquisition
and master plan costs consists of unallocated land costs and master plan costs
that will be allocated to future development projects at the Howard Hughes
Center. We have entitlements to construct an additional approximately 425,000
net rentable square feet of office space and have two parcels entitled for hotel
development at the Howard Hughes Center.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | We consider a property to be stabilized in the quarter  when the property is at least 95% leased.
|--- | -------------------------------------------------------------------------------------------------

|(3) | We consider Stabilized Cash NOI to be the rental revenues from the property less
the operating expenses of the property on a cash basis before deducting
financing costs (interest and principal payments) after the property is at least
95% leased.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | We consider the Estimated Year 1 Annual GAAP Yield to be the propertys
Stabilized Cash NOI adjusted for straight-line rents during its first year in
service over the propertys estimated total costs.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | As of August 1, 2001, 6080 Center Drive is 66% occupied and 76% leased with
another 5% of leases out for signature, which would bring the property to 81%
leased.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

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

In addition to our  development  at the Howard  Hughes  Center,  we have  completed  preliminary  designs and are marketing an
approximate  170,000 square foot  build-to-suit  office building at our Long Beach Airport  Business Park. We do not intend to commence
construction on this project until a build-to-suit  tenant lease is signed with terms allowing us to achieve yields  commensurate  with
the project's development risk.

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

## Current
Economic Climate

Our short and long-term  liquidity is  significantly  impacted by the operating  results of our  properties,  all of which are
located in Southern  California.  Our ability to lease available space,  increase rates when leases expire and collect amounts due from
our tenants is largely  dependent on the demand for office space in the markets where our  properties  are located.  National and local
economic  trends may affect  demand for our  properties.  The timing and extent of changes in the national and local  economy and their
effects on our properties and results of operations  are difficult to accurately  predict.  Some sectors of the national and California
economy,  particularly  the sectors  containing  technology  and Internet  companies,  are reported to be  experiencing  slower growth,
reduced earnings or increased  losses. In addition,  problems  associated with deregulation of the electric industry in California have
resulted in intermittent  service  interruptions and significantly higher costs in some areas of the state. As of the date of this Form
10-Q,  we have not noted any material  trends or effects  arising from these  national and regional  issues on our ability to lease and
renew  available  space,  to increase  rental  rates as leases  expire and to collect  amounts due from our  tenants.  It is  possible,
however,  that these national and regional issues may more directly affect us and our operating  results in the future,  making it more
difficult for us to lease and renew  available  space, to increase or maintain rental rates as leases expire and to collect amounts due
from our tenants.  For additional  information,  see "Risk Factors - Our operating  performance and property values will be affected by
changes in the economic  climate in Southern  California,"  "- the financial  condition and solvency of our tenants may reduce our cash
flow," and "- Rising energy costs and power outages in California may have an adverse  effect on our  operations and revenue"  sections
of our 2000 Annual Report on Form 10-K.

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.

## Item 3. Quantitative
and Qualitative Disclosure about Market Risk

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

Interest Rate Risk.

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

Some of our future  earnings,  cash flows and fair values  relating to financial  instruments  are dependent  upon  prevailing
market  rates of  interest,  such as LIBOR.  Based on interest  rates and  outstanding  balances as of June 30,  2001, a 1% increase in
interest rates on our $293.4 million of floating rate debt would decrease annual future earnings and cash flows by  approximately  $2.9
million  and would not have an impact on the fair value of the  floating  rate debt.  A 1%  decrease  in  interest  rates on our $293.4
million of floating rate debt would increase  annual future  earnings and cash flows by  approximately  $2.9 million and would not have
an impact on the fair value of the floating  rate debt.  A 1% increase or decrease in interest  rates on our secured  notes  receivable
would not have a material  impact on annual  future  earnings,  cash  flows and the fair value of the  secured  notes  receivable.  The
weighted average interest rate on our floating debt as of June 30, 2001 was 5.69%.

Our fixed  rate debt  totaled  $923.2  million  as of June 30,  2001 with a  weighted  average  interest  rate of 8.02% and an
unrealized  loss of  approximately  $22.1 million for a total fair value of  approximately  $901.1  million.  A 1% decrease in interest
rates on our $923.2  million of fixed rate debt would  decrease  its fair value by  approximately  $42.2  million and would not have an
impact on annual  future  earnings  and cash flows.  A 1% increase  in  interest  rates in our $923.2  million of fixed rate debt would
increase its fair value by approximately $42.2 million and would not have an impact on annual future earnings and cash flows.

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

## 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 15, 2001 Arden Realty held its annual meeting of stockholders in Santa Monica, California.  The matters voted on at
           the meeting and the results were as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|1. |  | To elect Directors of Arden Realty, Inc. to hold office until the Annual Meeting of stockholders in the year 2004 and until
                 their respective successors are elected and qualified, as follows:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | Number of Shares Voted For | Number of Shares Withheld
|------------------------------ | -------------------------- | -------------------------
|Director #1  -  Peter S. Gold  | 39,768,280                 | 15,711,877               
|Director #2  -  Steven C. Good | 39,768,165                 | 15,711,992               

|2. |  | To request the Board of Directors to redeem the stockholder rights adopted in August of 1998. Results of the vote were as
                 follows:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

|Number of Shares Voted For | Number of Shares Voted Against | Number of Shares Abstained
|-------------------------- | ------------------------------ | --------------------------
|39,975,756                 | 12,563,004                     | 168,827                   

Item 5.    Other Information  -  None

Item 6.    Exhibits and Reports on Form 8-K

## (a)           Exhibits

## None

## (b)          Reports on
Form 8-K

## None

# SIGNATURES

`ARDEN REALTY, INC.




Date: August 8, 2001                     By: /s/  Andrew J. Sobel
                                             Andrew J. Sobel
                                             Executive Vice President - Strategic Planning
                                             and Operations




Date: August 8, 2001                     By: /s/  Daniel S. Bothe
                                             Daniel S. Bothe
                                             Senior Vice President -
                                             Co-Chief Financial Officer




Date: August 8, 2001                     By: /s/  Richard S. Davis
                                             Richard S. Davis
                                             Senior Vice President -
                                             Co-Chief Financial Officer and
                                             Treasurer`