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(ARDEN REALTY LOGO)



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Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

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

For the quarter ended March 31, 2003

Commission file number 1-12193

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

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

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

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

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes     [X]     No     [   ]

As of May 9, 2003 there were 63,195,718 shares of the registrants common
stock, $.01 par value, issued and outstanding.



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TABLE OF CONTENTS



|                              |                                                                                               |                                                      |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|Part I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | Consolidated Balance Sheets                         
|                              |                                                                                               | Consolidated Statements of Income                   
|                              |                                                                                               | Consolidated Statements of Cash Flows               
|                              |                                                                                               | Notes to Consolidated Condensed Financial Statements
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosure about Market Risk                            
|                              | Item 4. Controls and Procedures                                                              
|Part II OTHER INFORMATION    
|SIGNATURES                   
|OFFICERS CERTIFICATIONS     
|EXHIBIT 99.1                 



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##### Table of Contents



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

|         |  |                       |  |                          |    |                                                                                       |    |                                                                                                      |    |          |   | 
|-------- |  | --------------------- |  | ------------------------ | -- | ------------------------------------------------------------------------------------- | -- | ---------------------------------------------------------------------------------------------------- | -- | -------- | - | 
|         |  |                       |  |                          |    |                                                                                       |    |                                                                                                      |    | PAGE NO.
|         |  |                       |  |                          |    |                                                                                       |    |                                                                                                      |    |         
|PART I.  |  | FINANCIAL INFORMATION |  |                          |    |                                                                                      
|         |  |                       |  | Item 1.                  |    | Financial Statements                                                                  |    |                                                                                                      |    |         
|         |  |                       |  |                          |    |                                                                                       |    | Consolidated Balance Sheets as of March 31, 2003 (unaudited) and
December 31, 2002                   |    |          | 3 | 
|         |  |                       |  |                          |    |                                                                                       |    | Consolidated Statements of Income for the three months ended
March 31, 2003 and 2002 (unaudited)     |    |          | 4 | 
|         |  |                       |  |                          |    |                                                                                       |    | Consolidated Statements of Cash Flows for the three months ended
March 31, 2003 and 2002 (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                            |    |                                                                                                      | 22 |         
|         |  |                       |  | Item 4.                  |    | Controls and Procedures                                                               |    |                                                                                                      | 23 |         
|PART II. |  | OTHER INFORMATION     |  |                          | 24 |                                                                                      
|         |  |                       |  | SIGNATURES               |    |                                                                                       | 25 |                                                                                                     
|         |  |                       |  | OFFICERS CERTIFICATIONS |    |                                                                                       | 26 |                                                                                                     

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Part I. FINANCIAL INFORMATION




Item 1. Financial Statements




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

|                                                                                                                                                                    |                                                 |                                            |           |             |           |              |           |           |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ------------------------------------------ | --------- | ----------- | --------- | ------------ | --------- | --------- | --------- | 
|                                                                                                                                                                    |                                                 |                                            |           | March 31,   |           | December 31,
|                                                                                                                                                                    |                                                 |                                            |           | 2003        |           | 2002        
|                                                                                                                                                                    |                                                 |                                            |           |             |           |             
|                                                                                                                                                                    |                                                 |                                            |           | (unaudited) |           |              |           |          
|Assets                                                                                                                                                              |                                                 |                                            |           |             |           |              |           |          
|Investment in real estate:                                                                                                                                          |                                                 |                                            |           |             |           |              |           |          
|                                                                                                                                                                    | Land                                            |                                            | $         | 476,034     |           |              | $         | 476,034   |          
|                                                                                                                                                                    | Buildings and improvements                      |                                            |           | 2,166,425   |           |              |           | 2,164,449 |          
|                                                                                                                                                                    | Tenant improvements and leasing commissions     |                                            |           | 328,588     |           |              |           | 320,100   |          
|                                                                                                                                                                    |                                                 |                                            |           |             |           |              |           |          
|                                                                                                                                                                    |                                                 |                                            | 2,971,047 |             |           |              | 2,960,583 |          
|                                                                                                                                                                    | Less: accumulated depreciation and amortization |                                            |           | (403,521    | )         |              |           | (381,557  | )        
|                                                                                                                                                                    |                                                 |                                            |           |             |           |              |           |          
|                                                                                                                                                                    |                                                 |                                            | 2,567,526 |             |           |              | 2,579,026 |          
|                                                                                                                                                                    | Properties under development                    |                                            |           | 66,915      |           |              |           | 65,296    |          
|                                                                                                                                                                    | Land available for development                  |                                            |           | 23,765      |           |              |           | 23,731    |          
|                                                                                                                                                                    | Properties held for disposition, net            |                                            |           | 40,756      |           |              |           | 73,571    |          
|                                                                                                                                                                    |                                                 |                                            |           |             |           |              |           |          
|                                                                                                                                                                    |                                                 | Net investment in real estate              |           |             | 2,698,962 |              |           |           | 2,741,624 | 
|Cash and cash equivalents                                                                                                                                           |                                                 |                                            | 15,428    |             |           |              | 4,063     |          
|Restricted cash                                                                                                                                                     |                                                 |                                            | 23,588    |             |           |              | 20,498    |          
|Rent and other receivables, net of allowance of $4,701 and $4,001 at
March 31, 2003 and December 31, 2002, respectively                                             |                                                 |                                            | 3,559     |             |           |              | 2,917     |          
|Deferred rent                                                                                                                                                       |                                                 |                                            | 43,764    |             |           |              | 43,646    |          
|Prepaid financing costs, expenses and other assets, net of amortization                                                                                             |                                                 |                                            | 20,305    |             |           |              | 19,661    |          
|                                                                                                                                                                    |                                                 |                                            |           |             |           |              |           |          
|                                                                                                                                                                    |                                                 | Total assets                               |           | $           | 2,805,606 |              |           | $         | 2,832,409 | 
|                                                                                                                                                                    |                                                 |                                            |           |             |           |              |           |          
|Liabilities                                                                                                                                                         |                                                 |                                            |           |             |           |              |           |          
|Mortgage loans payable                                                                                                                                              |                                                 | $                                          | 569,905   |             |           | $            | 570,654   |          
|Unsecured lines of credit                                                                                                                                           |                                                 |                                            | 195,587   |             |           |              | 208,587   |          
|Unsecured term loan                                                                                                                                                 |                                                 |                                            | 125,000   |             |           |              | 125,000   |          
|Unsecured senior notes, net of discount                                                                                                                             |                                                 |                                            | 498,159   |             |           |              | 498,063   |          
|Accounts payable and accrued expenses                                                                                                                               |                                                 |                                            | 60,082    |             |           |              | 55,705    |          
|Security deposits                                                                                                                                                   |                                                 |                                            | 20,517    |             |           |              | 20,645    |          
|Dividends payable                                                                                                                                                   |                                                 |                                            | 31,849    |             |           |              | 31,807    |          
|                                                                                                                                                                    |                                                 |                                            |           |             |           |              |           |          
|                                                                                                                                                                    |                                                 | Total liabilities                          |           |             | 1,501,099 |              |           |           | 1,510,461 | 
|Minority interest                                                                                                                                                   |                                                 |                                            | 74,124    |             |           |              | 74,571    |          
|Stockholders Equity                                                                                                                                                |                                                 |                                            |           |             |           |              |           |          
|Preferred stock, $.01 par value 20,000,000 shares authorized, none issued                                                                                           |                                                 |                                            |          |             |           |              |          |          
|Common stock, $.01 par value, 100,000,000 shares authorized,
63,066,851 and 62,984,217 issued and outstanding at March 31, 2003 and
December 31, 2002, respectively |                                                 |                                            | 632       |             |           |              | 631       |          
|Additional paid-in capital                                                                                                                                          |                                                 |                                            | 1,246,081 |             |           |              | 1,260,773 |          
|Deferred compensation                                                                                                                                               |                                                 |                                            | (12,465   | )           |           |              | (11,259   | )        
|Accumulated other comprehensive loss                                                                                                                                |                                                 |                                            | (3,865    | )           |           |              | (2,768    | )        
|                                                                                                                                                                    |                                                 |                                            |           |             |           |              |           |          
|                                                                                                                                                                    |                                                 | Total stockholders equity                 |           |             | 1,230,383 |              |           |           | 1,247,377 | 
|                                                                                                                                                                    |                                                 |                                            |           |             |           |              |           |          
|                                                                                                                                                                    |                                                 | Total liabilities and stockholders equity |           | $           | 2,805,606 |              |           | $         | 2,832,409 | 
|                                                                                                                                                                    |                                                 |                                            |           |             |           |              |           |          

See accompanying notes to consolidated financial statements.

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

|                                                                                          |                                     |   |                    |      |      |   |        |      | 
|----------------------------------------------------------------------------------------- | ----------------------------------- | - | ------------------ | ---- | ---- | - | ------ | ---- | 
|                                                                                          |                                     |   | Three Months Ended
|                                                                                          |                                     |   | March 31,         
|                                                                                          |                                     |   |                   
|                                                                                          |                                     |   | 2003               |      | 2002
|                                                                                          |                                     |   |                    |      |     
|Property revenues                                                                         |                                     | $ | 104,276            |      |      | $ | 99,701 |     
|Property operating expenses                                                               |                                     |   | 32,267             |      |      |   | 29,283 |     
|                                                                                          |                                     |   |                    |      |      |   |        |     
|                                                                                          |                                     |   | 72,009             |      |      |   | 70,418 |     
|General and administrative expenses                                                       |                                     |   | 3,652              |      |      |   | 2,960  |     
|Interest expense                                                                          |                                     |   | 23,035             |      |      |   | 21,397 |     
|Depreciation and amortization                                                             |                                     |   | 28,961             |      |      |   | 25,580 |     
|Interest and other income                                                                 |                                     |   | (132               | )    |      |   | (540   | )   
|                                                                                          |                                     |   |                    |      |      |   |        |     
|Income from continuing operations before gain on sale of properties and minority interest |                                     |   | 16,493             |      |      |   | 21,021 |     
|Gain on sale of operating properties                                                      |                                     |   |                   |      |      |   | 1,192  |     
|                                                                                          |                                     |   |                    |      |      |   |        |     
|Income from continuing operations before minority interest                                |                                     |   | 16,493             |      |      |   | 22,213 |     
|Minority interest                                                                         |                                     |   | (1,486             | )    |      |   | (1,655 | )   
|                                                                                          |                                     |   |                    |      |      |   |        |     
|Income from continuing operations                                                         |                                     |   | 15,007             |      |      |   | 20,558 |     
|Discontinued operations, net of minority interest                                         |                                     |   | 1,070              |      |      |   | 795    |     
|Loss on sale of discontinued properties                                                   |                                     |   | (639               | )    |      |   |       |     
|                                                                                          |                                     |   |                    |      |      |   |        |     
|Net income                                                                                |                                     | $ | 15,438             |      |      | $ | 21,353 |     
|                                                                                          |                                     |   |                    |      |      |   |        |     
|Basic net income per common share:                                                        |                                     |   |                    |      |      |   |        |     
|                                                                                          | Income from continuing operations   |   | $                  | 0.23 |      |   | $      | 0.32 | 
|                                                                                          | Income from discontinued operations |   |                    | 0.01 |      |   |        | 0.01 | 
|                                                                                          |                                     |   |                    |      |      |   |        |     
|Net income per common share  basic                                                       |                                     | $ | 0.24               |      |      | $ | 0.33   |     
|                                                                                          |                                     |   |                    |      |      |   |        |     
|Weighted average number of common shares  basic                                          |                                     |   | 63,040             |      |      |   | 64,405 |     
|                                                                                          |                                     |   |                    |      |      |   |        |     
|Diluted net income per common share:                                                      |                                     |   |                    |      |      |   |        |     
|                                                                                          | Income from continuing operations   |   | $                  | 0.23 |      |   | $      | 0.32 | 
|                                                                                          | Income from discontinued operations |   |                    | 0.01 |      |   |        | 0.01 | 
|                                                                                          |                                     |   |                    |      |      |   |        |     
|Net income per common share  diluted                                                     |                                     | $ | 0.24               |      |      | $ | 0.33   |     
|                                                                                          |                                     |   |                    |      |      |   |        |     
|Weighted average number of common shares  diluted                                        |                                     |   | 63,126             |      |      |   | 64,683 |     
|                                                                                          |                                     |   |                    |      |      |   |        |     

See accompanying notes to consolidated financial statements.

