<PAGE>   1


================================================================================

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


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

                      For the quarter ended March 31, 2000

                         Commission file number 1-12193


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


                     MARYLAND                              95-04578533
   (State or other jurisdiction of incorporation         (I.R.S. Employer
                or organization)                        Identification No.)


                            11601 WILSHIRE BOULEVARD,
                                    4TH FLOOR
                       LOS ANGELES, CALIFORNIA 90025-1740
              (Address and zip code of principal executive offices)

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

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


As of May 10, 2000 there were 63,316,424 shares of the registrant's Common
Stock, $.01 par value, issued and outstanding.

================================================================================




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


<TABLE>
<CAPTION>

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

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

                 Consolidated Statements of Income for the three months ended
                    March 31, 2000 and 1999 (Unaudited).................................4

                 Consolidated Statements of Cash Flows for the three months ended
                    March 31, 2000 and 1999 (Unaudited).................................5

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

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

         Item 3. Quantitative and Qualitative Disclosures about Market Risk.,,,........18



PART II. OTHER INFORMATION.......................................,.....................19

         SIGNATURES...............................................,....................20
</TABLE>


                                       2


<PAGE>   3


PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>

                                                                                            MARCH 31,         DECEMBER 31,
                                                                                              2000                1999
                                                                                          -------------       -------------
                                                                                          (UNAUDITED)
<S>                                                                                       <C>                 <C>
ASSETS
Investment in real estate:
   Land ............................................................................      $     467,157       $     467,157
   Buildings and improvements ......................................................          1,846,183           1,833,052
   Tenant improvements .............................................................            175,253             153,161
                                                                                          -------------       -------------
                                                                                              2,488,593           2,453,370
   Less:  accumulated depreciation .................................................           (176,545)           (158,590)
                                                                                          -------------       -------------
                                                                                              2,312,048           2,294,780
   Properties under development ....................................................            210,514             183,349
                                                                                          -------------       -------------
      Net investment in real estate ................................................          2,522,562           2,478,129

Cash and cash equivalents ..........................................................              2,501               7,056
Restricted cash ....................................................................             18,685              18,513
Rent and other receivables .........................................................             11,486              11,785
Mortgage notes receivable, net of discount .........................................             13,783              13,847
Deferred rent ......................................................................             25,330              23,932
Prepaid financing costs, expenses and other assets, net of amortization ............             20,313              17,196
                                                                                          -------------       -------------
      Total assets .................................................................      $   2,614,660       $   2,570,458
                                                                                          =============       =============

LIABILITIES
Mortgage loans payable .............................................................      $     621,171       $     740,806
Unsecured lines of credit ..........................................................            212,850             288,850
Unsecured senior notes, net of discount ............................................            249