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

|                                                     |                                                                                   |                                                                      |                                                    |         |                    |        |         |         |        |        |  
|---------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------------------- | -------------------------------------------------- | ------- | ------------------ | ------ | ------- | ------- | ------ | ------ | -
|                                                     |                                                                                   |                                                                      |                                                    |         | Three Months Ended
|                                                     |                                                                                   |                                                                      |                                                    |         | March 31,         
|                                                     |                                                                                   |                                                                      |                                                    |         |                   
|                                                     |                                                                                   |                                                                      |                                                    |         | 2003               |        | 2002   
|                                                     |                                                                                   |                                                                      |                                                    |         |                    |        |        
|Operating Activities:                                |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|                                                     | Net income                                                                        |                                                                      | $                                                  | 15,438  |                    |        | $       | 21,353  |       
|                                                     | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                                      |                                                    |         |                    |        |         |         |       
|                                                     |                                                                                   | Minority interest, including discontinued operations                 |                                                    |         | 1,498              |        |         |         | 1,677  |       
|                                                     |                                                                                   | Gain on sale of operating properties                                 |                                                    |         |                   |        |         |         | (1,192 | )     
|                                                     |                                                                                   | Loss on sale of discontinued operations                              |                                                    |         | 639                |        |         |         |       |       
|                                                     |                                                                                   | Depreciation and amortization, including discontinued operations     |                                                    |         | 29,526             |        |         |         | 26,383 |       
|                                                     |                                                                                   | Amortization of loan costs                                           |                                                    |         | 946                |        |         |         | 937    |       
|                                                     |                                                                                   | Non-cash compensation expense                                        |                                                    |         | 389                |        |         |         | 245    |       
|                                                     |                                                                                   | Changes in operating assets and liabilities:                         |                                                    |         |                    |        |         |         |        |       
|                                                     |                                                                                   |                                                                      | Rent and other receivables                         |         |                    | (642   | )       |         |        | 2,562  |  
|                                                     |                                                                                   |                                                                      | Deferred rent                                      |         |                    | (118   | )       |         |        | (1,596 | )
|                                                     |                                                                                   |                                                                      | Prepaid financing costs, expenses and other assets |         |                    | (1,494 | )       |         |        | (13    | )
|                                                     |                                                                                   |                                                                      | Accounts payable and accrued expenses              |         |                    | 3,280  |         |         |        | (2,094 | )
|                                                     |                                                                                   |                                                                      | Security deposits                                  |         |                    | (128   | )       |         |        | 16     |  
|                                                     |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|                                                     | Net cash provided by operating activities                                         |                                                                      |                                                    | 49,334  |                    |        |         | 48,278  |       
|                                                     |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|Investing Activities:                                |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|                                                     | Improvements to commercial properties                                             |                                                                      |                                                    | (19,386 | )                  |        |         | (31,659 | )     
|                                                     | Proceeds from sale of properties                                                  |                                                                      |                                                    | 31,943  |                    |        |         | 6,122   |       
|                                                     |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|                                                     | Net cash provided by (used in) investing activities                               |                                                                      |                                                    | 12,557  |                    |        |         | (25,537 | )     
|                                                     |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|Financing Activities:                                |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|                                                     | Repayments of mortgage loans                                                      |                                                                      |                                                    | (749    | )                  |        |         | (721    | )     
|                                                     | Proceeds from unsecured lines of credit                                           |                                                                      |                                                    | 36,500  |                    |        |         | 10,000  |       
|                                                     | Repayments of unsecured lines of credit                                           |                                                                      |                                                    | (49,500 | )                  |        |         | (27,000 | )     
|                                                     | Proceeds from issuance of common stock                                            |                                                                      |                                                    | 64      |                    |        |         | 1,166   |       
|                                                     | Distributions to preferred operating partnership unit holders                     |                                                                      |                                                    | (1,078  | )                  |        |         | (1,078  | )     
|                                                     | Increase in restricted cash                                                       |                                                                      |                                                    | (3,090  | )                  |        |         | (2,828  | )     
|                                                     | Distributions to minority interests                                               |                                                                      |                                                    | (867    | )                  |        |         | (901    | )     
|                                                     | Dividends paid                                                                    |                                                                      |                                                    | (31,806 | )                  |        |         | (31,408 | )     
|                                                     |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|                                                     | Net cash used in financing activities                                             |                                                                      |                                                    | (50,526 | )                  |        |         | (52,770 | )     
|                                                     |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|Net increase (decrease) in cash and cash equivalents |                                                                                   |                                                                      | 11,365                                             |         |                    |        | (30,029 | )      
|Cash and cash equivalents at beginning of period     |                                                                                   |                                                                      | 4,063                                              |         |                    |        | 37,041  |        
|                                                     |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|Cash and cash equivalents at end of period           |                                                                                   | $                                                                    | 15,428                                             |         |                    | $      | 7,012   |        
|                                                     |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|Supplemental Disclosure of Cash Flow Information:    |                                                                                   |                                                                      |                                                    |         |                    |        |         |        
|                                                     |                                                                                   | Cash paid during the period for interest, net of amounts capitalized |                                                    | $       | 23,555             |        |         | $       | 22,353 |       
|                                                     |                                                                                   |                                                                      |                                                    |         |                    |        |         |        

See accompanying notes to consolidated financial statements.

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Arden Realty, Inc.
Notes to Consolidated Condensed Financial Statements
March 31, 2003
(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 March 31, 2003, our portfolio
was comprised of 136 primarily suburban office properties, consisting of 222
buildings with approximately 19.3 million net rentable square feet including
one property with approximately 283,000 net rentable square feet under
lease-up. As of March 31, 2003 our properties were 89.7% occupied.

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

The minority interests at March 31, 2003 consisted of limited partnership
interests in the Operating Partnership of approximately 2.7%, exclusive of
ownership interests of the Operating Partnerships preferred unit holders.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of
Arden Realty, Inc., the operating partnership, and our subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.

We consolidate all entities for which we have controlling financial
interest as measured by a majority of the voting interest. For entities in
which the controlling financial interest is not clearly indicated by ownership
of a majority of the voting interest, we would consolidate those entities that
we control by agreement.

We currently own 100% of all of our consolidated subsidiaries and do not
have any unconsolidated investments other than an investment in the securities
of a non-publicly traded company. This investment represents approximately
5.8% of the total equity outstanding for this particular company. Because we
do not control this company contractually nor exert significant influence over
its operating and financial policies, we account for this investment under the
cost method of accounting.

Interim Financial Data

The accompanying consolidated condensed financial statements should be
read in conjunction with our 2002 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.

Reclassifications

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

3. New Accounting Standards

In April 2002, FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections (SFAS 145). SFAS 145 rescinds Statement No. 4 Reporting Gains and
Losses from Extinguishment of Debt. Under SFAS 145, any gain or loss on
extinguishment of debt that was classified as an extraordinary item in prior
periods presented that does not meet certain defined criteria must be
reclassified to income before extraordinary items. The provisions of SFAS 145
are effective for 2003. Our adoption of this statement in 2003 did not have an
impact on our consolidated financial statements.

In June 2002, FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities (SFAS 146). SFAS 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities.
SFAS 146 requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred based on the
present value of the expected contingent payment under the guarantee. The
provisions of SFAS 146 are effective for 2003. Our adoption of this statement
in 2003 did not have an impact on our consolidated financial statements.

In January 2003, FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46). FIN 46 clarifies the application of
Accounting Research Bulletin No. 51, Consolidated Financial Statements and
provides guidance on the identification of entities for which control is
achieved through means other than through voting rights and how to determine
when and which business enterprise should consolidate such an entity. This new
model for consolidation applies to an entity which either (1) the equity
investors (if any) do not have a controlling financial interest or (2) the
equity investment at risk is insufficient to finance that entitys activities
without receiving additional subordinated financial support from other parties.
Our adoption of this statement in 2003 did not have an impact on our
consolidated financial statements.

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In November 2002, FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN 45). FIN 45 requires guarantees and
indemnification agreements meeting the characteristics described in FIN 45 to
be initially recorded as a liability at fair value. FIN 45 also requires a
guarantor to make new disclosures for guarantees, even if the likelihood of the
guarantor having to make payment under the guarantee is remote. The disclosure
requirements within FIN 45 are effective for 2002 and its adoption is required
for 2003 on a prospective basis to guarantees issued or modified after December
31, 2002. We adopted the disclosure provisions of FIN 45 in 2003. Our adoption
of this statement did not have an impact on our consolidated financial
statements.

4. Property Dispositions

On March 11, 2003, we sold an approximate 140,000 square foot office
property located in West Hollywood, California for an approximate gross sales
price of approximately $32.5 million.

As of March 31, 2003, properties held for disposition consisted of five
properties representing approximately 375,000 square feet. See footnote 10 for
additional discussion on property dispositions.

5. Outstanding Indebtedness

A summary of our outstanding indebtedness as of March 31, 2003 and
December 31, 2002 is as follows:

|                             |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  |  | 
|---------------------------- | ---------- | ----------- | -------------- | --------- | ------------ | ----------- | -------------- | -------------- | ---------------- | ------------- | ------------- | -------- |  | ------------------------- | --------- | -------- | -- |  | ---- |  | ----- |  |  |  | 
|                             |            |             |                |           |              |             |                |                |                  |               | Stated Annual |          |  |                           |           |          |    |  |      |  |       |  | 
|                             |            |             | March 31,      |           |              |             |                |                | Interest Rate at |               |               |          |  |                           | Number of |          |    |  |     
|                             |            |             | 2003           |           | December 31, |             | March 31, 2003 |                | Rate             |               | Properties    |          |  |                           |          
|Type of Debt                 |            | (unaudited) |                | 2002      |              | (unaudited) |                | Fixed/Floating |                  | Securing Loan |               | Maturity
|                             |            |             |                |           |              |             |                |                |                  |               |               |         
|                             |            |             | (in thousands) |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |     
|Mortgage Loans Payable:      |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|Fixed Rate                   |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|Mortgage Financing I(1)      |            | $           | 175,000        |           |              | $           | 175,000        |                |                  |               | 7.52          | %        |  | Fixed                     |           |          | 18 |  |      |  | 6/04  | 
|Mortgage Financing III(2)    |            |             | 136,100        |           |              |             | 136,100        |                |                  |               | 6.74          | %        |  | Fixed                     |           |          | 22 |  |      |  | 4/08  | 
|Mortgage Financing IV(2)     |            |             | 111,200        |           |              |             | 111,200        |                |                  |               | 6.61          | %        |  | Fixed                     |           |          | 12 |  |      |  | 4/08  | 
|Mortgage Financing V(3)      |            |             | 107,578        |           |              |             | 108,153        |                |                  |               | 6.94          | %        |  | Fixed                     |           |          | 12 |  |      |  | 4/09  | 
|Mortgage Financing VI(3)     |            |             | 21,769         |           |              |             | 21,816         |                |                  |               | 7.54          | %        |  | Fixed                     |           |          | 3  |  |      |  | 4/09  | 
|Activity Business Center(3)  |            |             | 7,539          |           |              |             | 7,580          |                |                  |               | 8.85          | %        |  | Fixed                     |           |          | 1  |  |      |  | 5/06  | 
|145 South Fairfax(3)         |            |             | 3,940          |           |              |             | 3,952          |                |                  |               | 8.93          | %        |  | Fixed                     |           |          | 1  |  |      |  | 1/27  | 
|Marin Corporate Center(3)    |            |             | 2,820          |           |              |             | 2,850          |                |                  |               | 9.00          | %        |  | Fixed                     |           |          | 1  |  |      |  | 7/15  | 
|Conejo Business Center(3)    |            |             | 2,765          |           |              |             | 2,795          |                |                  |               | 8.75          | %        |  | Fixed                     |           | (Note 4) |    |  | 7/15 | 
|Conejo Business Center(3)    |            |             | 1,194          |           |              |             | 1,208          |                |                  |               | 7.88          | %        |  | Fixed                     |           | (Note 4) |    |  | 7/15 | 
|                             |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|                             |            |             | 569,905        |           |              |             | 570,654        |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|Unsecured Lines of Credit:   |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|Floating Rate                |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|Wells Fargo-$310 mm(1)       |            |             | 195,587        |           |              |             | 208,587        |                |                  |               | 2.77          | %        |  | LIBOR + 1.00% (Notes 5,6) |           |          |   |  |      |  | 4/06  | 
|City National Bank-$10 mm(1) |            |             |               |           |              |             |               |                |                  |               |              |          |  | Prime Rate  0.875%       |           |          |   |  |      |  | 8/03  | 
|                             |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|                             |            |             | 195,587        |           |              |             | 208,587        |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|Unsecured Term Loan:         |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|Floating Rate                |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|Wells Fargo-$125 mm(1),(7)   |            |             | 125,000        |           |              |             | 125,000        |                |                  |               | 3.64          | %        |  | Fixed (Note 8)            |           |          |   |  |      |  | 6/04  | 
|Unsecured Senior Notes:      |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|Fixed Rate                   |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|2005 Notes(9)                |            |             | 199,795        |           |              |             | 199,769        |                |                  |               | 8.88          | %        |  | Fixed                     |           |          |   |  |      |  | 3/05  | 
|2007 Notes(9)                |            |             | 149,284        |           |              |             | 149,245        |                |                  |               | 7.00          | %        |  | Fixed                     |           |          |   |  |      |  | 11/07 | 
|2010 Notes(9)                |            |             | 49,714         |           |              |             | 49,704         |                |                  |               | 9.15          | %        |  | Fixed                     |           |          |   |  |      |  | 3/10  | 
|2010 Notes(9)                |            |             | 99,366         |           |              |             | 99,345         |                |                  |               | 8.50          | %        |  | Fixed                     |           |          |   |  |      |  | 11/10 | 
|                             |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|                             |            |             | 498,159        |           |              |             | 498,063        |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|                             |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 
|                             | Total Debt |             | $              | 1,388,651 |              |             | $              | 1,402,304      |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  |  | 
|                             |            |             |                |           |              |             |                |                |                  |               |               |          |  |                           |           |          |    |  |      |  |       |  |  | 



---

|(1) |  | Requires monthly payments of interest only, with outstanding principal
balance due upon maturity.                                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Requires monthly payments of interest only for five years and monthly
payments of principal and interest thereafter.                                                                    
|   
|   
|   
|   
|(3) |  | Requires monthly payments of principal and interest.                                                                                                                                    
|   
|   
|   
|   
|(4) |  | Both mortgage loans are secured by the Conejo Business Center property.                                                                                                                 
|   
|   
|   
|   
|(5) |  | This line of credit also has an annual 20 basis points facility fee on
the entire $310 million commitment amount.                                                                       
|   
|   
|   
|   
|(6) |  | In 2002, we entered into interest rate swap agreements that fixed the
interest rate on $50 million of the outstanding balance on this line of
credit at 4.06% through April 2006.       
|   
|   
|   
|   
|(7) |  | This loan has a two-year extension option.                                                                                                                                              
|   
|   
|   
|   
|(8) |  | In 2002, we entered into interest rate swap agreements that fixed the
interest rate on the entire balance of this loan at 3.64% in 2003, 4.18%
in 2004, 4.75% in 2005 and 4.90% in 2006.
|   
|   
|   
|   
|(9) |  | Requires semi-annual interest payments only, with principal balance due
upon maturity.                                                                                                  

6. Interest Rate Swap Agreements

We have interest rate swap agreements to effectively convert floating rate
debt into fixed rate debt. Net amounts received or paid under these agreements
are recognized as an adjustment to interest expense when such amounts are
incurred or earned. Our objective in using interest rate swap agreements is to
limit our exposure to interest rate movements. During 2002, such agreements
were used to fix the floating interest rate associated with $50 million of the
Wells Fargo unsecured line of credit and the entire $125 million balance of the
unsecured term loan.

Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities (SFAS 133), as amended and interpreted,
establishes accounting and reporting standards for derivative instruments and
for hedging activities. The accounting for changes in the fair value of
derivatives depends on the intended use of the derivative and the resulting
designation. Derivatives used to hedge the exposure to changes in the fair
value of an asset, liability, or firm commitment attributable to a particular

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risk, are considered fair value hedges. Derivatives used to hedge the exposure
to variability in expected future cash flows, or other types of forecasted
transactions, are considered cash flow hedges.

For derivatives designated as fair value hedges, changes in the fair value
of the derivative and the hedged item related to the hedged risk are recognized
in earnings. For derivatives designated as cash flow hedges, the effective
portion of changes in the fair value of the derivative is initially reported in
other comprehensive income (loss), outside of earnings and subsequently
recognized to earnings when the hedged transaction affects earnings.

Under SFAS 133 our interest rate swap agreements are classified as cash
flow hedges with their fair value as of March 31, 2003 of approximately $3.9
million reported in accumulated other comprehensive loss on our balance sheet.
The estimated fair value of these interest rate swap agreements are dependent
on changes in market interest rates and other market factors that affect the
value of such agreements. Consequently, the estimated current fair value may
significantly change during the term of the agreements. Any estimated gain or
loss from these agreements will be amortized into earnings as we recognize the
interest expense for the underlying floating-rate loans at the fixed interest
rate provided under our agreements. If the underlying floating rate loans were
to be repaid prior to maturity, we would recognize into interest expense any
unamortized gain or loss at the time of such early repayment.

As of March 31, 2003, we did not have any derivatives that could be
designated as fair value hedges.

7. Stockholders Equity and Minority Interests

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

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

On January 28, 2003, we issued a total of 81,500 restricted stock awards
to several key executive officers. Holders of these shares of restricted stock
have full voting rights and will receive any dividends paid but are prohibited
from selling or transferring unvested shares. Of the 81,500 restricted shares
awarded, 48,000 shares vest equally over three years and 33,500 shares vest
after three years (cliff vesting). We recorded a deferred compensation charge
of approximately $1.7 million based on the market value of these shares on the
date of award and will amortize the compensation charge to expense on a
straight-line basis over the respective vesting periods.

On March 11, 2003, we declared a quarterly dividend of $0.505 per share to
stockholders of record on March 31, 2003.

8. Revenue from Rental Operations and Property Expenses

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

|                                |                          |   |                 |        |      |   |        |        | 
|------------------------------- | ------------------------ | - | --------------- | ------ | ---- | - | ------ | ------ | 
|                                |                          |   | Three Months   
|                                |                          |   | Ended March 31,
|                                |                          |   |                
|                                |                          |   | 2003            |        | 2002
|                                |                          |   |                 |        |     
|                                |                          |   | (unaudited)    
|Revenue from Rental Operations: |                          |   |                 |        |      |   |        |       
|                                | Scheduled cash rents     |   | $               | 90,226 |      |   | $      | 85,042 | 
|                                | Straight-line rents      |   |                 | 611    |      |   |        | 1,595  | 
|                                | Tenant reimbursements    |   |                 | 7,035  |      |   |        | 6,885  | 
|                                | Parking, net of expenses |   |                 | 5,119  |      |   |        | 4,964  | 
|                                | Other rental operations  |   |                 | 1,285  |      |   |        | 1,215  | 
|                                |                          |   |                 |        |      |   |        |       
|                                |                          |   | 104,276         |        |      |   | 99,701 |       
|                                |                          |   |                 |        |      |   |        |       
|Property Expenses:              |                          |   |                 |        |      |   |        |       
|                                | Repairs and maintenance  |   |                 | 10,421 |      |   |        | 9,128  | 
|                                | Utilities                |   |                 | 8,033  |      |   |        | 7,575  | 
|                                | Real estate taxes        |   |                 | 7,508  |      |   |        | 7,201  | 
|                                | Insurance                |   |                 | 2,125  |      |   |        | 1,614  | 
|                                | Ground rent              |   |                 | 42     |      |   |        | 68     | 
|                                | Administrative           |   |                 | 4,138  |      |   |        | 3,697  | 
|                                |                          |   |                 |        |      |   |        |       
|                                |                          |   | 32,267          |        |      |   | 29,283 |       
|                                |                          |   |                 |        |      |   |        |       
|                                |                          | $ | 72,009          |        |      | $ | 70,418 |       
|                                |                          |   |                 |        |      |   |        |       

9. Stock Option Plan

Beginning on January 1, 2003, we adopted the provisions of SFAS No. 148,
Accounting for Stock-Based Compensation under which we began expensing the
costs of new stock options granted to employees in 2003. We used the
Black-Scholes option valuation model to estimate the fair value of the stock
options granted in 2003. During the three months ended March 31, 2003, we
expensed approximately $8,000 of stock based employee compensation costs.

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The following table reflects pro forma net income and earnings per share
had we elected to expense all options granted prior to 2003 assuming the fair
value method and using the Black-Scholes option valuation model (in thousands,
except per share amounts):

|                                                                                                     |                     |   |                              |      |      |   |        |      | 
|---------------------------------------------------------------------------------------------------- | ------------------- | - | ---------------------------- | ---- | ---- | - | ------ | ---- | 
|                                                                                                     |                     |   | Three Months Ended March 31,
|                                                                                                     |                     |   |                             
|                                                                                                     |                     |   | 2003                         |      | 2002
|                                                                                                     |                     |   |                              |      |     
|Net income available to common stockholders, as reported                                             |                     | $ | 15,438                       |      |      | $ | 21,353 |     
|Stock based employee compensation costs for options
granted prior to 2003 assuming fair value method |                     |   | 264                          |      |      |   | 287    |     
|                                                                                                     |                     |   |                              |      |      |   |        |     
|Net income available to common stockholders, as adjusted                                             |                     | $ | 15,174                       |      |      | $ | 21,066 |     
|                                                                                                     |                     |   |                              |      |      |   |        |     
|Earnings per share:                                                                                  |                     |   |                              |      |      |   |        |     
|                                                                                                     | Basic as reported   |   | $                            | 0.24 |      |   | $      | 0.33 | 
|                                                                                                     |                     |   |                              |      |      |   |        |     
|                                                                                                     | Basic as adjusted   |   | $                            | 0.24 |      |   | $      | 0.33 | 
|                                                                                                     |                     |   |                              |      |      |   |        |     
|                                                                                                     | Diluted as reported |   | $                            | 0.24 |      |   | $      | 0.33 | 
|                                                                                                     |                     |   |                              |      |      |   |        |     
|                                                                                                     | Diluted as adjusted |   | $                            | 0.24 |      |   | $      | 0.33 | 
|                                                                                                     |                     |   |                              |      |      |   |        |     

10. Subsequent Events

On April 11, 2003, we sold four properties totaling approximately 343,000
square feet located in Riverside and San Bernardino counties for approximately
$43.4 million. The net proceeds from this disposition were used to
reduce the outstanding balance on our Wells Fargo unsecured line of credit.

9



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

Overview

The following discussion relates to our unaudited consolidated financial
statements included herein, which should be read in conjunction with the
financial statements and related notes thereto included elsewhere in this Form
10-Q and in our 2002 Annual Report on Form 10-K.

We are a self-administered and self-managed real estate investment trust
that owns, manages, leases, develops, renovates and acquires commercial
properties located in Southern California. We are managed by 8 senior executive
officers who have experience in the real estate industry ranging from 11 to 33
years and who collectively have an average of 19 years experience. We perform
all property and development management, accounting, finance and acquisition
activities and a majority of our leasing transactions with our staff of
approximately 300 employees.

As of March 31, 2003, we were Southern Californias largest publicly
traded office landlord as measured by total net rentable square feet owned. As
of that date, our portfolio was comprised of 136 primarily suburban office
properties, consisting of 222 buildings with approximately 19.3 million net
rentable square feet, including one development property with approximately
283,000 net rentable square feet under lease-up. As of March 31, 2003, our
properties were 89.7% occupied.

Business Strategy

Our primary business strategy is to actively manage our portfolio to seek
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, renovate or acquire new
properties that add value and fit strategically into our portfolio. We may
also sell existing properties and redeploy the proceeds into investments we
believe will generate higher long-term value.

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

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

Current Economic Climate

Our short and long-term liquidity, ability to refinance existing
indebtedness, ability to issue long-term debt and equity securities at
favorable rates and our dividend policy are significantly impacted by the
operating results of our properties, all of which are located in Southern
California. Our ability to lease available space and increase rates when
leases expire is largely dependent on the demand for office space in the
markets where our properties are located. We believe current uncertainty over
the national and Southern California economic environment is exerting downward
pressures on the demand for Southern California commercial office space. We are
experiencing continued downward pressures due to several factors as follows:



| |  |  | Job growth in Southern California, which we believe to be a
leading indicator of office demand in the region, was negative in
2002 as well as in the first quarter of 2003 and is largely dependent
on improved economic activity;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Occupancy and rental rates have decreased in recent months, are
expected to decrease further due to the state of the local economy
and competition from other office landlords;                                                   
|
| |  |  | Larger tenants are taking more time to make leasing decisions, reflecting the uncertainty in the economy;                                                                                                                         
|
| |  |  | Some tenants are under-utilizing their existing space and can therefore expand internally before they need new space;                                                                                                             
|
| |  |  | Sublease space is impacting vacancy and rental rates in some submarkets; and                                                                                                                                                      
|
| |  |  | Over-building has increased vacancy rates in some submarkets.                                                                                                                                                                     

These factors have contributed to a decrease in the occupancy of our
portfolio from 90.1% as of December 31, 2002 to 89.7% as of March 31, 2003.

According to published reports, overall market rental rates in Southern
California declined 1 to 2% during the three months ended March 31, 2003.
Given the current trends, including the expected continued occupancy pressures
and more aggressive pricing for sublease space, we expect market rates will
decline by an additional 3 to 4% during the remainder of 2003. Concessions
also rose during the three months ended March 31, 2003. As occupancy pressures
continue, we expect concessions in either free rent or higher tenant
improvement allowances to rise.

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The timing and extent of future changes in the national and local economy
and their effects on our properties and results of operations are difficult to
accurately predict. It is possible, however, that these national and regional
issues may more directly affect us and our operating results in the future,
making it more difficult for us to lease and renew available space, to increase
or maintain rental rates as leases expire and to collect amounts due from our
tenants. For additional information, see Risk Factors  Further declines in
the economic activity of Southern California will adversely affect our
operating results,  The financial condition and solvency of our tenants may
reduce our cash flow, and  Rising energy costs and power outages in
California may have an adverse effect on our operations and revenue, in our
2002 Annual Report on Form 10-K.

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RESULTS OF OPERATIONS

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

Comparison of the three months ended March 31, 2003 to the three months ended March 31, 2002
(in thousands, except number of properties and percentages):

|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |   |      |    |    | 
|------------------------- | ------------------------------- | ---------------------------------------------------------- | ------------------------------------ | ------------------------------------ | ------ | ------------------ | ------- | ---- | ------ | ------ | ------ | ------- | ------ | - | ----- | - | ---- | -- | -- | 
|                          |                                 |                                                            |                                      |                                      |        | Three Months Ended |         |      |        |        |        |         |        |  
|                          |                                 |                                                            |                                      |                                      |        | March 31,          |         |      |        |        |        |         |        |  
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        | Percent
|                          |                                 |                                                            |                                      |                                      |        | 2003               |         | 2002 |        | Change |        | Change 
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |        
|                          |                                 |                                                            |                                      |                                      |        | (unaudited)        |         |      |        |        |        |         |        |  
|Total Portfolio:          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          | Revenue from rental operations: |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |   |     
|                          |                                 | Scheduled cash rents                                       |                                      | $                                    | 90,226 |                    |         | $    | 85,042 |        |        | $       | 5,184  |   |       |   | 6    | % 
|                          |                                 | Straight-line rents                                        |                                      |                                      | 611    |                    |         |      | 1,595  |        |        |         | (984   | ) |       |   | (62  | ) 
|                          |                                 | Tenant reimbursements                                      |                                      |                                      | 7,035  |                    |         |      | 6,885  |        |        |         | 150    |   |       |   | 2    |   
|                          |                                 | Parking, net of expense                                    |                                      |                                      | 5,119  |                    |         |      | 4,964  |        |        |         | 155    |   |       |   | 3    |   
|                          |                                 | Other rental operations                                    |                                      |                                      | 1,285  |                    |         |      | 1,215  |        |        |         | 70     |   |       |   | 6    |   
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 |                                                            |                                      | Total revenue from rental operations |        |                    | 104,276 |      |        |        | 99,701 |         |        |   | 4,575 |   |      |    | 5  | 
|                          | Property expenses:              |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |   |     
|                          |                                 | Repairs and maintenance                                    |                                      | $                                    | 10,421 |                    |         | $    | 9,128  |        |        | $       | 1,293  |   |       |   | 14   | % 
|                          |                                 | Utilities                                                  |                                      |                                      | 8,033  |                    |         |      | 7,575  |        |        |         | 458    |   |       |   | 6    |   
|                          |                                 | Real estate taxes                                          |                                      |                                      | 7,508  |                    |         |      | 7,201  |        |        |         | 307    |   |       |   | 4    |   
|                          |                                 | Insurance                                                  |                                      |                                      | 2,125  |                    |         |      | 1,614  |        |        |         | 511    |   |       |   | 32   |   
|                          |                                 | Ground rent                                                |                                      |                                      | 42     |                    |         |      | 68     |        |        |         | (26    | ) |       |   | (38  | ) 
|                          |                                 | Administrative                                             |                                      |                                      | 4,138  |                    |         |      | 3,697  |        |        |         | 441    |   |       |   | 12   |   
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 |                                                            |                                      | Total property expenses              |        |                    | 32,267  |      |        |        | 29,283 |         |        |   | 2,984 |   |      |    | 10 | 
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 |                                                            |                                      | Property operating results (1)       |        |                    | 72,009  |      |        |        | 70,418 |         |        |   | 1,591 |   |      |    | 2  | 
|                          |                                 | General and administrative                                 |                                      |                                      | 3,652  |                    |         |      | 2,960  |        |        |         | 692    |   |       |   | 23   |   
|                          |                                 | Interest                                                   |                                      |                                      | 23,035 |                    |         |      | 21,397 |        |        |         | 1,638  |   |       |   | 8    |   
|                          |                                 | Depreciation and amortization                              |                                      |                                      | 28,961 |                    |         |      | 25,580 |        |        |         | 3,381  |   |       |   | 13   |   
|                          |                                 | Interest and other income                                  |                                      |                                      | (132   | )                  |         |      | (540   | )      |        |         | (408   | ) |       |   | (76  | ) 
|                          |                                 | Gain on sale of operating properties                       |                                      |                                      |       |                    |         |      | (1,192 | )      |        |         | (1,192 | ) |       |   | (100 | ) 
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 | Income from continuing operations before minority
interest |                                      | $                                    | 16,493 |                    |         | $    | 22,213 |        |        | $       | (5,720 | ) |       |   | (26  | )%
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 | Discontinued operations, net of minority interest          |                                      | $                                    | 1,070  |                    |         | $    | 795    |        |        | $       | 275    |   |       |   | 35   | % 
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 | Loss on sale of discontinued properties                    |                                      | $                                    | (639   | )                  |         | $    |       |        |        | $       | (639   | ) |       |   | 100  | % 
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|Number of Properties:     |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 | Disposed of during period                                  |                                      |                                      | (1     | )                  |         |      | (1     | )      |        |         |        |   |       |   |      |   
|                          |                                 | In service at end of period                                |                                      |                                      | 135    |                    |         |      | 132    |        |        |         |        |   |       |   |      |   
|Net Rentable Square Feet: |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 | Disposed of during period                                  |                                      |                                      | (140   | )                  |         |      | (64    | )      |        |         |        |   |       |   |      |   
|                          |                                 | In service at end of period                                |                                      |                                      | 18,992 |                    |         |      | 18,183 |        |        |         |        |   |       |   |      |   
|Same Store Portfolio (2): |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 | Revenue from rental operations                             |                                      | $                                    | 98,770 |                    |         | $    | 96,968 |        |        | $       | 1,802  |   |       |   | 2    | % 
|                          |                                 | Property expenses                                          |                                      |                                      | 30,511 |                    |         |      | 29,205 |        |        |         | 1,306  |   |       |   | 4    | % 
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 | $                                                          | 68,259                               |                                      |        | $                  | 67,763  |      |        | $      | 496    |         |        |   | 1     | %
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 |                                                            | Straight-line rents                  |                                      | $      | 295                |         |      | $      | 1,392  |        |         |        |   |       |   |      |    |   
|                          |                                 |                                                            |                                      |                                      |        |                    |         |      |        |        |        |         |        |   |       |  
|                          |                                 |                                                            | Number of non-development properties |                                      |        | 129                |         |      |        | 129    |        |         |        |   |       |   |      |    |   
|                          |                                 |                                                            | Average occupancy                    |                                      |        | 89.9               | %       |      |        | 91.7   | %      |         |        |   |       |   |      |    |   
|                          |                                 |                                                            | Net rentable square feet             |                                      |        | 17,902             |         |      |        | 17,902 |        |         |        |   |       |   |      |    |   



|(1) |  | Property Operating Results is commonly used by investors to
evaluate the performance of REITs, to determine trends in
earnings and to compute the fair value of properties as it is
not affected by (1) the cost of funds of the property owner or
(2) the impact of depreciation and amortization expenses as well
as gains or losses from the sale of operating real estate assets
that are included in net income computed in accordance with
Generally Accepted Accounting Principles, or GAAP. The first
factor is commonly eliminated from net income because it is
specific to the particular financing capabilities and
constraints of the owner. The second factor is commonly
eliminated because it may not accurately represent the actual
change in value in real estate properties that results from use
or changes in market conditions. We believe that eliminating
these costs from net income gives investors an additional
measure of operating performance that, when used as an adjunct
to net income computed in accordance with GAAP, can be a useful
measure of our operating results.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12



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##### Table of Contents





| |  | Property Operating Results captures trends in occupancy rates,
rental rates and operating costs. However, Property Operating
Results excludes general and administrative costs, interest
expense, interest income, depreciation and amortization expense and
gains or losses from the sale of properties, changes in value in
our real estate properties that result from use or permanent
impairment to carrying costs as stipulated by GAAP, the level of
capital expenditures and leasing costs necessary to maintain the
operating performance of our properties, all of which are
significant economic costs. Therefore, Property Operating Results
may fail to capture significant trends which limits its usefulness.        
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Property Operating Results is a non-GAAP measure of performance.
Property Operating Results is not a substitute for net income as
computed in accordance with GAAP. It excludes significant expense
components such as depreciation and amortization expense and
financing costs. This measure should be analyzed in conjunction
with net income and cash flow from operating activities as computed
in accordance with GAAP. Other companies may use different methods
for calculating Property Operating Results or similarly entitled
measures and, accordingly, our Property Operating Results may not
be comparable to similarly entitled measures reported by other
companies that do not define the measure exactly as we do.
|
| |  | The following is a reconciliation of income from continuing
operations before gain on sale of properties and minority interest
to Property Operating Results:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                                                                          |                                    |   |                              |        |      |   |        |        |  
|----------------------------------------------------------------------------------------- | ---------------------------------- | - | ---------------------------- | ------ | ---- | - | ------ | ------ | -
|                                                                                          |                                    |   | Three Months Ended March 31,
|                                                                                          |                                    |   |                             
|                                                                                          |                                    |   | 2003                         |        | 2002
|                                                                                          |                                    |   |                              |        |     
|                                                                                          |                                    |   | ($000's)                    
|Income from continuing operations before gain
on sale of properties and minority interest |                                    | $ | 16,493                       |        |      | $ | 21,021 |       
|Add:                                                                                      |                                    |   |                              |        |      |   |        |       
|                                                                                          | General and administrative expense |   |                              | 3,652  |      |   |        | 2,960  |  
|                                                                                          | Interest expense                   |   |                              | 23,035 |      |   |        | 21,397 |  
|                                                                                          | Depreciation and amortization      |   |                              | 28,961 |      |   |        | 25,580 |  
|Less:                                                                                     |                                    |   |                              |        |      |   |        |       
|                                                                                          | Interest and other income          |   |                              | (132   | )    |   |        | (540   | )
|                                                                                          |                                    |   |                              |        |      |   |        |       
|Property Operating Results                                                                |                                    | $ | 72,009                       |        |      | $ | 70,418 |       
|                                                                                          |                                    |   |                              |        |      |   |        |       



|(2) |  | Consists of non-development properties owned for the entirety
of the periods presented.
|--- |  | ---------------------------------------------------------------------------------------

VARIANCES FOR RESULTS OF OPERATIONS

Our results of operations for the three months ended March 31, 2003
compared to the same period in 2002 were primarily affected by our
acquisitions, dispositions and development activities since January 1, 2002. In
addition, our Property Operating Results from period to period were affected by
our implementation of SFAS No. 144 Accounting for the Impairment or Disposal
of Long-Lived Assets (SFAS 144), which resulted in the classification of the
operating results of some of the properties sold since January 1, 2002 into
discontinued operations.

As a result of these changes within our portfolio of properties since the
beginning of 2002, we do not believe the Property Operating Results presented
above are comparable from period to period. Therefore, above we also present
the results of operations for our same store portfolio.

Revenue from Rental Operations

The increase in revenue from rental operations for the total portfolio was
primarily due to the 800,000 square feet in acquisitions we made in August of
2002, consisting of four properties in San Diego County and one property in Los
Angeles County and the placement in service of the 6080 Center Drive
development property at the Howard Hughes Center in the fourth quarter of 2002.
The revenue from rental operations for the acquisitions and development were
partially offset by a change in our method of estimating tenant reimbursements
in 2003 to adjust for quarterly seasonality variations associated with
recoverable operating expenses and by the sale of a 64,000 square foot property
in March 2002, a 61,000 square foot property in April 2002 and an 80,000 square
foot property in May 2002, all of which were located in Los Angeles County and
which during the transition into SFAS 144 were not classified as discontinued
operations.

The increase in revenue from rental operations for the same store
portfolio was primarily due to an approximate $1.4 million increase in cash
rents and a $1.4 million in tenant reimbursements, which were partially offset
by a $1.1 million decrease in straight-line rents. The increase in cash rents
was primarily related to imbedded rent bumps in existing leases that were
partially offset by the 1.8% decrease in average occupancy for these
properties. The increase in tenant reimbursements was primarily due to
increases in operating expenses discussed below and the timing of prior year
reimbursement reconciliations. Straight-line rents decreased primarily to the
decline in occupancy and the turning over of older leases in the same store
portfolio.

Property Expenses

The increase in property expenses for the total portfolio was primarily
due to the five properties acquired, the three properties sold that were not
classified as discontinued operations and the one property placed in service
subsequent to January 1, 2002 described above.

The increase in property expenses for the same store portfolio was
primarily due to an approximate $646,000 increase in repairs and maintenance, a
$433,000 increase in insurance costs and a $199,000 increase in utility
expense. Repairs and maintenance costs increased primarily due to higher
contractual costs for janitorial and other services. Insurance costs increased
due to increases in industry-wide rates and premiums related to a $100 million
terrorism insurance policy entered into in the second quarter of 2002 while
utility expense increased primarily due to additional usage.

13



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##### Table of Contents



General and Administrative

General and administrative expenses as a percentage of total revenues were
approximately 3.5% for the three months ended March 31, 2003, as compared to
approximately 2.9% for the same period in 2002. The $692,000 increase in
general and administrative expenses was primarily related to higher external
accounting, professional fees as well as higher personnel costs as a result of
annual merit increases in 2003.

Interest Expense

Interest expense increased approximately $1.6 million, or 8%, during the
three months ended March 31, 2003, as compared to the same period in 2002. This
increase was primarily due to increases in borrowings in 2002 for property
acquisitions and lower interest capitalized in 2003. Capitalized interest was
lower in 2003 as we ceased capitalizing interest on our 6080 Center Drive
development property in May 2002. The increases in interest expense were
partially offset by lower effective interest rates in 2003.

Depreciation and Amortization

Depreciation and amortization expense increased by approximately $3.4
million or 13% during the three months ended March 31, 2003, as compared to the
same period in 2002, primarily due to depreciation related to five properties
totaling $135.0 million acquired in August 2002, the placement in service of
our 6080 Center Drive development property in the fourth quarter of 2002 and
depreciation related to capital expenditures, tenant improvements and leasing
commissions placed in service subsequent to the first quarter of 2002.

Interest and Other Income

Interest and other income decreased by approximately $408,000 for the
three months ended March 31, 2003 as compared to the same period in 2002,
primarily due to the repayment by the borrower of a $13.7 million mortgage note
receivable in the fourth quarter of 2002.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Cash provided by operating activities increased by approximately $1.0
million to $49.3 million for the three months ended March 31, 2003, as compared
to $48.3 million for the same period in 2002. This increase was primarily due
to increased cash flows from five properties acquired in the third quarter of
2002 and cash flows for a development property placed in service in the fourth
quarter of 2002, all of which was partially offset by the loss of operating
cash flows from one property sold in the first quarter of 2002, two properties
sold in the second quarter of 2002 and one property sold in the first quarter
of 2003.

Cash provided by investing activities increased by approximately $38.1
million to an inflow of $12.6 million for the three months ended March 31,
2003, as compared to an outflow of $25.5 million for the same period in 2002.
This increase was primarily from the proceeds of one property sold in the first
quarter of 2003 and from lower development costs in 2003.

Cash used in financing activities decreased by approximately $2.3 million
to $50.5 million for the three months ended March 31, 2003, as compared to
$52.8 million for the same period in 2002. This decrease was primarily due to
higher net repayments in 2002 on our unsecured lines of credit.

Available Borrowings, Cash Balance and Capital Resources

Our operating partnership has an unsecured line of credit with a total
commitment of $10 million from City National Bank. This line of credit accrues
interest at the City National Bank Prime Rate less 0.875% and is scheduled to
mature on August 1, 2003. Proceeds from this line of credit are used, among
other things, to provide funds for tenant improvements and capital expenditures
and provide for working capital and other corporate purposes. As of March 31,
2003, there was no outstanding balance on this line of credit and $10 million
was available for additional borrowings.

Our operating partnership also has an unsecured line of credit with a
group of banks led by Wells Fargo. This line of credit provides for borrowings
up to $310 million with an option to increase the amount to $350 million and
bears interest at a rate ranging between LIBOR + 0.80% and LIBOR + 1.25%
(including an annual facility fee ranging from 0.15% to 0.40% based on the
aggregate amount of the line of credit) depending on the operating
partnerships unsecured debt rating. This line of credit matures in April 2006.
In addition, as long as the operating partnership maintains an unsecured debt
rating of BBB-/Baa3 or better, the agreement contains a competitive bid option,
whereby the lenders may bid on the interest rate to be charged for up to $150
million of the unsecured line of credit. The operating partnership also has
the option to convert the interest rate on this line of credit to the higher of
Wells Fargos prime rate or the Federal Funds rate plus 0.5%. As of March 31,
2003, $195.6 million was outstanding on this line of credit and $114.4 million
was available for additional borrowings.

As of March 31, 2003, we had $39.0 million in cash and cash equivalents,
including $23.6 million in restricted cash. Restricted cash consisted of $13.7
million in interest bearing cash deposits required by five of our mortgage
loans payable and $9.9 million in cash impound accounts for real estate taxes
and insurance as required by several of our mortgage loans payable.

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

14



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##### Table of Contents



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

Capital Recycling Program

On March 11, 2003, we sold an approximate 140,000 square foot office
property located in West Hollywood, California for approximately $32.5 million
in gross proceeds. The net proceeds from this disposition was used to reduce
the outstanding balance on the Wells Fargo unsecured line of credit.

On April 11, 2003, we sold four properties totaling approximately 343,000
square feet located in Riverside and San Bernardino counties for approximately
$43.4 million in gross proceeds. The net proceeds from this disposition were
used to reduce the outstanding balance on our Wells Fargo unsecured line of
credit.

Debt Summary

Following is a summary of scheduled principal payments for our total debt
outstanding as of March 31, 2003 (in thousands):

|           |       |        |         |           | 
|---------- | ----- | ------ | ------- | --------- | 
|Year       |       | Amount
|           |       |       
|2003       |       | $      | 4,807   |          
|2004       |       |        | 307,062 | (1)      
|2005       |       |        | 207,678 |          
|2006       |       |        | 210,650 | (2)      
|2007       |       |        | 158,681 |          
|2008       |       |        | 230,305 |          
|2009       |       |        | 111,980 |          
|2010       |       |        | 150,565 |          
|2011       |       |        | 710     |          
|2012       |       |        | 768     |          
|Thereafter |       |        | 5,445   |          
|           |       |        |         |          
|           | Total |        | $       | 1,388,651 | 
|           |       |        |         |          



---

|(1) |  | Includes $125 million outstanding on the Wells Fargo term loan which has a two-year extension option.
|--- |  | -----------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Consists primarily of $195.6 million outstanding on the Wells Fargo line of credit.                  

Following is certain other information related to our outstanding
indebtedness as of March 31, 2003 (in thousands, except percentage data):

Unsecured and Secured Debt:

|               |  |         |           |         |  |                   |     |                     |  |          |      |                  |  |  |     | 
|-------------- |  | ------- | --------- | ------- |  | ----------------- | --- | ------------------- |  | -------- | ---- | ---------------- |  |  | --- | 
|               |  |         |           |         |  |                   |     |                     |  | Weighted |      |                  |  | 
|               |  |         |           |         |  |                   |     |                     |  | Average  |      | Weighted Average
|               |  | Balance |           | Percent |  | Interest Rate (1) |     | Maturity (in years)
|               |  |         |           |         |  |                   |     |                    
|Unsecured Debt |  | $       | 818,746   |         |  |                   | 59  | %                   |  |          | 6.62 | %                |  |  | 3.5 | 
|Secured Debt   |  |         | 569,905   |         |  |                   | 41  | %                   |  |          | 7.37 | %                |  |  | 5.5 | 
|               |  |         |           |         |  |                   |     |                     |  |          |      |                  |  |  |     | 
|Total Debt     |  | $       | 1,388,651 |         |  |                   | 100 | %                   |  |          | 6.93 | %                |  |  | 4.4 | 
|               |  |         |           |         |  |                   |     |                     |  |          |      |                  |  |  |     | 

Floating and Fixed Rate Debt:

|                    |  |         |           |         |  |                   |     |                     |  |          |      |                  |  |  |     | 
|------------------- |  | ------- | --------- | ------- |  | ----------------- | --- | ------------------- |  | -------- | ---- | ---------------- |  |  | --- | 
|                    |  |         |           |         |  |                   |     |                     |  | Weighted |      |                  |  | 
|                    |  |         |           |         |  |                   |     |                     |  | Average  |      | Weighted Average
|                    |  | Balance |           | Percent |  | Interest Rate (1) |     | Maturity (in years)
|                    |  |         |           |         |  |                   |     |                    
|Floating Rate Debt  |  | $       | 145,587   |         |  |                   | 10  | %                   |  |          | 3.31 | %                |  |  | 3.0 | 
|Fixed Rate Debt (2) |  |         | 1,243,064 |         |  |                   | 90  | %                   |  |          | 7.35 | %                |  |  | 4.5 | 
|                    |  |         |           |         |  |                   |     |                     |  |          |      |                  |  |  |     | 
|Total Debt          |  | $       | 1,388,651 |         |  |                   | 100 | %                   |  |          | 6.93 | %                |  |  | 4.4 | 
|                    |  |         |           |         |  |                   |     |                     |  |          |      |                  |  |  |     | 



---

|(1) |  | Includes amortization of prepaid financing costs.                                                     
|--- |  | ------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Includes $175 million of floating rate debt that has been fixed
through interest rate swap agreements.

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

|                        |  |                                      |        |      |  |   |        |  
|----------------------- |  | ------------------------------------ | ------ | ---- |  | - | ------ | -
|                        |  | For the Three Months Ended March 31,
|                        |  |                                     
|                        |  | 2003                                 |        | 2002
|                        |  |                                      |        |     
|Total interest incurred |  | $                                    | 24,270 |      |  | $ | 22,984 |  
|Amount capitalized      |  |                                      | (1,235 | )    |  |   | (1,587 | )
|                        |  |                                      |        |      |  |   |        |  
|Amount expensed         |  | $                                    | 23,035 |      |  | $ | 21,397 |  
|                        |  |                                      |        |      |  |   |        |  

15



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##### Table of Contents



Senior Unsecured Notes Covenant Compliance Ratios

The following table summarizes our senior unsecured notes covenant
compliance ratios as of March 31, 2003 (in thousands, except percentage and
covenant ratio data):

|                                              |                        |   |           |           | 
|--------------------------------------------- | ---------------------- | - | --------- | --------- | 
|Net investment in real estate                 |                        | $ | 2,698,962 |          
|Cash and cash equivalents                     |                        |   | 15,428    |          
|Restricted Cash                               |                        |   | 23,588    |          
|Accumulated depreciation and amortization (1) |                        |   | 410,476   |          
|                                              |                        |   |           |          
|                                              | Total Assets           |   | $         | 3,148,454 | 
|                                              |                        |   |           |          
|Total unencumbered assets                     |                        | $ | 1,808,140 |          
|                                              |                        |   |           |          
|Mortgage loans payable                        |                        | $ | 569,905   |          
|Unsecured lines of credit                     |                        |   | 195,587   |          
|Unsecured term loan                           |                        |   | 125,000   |          
|Unsecured senior notes, net of discount       |                        |   | 498,159   |          
|                                              |                        |   |           |          
|                                              | Total Outstanding Debt |   | $         | 1,388,651 | 
|                                              |                        |   |           |          
|Consolidated EBITDA (2), (3)                  |                        | $ | 274,991   |          
|                                              |                        |   |           |          
|Interest incurred (3)                         |                        | $ | 95,448    |          
|Loan fee amortization (3)                     |                        |   | 3,816     |          
|                                              |                        |   |           |          
|Debt Service (3)                              |                        | $ | 99,264    |          
|                                              |                        |   |           |          

|                                    |  |                   |  |        |     |  
|----------------------------------- |  | ----------------- |  | ------ | --- | -
|Covenant Ratios                     |  | Test              |  | Actual
|                                    |  |                   |  |       
|Total Outstanding Debt/Total Assets |  | Less than 60%     |  |        | 44  | %
|Secured Debt/Total Assets           |  | Less than 40%     |  |        | 18  | %
|EBITDA to Debt Service              |  | Greater than 1.5  |  |        | 2.8 |  
|Unencumbered Assets/Unsecured Debt  |  | Greater than 150% |  |        | 221 | %



---

|(1) |  | Includes accumulated depreciation related to five properties currently
classified as held for disposition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Earnings before interest, taxes, depreciation and amortization, or
EBITDA, is a non-GAAP measurement. EBITDA is presented because we use
this data and we believe this data is also used by investors as an
indication of our ability to meet our debt service requirements. We
consider that EBITDA, when combined with other measures, can be a useful
measure to determine our ability to service debt and fund future capital
expenditure requirements. However, due to the significance of the net
income components excluded from EBITDA, it should not be considered an
alternative to net income, cash flow from operations, or any other
operating or liquidity performance measure prescribed by GAAP.                                                                                                        
|   
|   
|   
|   
|    |  | Because interest expense, taxes, gains or losses on sales of property,
losses on valuations of derivatives, asset impairment losses, cumulative
effect of a change in accounting principle, extraordinary items as defined
by GAAP and depreciation and amortization costs, which are not reflected in
EBITDA, have been, will be or may be incurred by us, investors are cautioned
to reflect our ability to finance our investments at competitive borrowing
costs, successfully maintain our REIT status, acquire and dispose of real
estate properties at favorable prices to us and also reflect changes in
value in our properties that result from use or changes in market conditions
and the level of capital expenditures and leasing costs necessary to
maintain the operating performance of our properties.
|   
|   
|   
|   
|    |  | We present the ratio of EBITDA to interest expense and the ratio of EBITDA
to fixed charges because these ratios are used in several financial
covenants contained in our principal loan agreements. We are required to
satisfy these financial covenants each fiscal quarter. We believe this
information is useful to investors because investors can use this data to
(1) confirm that we are in compliance with the ratio covenants of our
principal loan agreements, (2) evaluate our ability to service our debt, (3)
evaluate our ability to fund future capital expenditures, and (4) compare
our ratios to other real estate companies that present similar ratios,
including other REITs. These ratios should not be considered as
alternatives to the ratio of earnings to fixed charges.                    
|   
|   
|   
|   
|    |  | The reader is cautioned that EBITDA, as calculated by us, may not be
comparable to EBITDA as reported by other companies that do not define
EBITDA exactly the same as we do.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

16



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##### Table of Contents



We calculate EBITDA as follows:

|                                                                                          |                                                   |   |                    |        |          |   |         |        |         |   |         |        |  |   |        |        |  |   |        |        | 
|----------------------------------------------------------------------------------------- | ------------------------------------------------- | - | ------------------ | ------ | -------- | - | ------- | ------ | ------- | - | ------- | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                                                                          |                                                   |   | Three Months Ended
|                                                                                          |                                                   |   |                   
|                                                                                          |                                                   |   | 3/31/03            |        | 12/31/02 |   | 9/30/02 |        | 6/30/02 |   | 3/31/02
|                                                                                          |                                                   |   |                    |        |          |   |         |        |         |   |        
|Income from continuing operations before gain on
sale of properties and minority interest |                                                   | $ | 16,493             |        |          | $ | 16,258  |        |         | $ | 15,770  |        |  | $ | 17,931 |        |  | $ | 21,021 |       
|Add:                                                                                      |                                                   |   |                    |        |          |   |         |        |         |   |         |        |  |   |        |        |  |   |        |       
|                                                                                          | Interest expense                                  |   |                    | 23,035 |          |   |         | 23,132 |         |   |         | 22,403 |  |   |        | 21,584 |  |   |        | 21,397 | 
|                                                                                          | Depreciation and amortization                     |   |                    | 28,961 |          |   |         | 27,591 |         |   |         | 26,829 |  |   |        | 28,028 |  |   |        | 25,580 | 
|                                                                                          | Discontinued operations, net of minority interest |   |                    | 1,070  |          |   |         | 861    |         |   |         | 800    |  |   |        | 916    |  |   |        | 795    | 
|                                                                                          | Minority interest from discontinued operations    |   |                    | 12     |          |   |         | 24     |         |   |         | 21     |  |   |        | 25     |  |   |        | 22     | 
|                                                                                          | Depreciation from discontinued operations         |   |                    | 661    |          |   |         | 971    |         |   |         | 821    |  |   |        | 794    |  |   |        | 803    | 
|EBITDA                                                                                    |                                                   | $ | 70,232             |        |          | $ | 68,837  |        |         | $ | 66,644  |        |  | $ | 69,278 |        |  | $ | 69,618 |       
|                                                                                          |                                                   |   |                    |        |          |   |         |        |         |   |         |        |  |   |        |        |  |   |        |       



|(3) |  | Represent amounts for the most recent four consecutive quarters.
|--- |  | ----------------------------------------------------------------

Funds from Operations

The following table reflects the calculation of our funds from operations
for the three months ended March 31, 2003 and 2002 (in thousands):

|                           |                                                            |                                                                             |         |        |                    |        |        |        |   |        | 
|-------------------------- | ---------------------------------------------------------- | --------------------------------------------------------------------------- | ------- | ------ | ------------------ | ------ | ------ | ------ | - | ------ | 
|                           |                                                            |                                                                             |         |        | Three Months Ended
|                           |                                                            |                                                                             |         |        | March 31,         
|                           |                                                            |                                                                             |         |        |                   
|                           |                                                            |                                                                             |         |        | 2003               |        | 2002  
|                           |                                                            |                                                                             |         |        |                    |        |       
|Funds from Operations (1): |                                                            |                                                                             |         |        |                    |        |        |       
|                           | Net income                                                 |                                                                             | $       | 15,438 |                    |        | $      | 21,353 |  
|                           | Depreciation and amortization from discontinued
operations |                                                                             |         | 673    |                    |        |        | 825    |  
|                           | Loss from sale of discontinued operations                  |                                                                             |         | 639    |                    |        |        |       |  
|                           | Depreciation and amortization                              |                                                                             |         | 28,961 |                    |        |        | 25,580 |  
|                           | Minority interest                                          |                                                                             |         | 1,486  |                    |        |        | 1,655  |  
|                           | Gain on sale of operating properties                       |                                                                             |         |       |                    |        |        | (1,192 | )
|                           | Distributions on Preferred Operating Partnership
Units     |                                                                             |         | (1,078 | )                  |        |        | (1,078 | )
|                           |                                                            |                                                                             |         |        |                    |        |        |       
|Funds from Operations (2)  |                                                            | $                                                                           | 46,119  |        |                    | $      | 47,143 |       
|                           |                                                            |                                                                             |         |        |                    |        |        |       
|                           |                                                            | Weighted average common shares and
operating partnership units outstanding- |         |        |                    |        |        |        |   |       
|                           |                                                            |                                                                             | Diluted |        |                    | 64,843 |        |        |   | 66,488 | 
|                           |                                                            |                                                                             |         |        |                    |        |        |       



---

|(1) |  | We believe that funds from operations, or FFO, is a useful
supplemental measure of our operating performance. We compute FFO
in accordance with standards established by the White Paper on FFO
approved by the Board of Governors of the National Association of
Real Estate Investment Trusts, or NAREIT, in April 2002. The White
Paper defines FFO as net income or loss computed in accordance with
generally accepted accounting principles, or 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 believe that FFO, by excluding depreciation costs, the gains or
losses from the sale of operating real estate properties and the
extraordinary items as defined by GAAP, provides an additional
perspective on our operating results. However, because these excluded
items have a real economic effect, FFO is a limited measure of
performance.                                                                                                                                                                                                                                                                                                                                                             
|   
|   
|   
|   
|    |  | FFO captures trends in occupancy rates, rental rates and operating
costs. FFO excludes depreciation and amortization costs and it does
not capture the changes in value in our properties that result from
use or changes in market conditions or the level of capital
expenditures and leasing costs necessary to maintain the operating
performance of our properties, all of which are significant economic
costs. Therefore, its ability to measure performance is limited.                                                                                                                                                                                                                                  
|   
|   
|   
|   
|    |  | Because FFO excludes significant economic components of net income
determined in accordance with GAAP, FFO should be used as an adjunct
to net income and not as an alternative to net income. FFO should
also not be used as an indicator of our financial performance, or as a
substitute for cash flow from operating activities determined in
accordance with GAAP or as a measure of our liquidity. FFO is not by
itself indicative of funds available to fund our cash needs, including
our ability to pay dividends or service our debt.                                                                                                                                                                  
|   
|   
|   
|   
|    |  | FFO is used by investors to compare our performance with other REITs.
Other REITs may use different methods for calculating FFO and,
accordingly, our FFO may not be comparable to other REITs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|   
|   
|   
|(2) |  | Includes $389,000 and $245,000 in non-cash compensation expense
for the three months ended March 31, 2003, and 2002, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

17



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##### Table of Contents



Portfolio and Lease Information

The following tables set forth certain information regarding our
properties as of March 31, 2003.

PORTFOLIO SUMMARY
As of March 31, 2003

|                                      |          |                |       |               |        |                        |        |                |                 |     |                            |    |       |     |       |    |       |     |           |           |            |            |     |    |    |     |        |        |                                |        |    |    |    |     |  
|------------------------------------- | -------- | -------------- | ----- | ------------- | ------ | ---------------------- | ------ | -------------- | --------------- | --- | -------------------------- | -- | ----- | --- | ----- | -- | ----- | --- | --------- | --------- | ---------- | ---------- | --- | -- | -- | --- | ------ | ------ | ------------------------------ | ------ | -- | -- | -- | --- | -
|                                      |          |                |       |               |        |                        |        |                |                 |     |                            |    |       |     |       |    |       |     |           |           |            |            |     |    |    |     |        |        | Property Operating Results (2)
|                                      |          |                |       |               |        |                        |        |                |                 |     |                            |    |       |     |       |    |       |     |           |           |            |            |     |    |    |     |        |        |                               
|                                      |          |                |       |               | Number |                        | Number |                |                 |     |                            |    |       |     |       |    |       |     |           |           |            |            |    
|                                      |          |                |       |               | of     |                        | of     |                | Approximate Net |     | For the Three Months Ended
|Location                              |          | Properties (1) |       | Buildings (1) |        | Rentable (Square Feet) |        | March 31, 2003
|                                      |          |                |       |               |        |                        |        |               
|                                      |          |                |       |               |        |                        |        |                |                 |     |                            |    |       |     |       |    |       |     |           |           |            |            |     |    |    |     |        |        | (unaudited)                   
|                                      |          |                |       |               |        |                        |        |                | %of             |     |                            |    |       |     | %of   |    |       |     |           |           | %of        |            |     |    |    |     | % of  
|                                      |          |                |       |               | Total  |                        | Total  |                | Total           |     | Total                      |    | Total |     | Total |    | Total |     | Total    
|                                      |          |                |       |               |        |                        |        |                |                 |     |                            |    |       |     |       |    |       |     |          
|                                      |          |                |       |               |        |                        |        |                |                 |     |                            |    |       |     |       |    |       |     |           |           |            |            |     |    |    |     |        |        | (in thousands)                 |        |    |    |   
|Los Angeles County                    |          |                |       |               |        |                        |        |                |                 |     |                            |    |       |     |       |    |       |     |           |           |            |            |     |    |    |     |        |        |                                |        |    |   
|                                      | West (3) |                |       | 30            |        |                        |        | 22             | %               |     |                            | 32 |       |     |       | 15 | %     |     |           | 4,882,004 |            |            |     | 26 | %  |     | $      | 27,473 |                                |        |    | 38 | % 
|                                      | North    |                |       | 29            |        |                        |        | 22             | %               |     |                            | 46 |       |     |       | 21 | %     |     |           | 3,231,591 |            |            |     | 17 | %  |     |        | 11,315 |                                |        |    | 16 | % 
|                                      | South    |                |       | 16            |        |                        |        | 12             | %               |     |                            | 21 |       |     |       | 9  | %     |     |           | 3,057,925 |            |            |     | 16 | %  |     |        | 9,542  |                                |        |    | 13 | % 
|                                      |          |                |       |               |        |                        |        |                |                 |     |                            |    |       |     |       |    |       |     |           |           |            |            |     |    |    |     |        |        |                                |        |    |   
|                                      |          | Subtotal       |       |               | 75     |                        |        |                | 56              | %   |                            |    | 99    |     |       |    | 45    | %   |           |           | 11,171,520 |            |     |    | 59 | %   |        |        | 48,330                         |        |    |    | 67 | %  
|Orange County                         |          |                | 24    |               |        |                        | 18     | %              |                 |     | 57                         |    |       |     | 25    | %  |       |     | 3,708,926 |           |            |            | 19  | %  |    |     | 12,068 |        |                                |        | 17 | % 
|San Diego County                      |          |                | 25    |               |        |                        | 18     | %              |                 |     | 40                         |    |       |     | 18    | %  |       |     | 2,857,195 |           |            |            | 15  | %  |    |     | 8,713  |        |                                |        | 12 | % 
|Ventura/Kern
Counties                 |          |                | 6     |               |        |                        | 4      | %              |                 |     | 17                         |    |       |     | 8     | %  |       |     | 778,363   |           |            |            | 4   | %  |    |     | 2,566  |        |                                |        | 3  | % 
|Riverside/San
Bernardino
Counties (4) |          |                | 5     |               |        |                        | 4      | %              |                 |     | 8                          |    |       |     | 4     | %  |       |     | 476,461   |           |            |            | 3   | %  |    |     | 332    |        |                                |        | 1  | % 
|                                      |          |                |       |               |        |                        |        |                |                 |     |                            |    |       |     |       |    |       |     |           |           |            |            |     |    |    |     |        |        |                                |        |    |   
|                                      |          |                | Total |               |        | 135                    | (5)    |                |                 | 100 | %                          |    |       | 221 | (5)   |    |       | 100 | %         |           |            | 18,992,465 | (5) |    |    | 100 | %      |        | $                              | 72,009 |    |    |    | 100 | %
|                                      |          |                |       |               |        |                        |        |                |                 |     |                            |    |       |     |       |    |       |     |           |           |            |            |     |    |    |     |        |        |                                |        |    |   



---

|(1) |  | Includes five properties with approximately 376,000 net rentable square
feet currently held for disposition.                                                                                                                  
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Excludes the operating results of five properties currently
classified as held for disposition. The operating results for
these properties are reported as part of discontinued operations
in our quarterly operating results.
|   
|   
|   
|   
|(3) |  | Includes a retail property with approximately 37,000 net rentable square
feet.                                                                                                                                                
|   
|   
|   
|   
|(4) |  | Includes a retail property with approximately 133,000 net rentable square
feet.                                                                                                                                               
|   
|   
|   
|   
|(5) |  | Including one development property currently under lease-up,
our total portfolio consists of 136 properties with 222
buildings and approximately 19.3 million rentable square feet.                                           

PORTFOLIO OCCUPANCY AND IN-PLACE RENTS
As of March 31, 2003

|                                  |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                 |       |              |       | 
|--------------------------------- | ----- | ---------------------- | ---- | -------------- | ---- | ------------------------- | ---- | ---- | ---- | - | ----- | -------------------- | ----- | --------------- | ----- | ------------ | ----- | 
|                                  |       |                        |      |                |      |                           |      |      |      |   |       | Annualized Base Rent
|Location                          |       | Percent Occupied       |      | Percent Leased |      | Per Leased Square Foot(1)
|                                  |       |                        |      |                |      |                          
|                                  |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                 |       | Full Service
|                                  |       |                        |      |                |      |                           |      |      |      |   |       | Portfolio Total      |       | Gross Leases(2)
|                                  |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                
|Los Angeles County                |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                 |       |             
|                                  | West  |                        |      | 91.0           | %    |                           |      | 92.2 | %    |   | $     | 28.44                |       |                 | $     | 28.59        |      
|                                  | North |                        |      | 87.7           | %    |                           |      | 89.7 | %    |   |       | 21.80                |       |                 |       | 22.65        |      
|                                  | South |                        |      | 86.9           | %    |                           |      | 88.1 | %    |   |       | 19.52                |       |                 |       | 20.66        |      
|Orange County                     |       |                        | 91.8 | %              |      |                           | 92.7 | %    |      |   | 18.44 |                      |       |                 | 21.81 |             
|San Diego County                  |       |                        | 87.2 | %              |      |                           | 90.9 | %    |      |   | 18.77 |                      |       |                 | 23.32 |             
|Ventura/Kern Counties             |       |                        | 96.7 | %              |      |                           | 97.1 | %    |      |   | 18.42 |                      |       |                 | 18.73 |             
|Riverside/San
Bernardino Counties |       |                        | 95.4 | %              |      |                           | 95.6 | %    |      |   | 17.34 |                      |       |                 | 19.86 |             
|                                  |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                 |       |             
|                                  |       | Total/Weighted Average |      |                | 89.7 | %                         |      |      | 91.3 | % |       | $                    | 21.78 |                 |       | $            | 23.87 | 
|                                  |       |                        |      |                |      |                           |      |      |      |   |       |                      |       |                 |       |             



---

|(1) |  | Based on monthly contractual base rent under existing leases as of March 31, 2003, multiplied by 12 and divided by leased net rentable
square feet; for those leases where rent has not yet commenced or which are in a free rent period, the first month in which rent is to be
received is used to determine annualized base rent.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Excludes 38 properties and approximately 3.9 million square feet under triple net and modified gross leases.                                                                                                                                                                                                                        

18



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##### Table of Contents



TEN LARGEST TENANTS
As of March 31, 2003

|                                  |  |           |    |            |  |             |     |               |  |               |       |                |  |  |       |            |  |  |           |  |  |   |        | 
|--------------------------------- |  | --------- | -- | ---------- |  | ----------- | --- | ------------- |  | ------------- | ----- | -------------- |  |  | ----- | ---------- |  |  | --------- |  |  | - | ------ | 
|                                  |  |           |    |            |  | Weighted    |     | Percentage    |  | Percentage of |       |                |  |  |       |            |  | 
|                                  |  |           |    |            |  | Average     |     | of Aggregate  |  | Aggregate     |       |                |  |  |       |            |  | 
|                                  |  |           |    |            |  | Remaining   |     | Portfolio     |  | Portfolio     |       |                |  |  |       | Annualized
|                                  |  | Number of |    | Lease Term |  | Leased      |     | Annualized    |  | Net Rentable  |       | Base Rent     
|Tenant                            |  | Locations |    | In Months  |  | Square Feet |     | Base Rent (1) |  | Square Feet   |       | (in thousands)
|                                  |  |           |    |            |  |             |     |               |  |               |       |               
|State of California               |  |           | 26 |            |  |             | 49  |               |  |               | 2.49  | %              |  |  | 2.45  | %          |  |  | 431,075   |  |  | $ | 9,241  | 
|Vivendi Universal                 |  |           | 2  |            |  |             | 85  |               |  |               | 1.34  |                |  |  | 2.15  |            |  |  | 231,681   |  |  |   | 8,111  | 
|University of Phoenix             |  |           | 6  |            |  |             | 20  |               |  |               | 1.47  |                |  |  | 1.35  |            |  |  | 255,168   |  |  |   | 5,089  | 
|Univision                         |  |           | 1  |            |  |             | 223 |               |  |               | 0.96  |                |  |  | 1.13  |            |  |  | 166,363   |  |  |   | 4,247  | 
|Ceridian Corporation              |  |           | 3  |            |  |             | 78  |               |  |               | 0.93  |                |  |  | 0.95  |            |  |  | 160,805   |  |  |   | 3,589  | 
|SBC Communications, Inc.          |  |           | 5  |            |  |             | 27  |               |  |               | 0.88  |                |  |  | 0.88  |            |  |  | 153,150   |  |  |   | 3,333  | 
|U.S. Government                   |  |           | 17 |            |  |             | 41  |               |  |               | 0.79  |                |  |  | 0.85  |            |  |  | 136,165   |  |  |   | 3,200  | 
|Verizon Communications, Inc.      |  |           | 5  |            |  |             | 17  |               |  |               | 0.90  |                |  |  | 0.70  |            |  |  | 156,612   |  |  |   | 2,659  | 
|Atlantic Richfield                |  |           | 1  |            |  |             | 41  |               |  |               | 0.73  |                |  |  | 0.70  |            |  |  | 126,830   |  |  |   | 2,658  | 
|State Compensation Insurance Fund |  |           | 1  |            |  |             | 60  |               |  |               | 0.65  |                |  |  | 0.70  |            |  |  | 113,513   |  |  |   | 2,656  | 
|                                  |  |           |    |            |  |             |     |               |  |               |       |                |  |  |       |            |  |  |           |  |  |   |        | 
|Total/Weighted Average (2)        |  |           | 67 |            |  |             | 62  |               |  |               | 11.14 | %              |  |  | 11.86 | %          |  |  | 1,931,362 |  |  | $ | 44,783 | 
|                                  |  |           |    |            |  |             |     |               |  |               |       |                |  |  |       |            |  |  |           |  |  |   |        | 



---

|(1) |  | Annualized base rent is calculated as monthly contractual base rent under existing leases as of March 31, 2003, multiplied by 12; for those leases
where rent has not yet commenced or which are in a free rent period, the first month in which rent is to be received is used to determine
annualized base rent.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | The weighted average calculation is based on net rentable square footage leased by each tenant.                                                                                                                                                                                                                   

LEASING ACTIVITY

|                                                       |                    |  |                    |       |  
|------------------------------------------------------ | ------------------ |  | ------------------ | ----- | -
|                                                       |                    |  | For the           
|                                                       |                    |  | Three Months Ended
|                                                       |                    |  | March 31, 2003    
|                                                       |                    |  |                   
|Net Absorption (square feet)                           |                    |  | (101,633           | )    
|                                                       |                    |  |                    |      
|Gross New Leasing Activity (square feet)               |                    |  | 429,422            |      
|                                                       |                    |  |                    |      
|Retention Rate                                         |                    |  | 58.9               | %    
|                                                       |                    |  |                    |      
|Cash Rent Growth (1):                                  |                    |  |                    |      
|                                                       | Expiring Rate      |  | $                  | 20.07 |  
|                                                       |                    |  |                    |      
|                                                       | New / Renewed Rate |  | $                  | 21.04 |  
|                                                       |                    |  |                    |      
|                                                       | Increase           |  |                    | 5     | %
|                                                       |                    |  |                    |      
|GAAP Rent Growth (2):                                  |                    |  |                    |      
|                                                       | Expiring Rate      |  | $                  | 19.30 |  
|                                                       |                    |  |                    |      
|                                                       | New / Renewed Rate |  | $                  | 21.78 |  
|                                                       |                    |  |                    |      
|                                                       | Increase           |  |                    | 13    | %
|                                                       |                    |  |                    |      
|Weighted Average Lease Term in Months                  |                    |  | 52                 |      
|                                                       |                    |  |                    |      
|Tenant Improvements and Commissions (per square foot): |                    |  |                    |      
|                                                       | New (3)            |  | $                  | 19.93 |  
|                                                       |                    |  |                    |      
|                                                       | Renewal (4)        |  | $                  | 15.64 |  
|                                                       |                    |  |                    |      
|Capital Expenditures (per square foot):                |                    |  |                    |      
|                                                       | Recurring          |  | $                  | 0.05  |  
|                                                       |                    |  |                    |      
|                                                       | Non-recurring      |  | $                  | 0.02  |  
|                                                       |                    |  |                    |      



---

|(1) |  | Represents the difference between initial market rents on new and renewed leases as compared to the expiring cash rents on the same space.                                                                                                                                                                                              
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Represents estimated cash rent growth adjusted for straight-line rents.                                                                                                                                                                                                                                                                 
|   
|   
|   
|   
|(3) |  | Excludes all newly developed or renovated square footage or square footage vacant at acquisition.                                                                                                                                                                                                                                       
|   
|   
|   
|   
|(4) |  | Includes two tenants with approximately 140,000 net rentable square feet that extended their leases early, an average of eight years and
which will not use their tenant improvement allowance until 2004. Excluding these two large renewals, tenant improvements and commissions
for the first quarter averaged $7.76 per square foot.

19



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##### Table of Contents



PORTFOLIO DIVERSIFICATION
As of March 31, 2003

|                                                                         |                                                                |       |          |                            |        |           |           |           |      |           |            |       |   |            |        |  
|------------------------------------------------------------------------ | -------------------------------------------------------------- | ----- | -------- | -------------------------- | ------ | --------- | --------- | --------- | ---- | --------- | ---------- | ----- | - | ---------- | ------ | -
|                                                                         |                                                                |       |          |                            |        |           |           |           |      |           |            |       |   | Percentage
|                                                                         |                                                                |       |          |                            |        |           |           |           |      |           |            |       |   | of        
|                                                                         |                                                                |       |          |                            |        |           |           |           |      | Occupied  |            | Total
|                                                                         |                                                                |       |          |                            |        | NAICS     |           | Square    |      | Occupied 
|North American Industrial Classification System Description              |                                                                | Code  |          | Feet                       |        | Portfolio
|                                                                         |                                                                |       |          |                            |        |          
|Professional, Scientific, and Technical Services:                        |                                                                |       |          |                            |        |           |           |           |      |           |            |      
|                                                                         | Legal Services                                                 |       |          | 5411                       |        |           |           | 1,255,836 |      |           |            | 7.37  | %
|                                                                         | Accounting & Tax Preparation, Bookkeeping and Payroll
Services |       |          | 5412                       |        |           |           | 662,095   |      |           |            | 3.88  |  
|                                                                         | Management, Scientific and Technical Consulting Services       |       |          | 5416                       |        |           |           | 788,020   |      |           |            | 4.62  |  
|                                                                         | Other Services                                                 |       |          |                            |        |           |           | 1,771,776 |      |           |            | 10.41 |  
|                                                                         |                                                                |       |          |                            |        |           |           |           |      |           |            |      
|                                                                         |                                                                |       | Subtotal |                            |        | 541       |           |           |      | 4,477,727 |            |       |   | 26.28      |       
|Finance and Insurance                                                    |                                                                |       | 521-525  |                            |        |           | 2,667,230 |           |      |           | 15.66      |      
|Information                                                              |                                                                |       | 511-519  |                            |        |           | 2,138,348 |           |      |           | 12.55      |      
|Manufacturing                                                            |                                                                |       | 311-339  |                            |        |           | 1,316,829 |           |      |           | 7.73       |      
|Health Care and Social Assistance                                        |                                                                |       | 621-624  |                            |        |           | 1,240,799 |           |      |           | 7.28       |      
|Administrative and Support and Waste Management and
Remediation Services |                                                                |       | 561-562  |                            |        |           | 766,757   |           |      |           | 4.50       |      
|Public Administration                                                    |                                                                |       | 921-928  |                            |        |           | 771,076   |           |      |           | 4.53       |      
|Educational Services                                                     |                                                                |       | 611      |                            |        |           | 705,930   |           |      |           | 4.14       |      
|Real Estate, Rental and Leasing                                          |                                                                |       | 531-533  |                            |        |           | 742,911   |           |      |           | 4.36       |      
|Wholesale Trade                                                          |                                                                |       | 423-425  |                            |        |           | 557,627   |           |      |           | 3.27       |      
|Transportation and Warehousing                                           |                                                                |       | 481-493  |                            |        |           | 392,219   |           |      |           | 2.30       |      
|Arts, Entertainment, and Recreation                                      |                                                                |       | 711-713  |                            |        |           | 326,128   |           |      |           | 1.91       |      
|Construction                                                             |                                                                |       | 236-238  |                            |        |           | 241,294   |           |      |           | 1.42       |      
|Accommodation and Food Services                                          |                                                                |       | 721-722  |                            |        |           | 186,861   |           |      |           | 1.10       |      
|Other Services (except Public Administration)                            |                                                                |       | 811-814  |                            |        |           | 192,809   |           |      |           | 1.13       |      
|Retail Trade                                                             |                                                                |       | 441-454  |                            |        |           | 130,719   |           |      |           | 0.77       |      
|Mining                                                                   |                                                                |       | 211-213  |                            |        |           | 85,272    |           |      |           | 0.50       |      
|Management of Companies and Enterprises                                  |                                                                |       | 551      |                            |        |           | 21,970    |           |      |           | 0.13       |      
|Utilities                                                                |                                                                |       | 221      |                            |        |           | 8,795     |           |      |           | 0.05       |      
|Agriculture, Forestry, Fishing and Hunting                               |                                                                |       | 111-115  |                            |        |           | 6,065     |           |      |           | 0.04       |      
|Non-classified                                                           |                                                                | Other |          |                            | 58,875 |           |           |           | 0.35 |          
|                                                                         |                                                                |       |          |                            |        |           |           |           |      |           |            |      
|                                                                         |                                                                |       |          | Total Square Feet Occupied |        |           |           |           |      |           | 17,036,241 |       |   |            | 100.00 | %
|                                                                         |                                                                |       |          |                            |        |           |           |           |      |           |            |      

20



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##### Table of Contents



LEASE EXPIRATIONS
As of March 31, 2003

|                    |                    |                    |                 |   |           |           |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          |  | 
|------------------- | ------------------ | ------------------ | --------------- | - | --------- | --------- | ---- | - | --------- | --------- | ---- | - | --------- | --------- | ---- | - | ---------- | --------- |  | - | --------- | --------- |  | - | --------- | --------- | -------- |  | 
|                    |                    |                    |                 |   |           |           |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           | 2008 and
|                    |                    |                    |                 |   |           |           | 2003 |   | 2004      |           | 2005 |   | 2006      |           | 2007 |   | Thereafter
|                    |                    |                    |                 |   |           |           |      |   |           |           |      |   |           |           |      |   |           
|Los Angeles County: |                    |                    |                 |   |           |           |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 
|                    | West               |                    | Expiring SF (1) |   |           | 414,048   |      |   |           | 701,004   |      |   |           | 799,873   |      |   |            | 479,877   |  |   |           | 529,986   |  |   |           | 1,547,267 |         
|                    |                    | % of Leased SF (2) |                 |   | 2.39      | %         |      |   | 4.04      | %         |      |   | 4.61      | %         |      |   | 2.77       | %         |  |   | 3.05      | %         |  |   | 8.93      | %        
|                    |                    | Rent per SF (3)    |                 | $ | 26.75     |           |      | $ | 27.29     |           |      | $ | 27.61     |           |      | $ | 29.62      |           |  | $ | 30.77     |           |  | $ | 36.54     |          
|                    | North              |                    | Expiring SF (1) |   |           | 355,670   |      |   |           | 622,238   |      |   |           | 432,168   |      |   |            | 363,259   |  |   |           | 434,632   |  |   |           | 661,047   |         
|                    |                    | % of Leased SF (2) |                 |   | 2.05      | %         |      |   | 3.59      | %         |      |   | 2.49      | %         |      |   | 2.09       | %         |  |   | 2.51      | %         |  |   | 3.81      | %        
|                    |                    | Rent per SF (3)    |                 | $ | 20.32     |           |      | $ | 21.66     |           |      | $ | 22.74     |           |      | $ | 24.48      |           |  | $ | 22.67     |           |  | $ | 24.45     |          
|                    | South              |                    | Expiring SF (1) |   |           | 262,634   |      |   |           | 532,101   |      |   |           | 702,069   |      |   |            | 286,484   |  |   |           | 209,494   |  |   |           | 653,919   |         
|                    |                    | % of Leased SF (2) |                 |   | 1.51      | %         |      |   | 3.07      | %         |      |   | 4.05      | %         |      |   | 1.65       | %         |  |   | 1.21      | %         |  |   | 3.77      | %        
|                    |                    | Rent per SF (3)    |                 | $ | 18.89     |           |      | $ | 20.61     |           |      | $ | 16.10     |           |      | $ | 23.15      |           |  | $ | 23.16     |           |  | $ | 23.41     |          
|                    |                    |                    |                 |   |           |           |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 
|Subtotal -          |                    |                    |                 |   |           |           |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 
|                    | Los Angeles County |                    | Expiring SF (1) |   |           | 1,032,352 |      |   |           | 1,855,343 |      |   |           | 1,934,110 |      |   |            | 1,129,620 |  |   |           | 1,174,112 |  |   |           | 2,862,233 |         
|                    |                    | % of Leased SF (2) |                 |   | 5.95      | %         |      |   | 10.70     | %         |      |   | 11.15     | %         |      |   | 6.51       | %         |  |   | 6.77      | %         |  |   | 16.51     | %        
|                    |                    | Rent per SF (3)    |                 | $ | 22.53     |           |      | $ | 23.49     |           |      | $ | 22.35     |           |      | $ | 26.33      |           |  | $ | 26.42     |           |  | $ | 30.75     |          
|                    | Orange County      |                    | Expiring SF (1) |   |           | 561,891   |      |   |           | 779,047   |      |   |           | 548,750   |      |   |            | 726,396   |  |   |           | 385,025   |  |   |           | 411,856   |         
|                    |                    | % of Leased SF (2) |                 |   | 3.24      | %         |      |   | 4.49      | %         |      |   | 3.16      | %         |      |   | 4.19       | %         |  |   | 2.22      | %         |  |   | 2.37      | %        
|                    |                    | Rent per SF (3)    |                 | $ | 18.51     |           |      | $ | 16.46     |           |      | $ | 21.40     |           |      | $ | 19.61      |           |  | $ | 20.54     |           |  | $ | 24.64     |          
|                    | San Diego County   |                    | Expiring SF (1) |   |           | 266,462   |      |   |           | 425,473   |      |   |           | 536,921   |      |   |            | 255,329   |  |   |           | 156,600   |  |   |           | 781,651   |         
|                    |                    | % of Leased SF (2) |                 |   | 1.54      | %         |      |   | 2.46      | %         |      |   | 3.10      | %         |      |   | 1.47       | %         |  |   | 0.90      | %         |  |   | 4.51      | %        
|                    |                    | Rent per SF (3)    |                 | $ | 20.40     |           |      | $ | 20.14     |           |      | $ | 18.61     |           |      | $ | 24.40      |           |  | $ | 24.00     |           |  | $ | 21.43     |          
|                    | All Others         |                    | Expiring SF (1) |   |           | 145,205   |      |   |           | 348,401   |      |   |           | 169,965   |      |   |            | 238,315   |  |   |           | 154,052   |  |   |           | 144,527   |         
|                    |                    | % of Leased SF (2) |                 |   | 0.84      | %         |      |   | 2.01      | %         |      |   | 0.98      | %         |      |   | 1.38       | %         |  |   | 0.89      | %         |  |   | 0.83      | %        
|                    |                    | Rent per SF (3)    |                 | $ | 18.90     |           |      | $ | 18.26     |           |      | $ | 19.70     |           |      | $ | 19.25      |           |  | $ | 18.95     |           |  | $ | 18.50     |          
|                    |                    |                    |                 |   |           |           |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 
|Total Portfolio     |                    | Expiring SF (1)    |                 |   | 2,005,910 |           |      |   | 3,408,264 |           |      |   | 3,189,746 |           |      |   | 2,349,660  |           |  |   | 1,869,789 |           |  |   | 4,200,267 |          
|                    |                    |                    |                 |   |           |           |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 
|                    |                    | % of Leased SF (2) |                 |   | 11.57     | %         |      |   | 19.66     | %         |      |   | 18.39     | %         |      |   | 13.55      | %         |  |   | 10.78     | %         |  |   | 24.22     | %        
|                    |                    |                    |                 |   |           |           |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 
|                    |                    | Rent per SF (3)    |                 | $ | 20.86     |           |      | $ | 20.93     |           |      | $ | 21.41     |           |      | $ | 23.32      |           |  | $ | 24.39     |           |  | $ | 27.99     |          
|                    |                    |                    |                 |   |           |           |      |   |           |           |      |   |           |           |      |   |            |           |  |   |           |           |  |   |           |           |          | 



---

|(1) |  | Represents the rentable square footage of expiring leases. For 2003, represents expirations from April 1, 2003 through December 31, 2003, not including month-to-month tenants.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Percentage of total rentable square footage expiring during the period.                                                                                                        
|   
|   
|   
|   
|(3) |  | Represents annualized ending cash rents of expiring leases.                                                                                                                    

LEASE EXPIRATIONS FOR THE NEXT FOUR QUARTERS
As of March 31, 2003

|                    |                    |                    |                 |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  |  | 
|------------------- | ------------------ | ------------------ | --------------- | - | ------- | ------- | ----- | - | ------- | ------- | ----- | - | ------- | ------- |  | - | ------- | ------- |  |  | 
|                    |                    |                    |                 |   |         |         | Q2-03 |   | Q3-03   |         | Q4-03 |   | Q1-04  
|                    |                    |                    |                 |   |         |         |       |   |         |         |       |   |        
|Los Angeles County: |                    |                    |                 |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|                    | West               |                    | Expiring SF (1) |   |         | 46,489  |       |   |         | 167,169 |       |   |         | 200,390 |  |   |         | 127,518 | 
|                    |                    | % of Leased SF (2) |                 |   | 0.27    | %       |       |   | 0.96    | %       |       |   | 1.16    | %       |  |   | 0.73    | %      
|                    |                    | Rent per SF (3)    |                 | $ | 25.48   |         |       | $ | 24.03   |         |       | $ | 29.32   |         |  | $ | 25.57   |        
|                    | North              |                    | Expiring SF (1) |   |         | 121,432 |       |   |         | 64,286  |       |   |         | 169,952 |  |   |         | 66,173  | 
|                    |                    | % of Leased SF (2) |                 |   | 0.70    | %       |       |   | 0.37    | %       |       |   | 0.98    | %       |  |   | 0.38    | %      
|                    |                    | Rent per SF (3)    |                 | $ | 18.41   |         |       | $ | 23.30   |         |       | $ | 20.56   |         |  | $ | 23.65   |        
|                    | South              |                    | Expiring SF (1) |   |         | 77,697  |       |   |         | 111,539 |       |   |         | 73,398  |  |   |         | 120,960 | 
|                    |                    | % of Leased SF (2) |                 |   | 0.45    | %       |       |   | 0.64    | %       |       |   | 0.42    | %       |  |   | 0.70    | %      
|                    |                    | Rent per SF (3)    |                 | $ | 19.45   |         |       | $ | 17.43   |         |       | $ | 20.51   |         |  | $ | 23.74   |        
|                    |                    |                    |                 |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|Subtotal -          |                    |                    |                 |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|                    | Los Angeles County |                    | Expiring SF (1) |   |         | 245,618 |       |   |         | 342,994 |       |   |         | 443,740 |  |   |         | 314,651 | 
|                    |                    | % of Leased SF (2) |                 |   | 1.42    | %       |       |   | 1.97    | %       |       |   | 2.56    | %       |  |   | 1.81    | %      
|                    |                    | Rent per SF (3)    |                 | $ | 20.08   |         |       | $ | 21.74   |         |       | $ | 24.51   |         |  | $ | 24.46   |        
|                    | Orange County      |                    | Expiring SF (1) |   |         | 90,156  |       |   |         | 260,302 |       |   |         | 211,433 |  |   |         | 234,355 | 
|                    |                    | % of Leased SF (2) |                 |   | 0.52    | %       |       |   | 1.50    | %       |       |   | 1.22    | %       |  |   | 1.35    | %      
|                    |                    | Rent per SF (3)    |                 | $ | 18.14   |         |       | $ | 19.99   |         |       | $ | 16.85   |         |  | $ | 14.80   |        
|                    | San Diego County   |                    | Expiring SF (1) |   |         | 85,142  |       |   |         | 75,593  |       |   |         | 105,727 |  |   |         | 156,122 | 
|                    |                    | % of Leased SF (2) |                 |   | 0.49    | %       |       |   | 0.44    | %       |       |   | 0.61    | %       |  |   | 0.90    | %      
|                    |                    | Rent per SF (3)    |                 | $ | 21.62   |         |       | $ | 19.61   |         |       | $ | 19.98   |         |  | $ | 20.08   |        
|                    | All Others         |                    | Expiring SF (1) |   |         | 56,169  |       |   |         | 40,618  |       |   |         | 48,418  |  |   |         | 67,125  | 
|                    |                    | % of Leased SF (2) |                 |   | 0.32    | %       |       |   | 0.24    | %       |       |   | 0.28    | %       |  |   | 0.39    | %      
|                    |                    | Rent per SF (3)    |                 | $ | 16.59   |         |       | $ | 19.36   |         |       | $ | 21.18   |         |  | $ | 20.25   |        
|                    |                    |                    |                 |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|Total Portfolio     |                    | Expiring SF (1)    |                 |   | 477,085 |         |       |   | 719,507 |         |       |   | 809,318 |         |  |   | 772,253 |        
|                    |                    |                    |                 |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|                    |                    | % of Leased SF (2) |                 |   | 2.75    | %       |       |   | 4.15    | %       |       |   | 4.67    | %       |  |   | 4.45    | %      
|                    |                    |                    |                 |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 
|                    |                    | Rent per SF (3)    |                 | $ | 19.58   |         |       | $ | 20.75   |         |       | $ | 21.72   |         |  | $ | 20.28   |        
|                    |                    |                    |                 |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         |  | 



---

|(1) |  | Represents the square footage of expiring leases, not including month-to-month tenants.
|--- |  | ---------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Percentage of total rentable space expiring during the period.                         
|   
|   
|   
|   
|(3) |  | Represents annualized ending cash rents of expiring leases.                            

21



---



##### Table of Contents



DEVELOPMENT SUMMARY
As of March 31, 2003

|                      |                   |      |        |                |         |                |                |         |           |      |            |          |               |                |              |            |               |                |              |  |              |  |        |       |  |  |           |     |           |  |  |     |   |  |  |  | 
|--------------------- | ----------------- | ---- | ------ | -------------- | ------- | -------------- | -------------- | ------- | --------- | ---- | ---------- | -------- | ------------- | -------------- | ------------ | ---------- | ------------- | -------------- | ------------ |  | ------------ |  | ------ | ----- |  |  | --------- | --- | --------- |  |  | --- | - |  |  |  | 
|                      |                   |      |        |                |         |                |                |         |           |      |            |          |               |                |              |            |               |                |              |  |              |  |        |       |  |  | Estimated |     |           |  |  |     |   |  | 
|                      |                   |      |        |                |         |                | Costs          |         |           |      |            |          | Percent       |                |              |            |               |                |              |  |              |  | Year 1 |       |  |  |           |     | Estimated
|                      |                   |      |        |                |         |                | Incurred       |         | Estimated |      | Leased     |          | Shell         |                | Estimated    |            | Stabilized    |                | Estimated    |  | Year 1      
|                      |                   |      | Square |                | To Date |                | Total Cost (1) |         | at        |      | Completion |          | Stabilization |                | Cash NOI (3) |            | Year 1 Annual |                | Annual      
|Property              |                   | Feet |        | (in thousands) |         | (in thousands) |                | 4/29/03 |           | Date |            | Date (2) |               | (in thousands) |              | Cash Yield |               | GAAP Yield (4)
|                      |                   |      |        |                |         |                |                |         |           |      |            |          |               |                |              |            |               |               
|Howard Hughes Center: |                   |      |        |                |         |                |                |         |           |      |            |          |               |                |              |            |               |                |              |  |              |  |        |       |  |  |           |     |           |  |  |     |   |  |  | 
|                      | 6100 Center Drive |      |        | 283,000        |         |                | $              | 66,915  |           |      | $          | 81,500   |               |                |              | 49         | %             |                | 2nd Qtr 2002 |  | 4th Qtr 2003 |  | $      | 6,450 |  |  |           | 7.9 | %         |  |  | 8.9 | %
|                      |                   |      |        |                |         |                |                |         |           |      |            |          |               |                |              |            |               |                |              |  |              |  |        |       |  |  |           |     |           |  |  |     |   |  |  | 



---

|(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 for up to 600 hotel rooms 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.                                                                                                                                                                                                                                                                                                                                                                                                                                   

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.
We also have construction entitlements at the Howard Hughes Center for up to
600 hotel rooms. Build-to-suit buildings consist of properties constructed to
the tenants specifications in return for the tenants long-term commitment to
the property. We do not intend to commence construction on any additional
build-to-suit buildings at the Howard Hughes Center until development plans and
budgets are finalized and build-to-suit tenant leases are signed with terms
allowing us to achieve yields commensurate with the projects development risk.

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

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




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

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. We do not enter into any
transactions for speculative or trading purposes. During 2002, we entered into
interest rate swap agreements fixing the interest rates on variable debt with
notional amounts totaling $175.0 million.

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 March
31, 2003, a 1% increase in interest rates on our $145.6 million of floating
rate debt would decrease annual future earnings and cash flows by approximately
$1.5 million and would not have an impact on the fair value of the floating
rate debt. Conversely, a 1% decrease in interest rates on our $145.6 million
of floating rate debt would increase annual future earnings and cash flows by
approximately $1.5 million and would not have an impact on the fair value of
the floating rate debt. The weighted average interest rate on our floating
debt as of March 31, 2003 was 3.31%.

Our fixed rate debt totaled $1,243.1 million as of March 31, 2003 with a
weighted average interest rate of 7.35% and a total fair value of approximately
$1,315.7 million. A 1% decrease in interest rates would increase the fair
value of our fixed rate debt by approximately $27.0 million and would not have
an impact on future earnings and cash flows. A 1% increase in interest rates
would decrease the fair value of our fixed rated debt by approximately $25.8
million and would not have an impact on future earnings and cash flows.

22



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##### Table of Contents



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




Item 4. Controls and Procedures

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

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

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

23



---



##### Table of Contents






Part II OTHER INFORMATION

Item 1. Legal Proceedings

We are presently subject to various lawsuits, claims and proceedings
arising in the ordinary course of business none of which if determined
unfavorably to us is expected to have a material adverse effect on our cash
flows, financial condition of results of operations except as described below.

In December 2001, the owner of the entertainment center at our Howard
Hughes Center project asserted a claim against us for indemnification arising
out of a Los Angeles Superior Court judgment against them, which invalidated a
transfer of in-lieu credits that we made in August of 1999 as part of our sale
of the land for the entertainment center. The value of these in-lieu credits
was approximately $6.0 million and were transferred to satisfy certain
Transportation Impact Assessment fees related to the entertainment center. On
January 17, 2003, the California Court of Appeal reversed the Superior Courts
judgment, rendering the indemnification claim moot. On January 23, 2003, the
plaintiff in the original lawsuit filed a petition for rehearing with the
California Court of Appeal. On February 8, 2003, the California Court of Appeal
denied the petition for rehearing.

Item 2. Changes in Securities  None

Item 3. Defaults Upon Senior Securities  None

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

Item 5. Other Information  None

Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits                                                                                                                                                                                                                                                                    
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | In accordance with SEC Release No. 33-8212, the following exhibit is
being furnished, and is not being filed as part of this Report or as a
separate disclosure document, and is not being incorporated by reference
into any Securities Act of 1933 registration statement:
|
| |     |  | 99.1 Officers certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                                                    
|
| | (b) |  | Reports on Form 8-K  None                                                                                                                                                                                                                                                  

24



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##### Table of Contents






SIGNATURES

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

|                   |                                                                              |                      
|------------------ | ---------------------------------------------------------------------------- | ---------------------
|                   | ARDEN REALTY, INC.                                                          
|                  
|Date: May 12, 2003 | By:                                                                          | /s/   Andrew J. Sobel
|                   |                                                                             
|                   | Andrew J. Sobel
Executive Vice President  Strategic Planning
and Operations

|                   |                                                                    |                       
|------------------ | ------------------------------------------------------------------ | ----------------------
|Date: May 12, 2003 | By:                                                                | /s/   Richard S. Davis
|                   |                                                                   
|                   | Richard S. Davis
Senior Vice President and
Chief Financial Officer

25



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##### Table of Contents






OFFICERS CERTIFICATIONS

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Richard S. Ziman, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 12, 2003



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

26



---



##### Table of Contents



CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Richard S. Davis, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 12, 2003



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

27



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##### Table of Contents



CERTIFICATION OF CHIEF OPERATING OFFICER

I, Victor J. Coleman, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 12, 2003



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

28



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##### Table of Contents



CERTIFICATION OF EXECUTIVE VICE PRESIDENT

I, Andrew J. Sobel, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 12, 2003



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

29



---



##### Table of Contents



CERTIFICATION OF SENIOR VICE PRESIDENT

I, Robert C. Peddicord, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 12, 2003



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

30



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##### Table of Contents



CERTIFICATION OF GENERAL COUNSEL

I, David A. Swartz, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Arden Realty, Inc.;                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 12, 2003



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

31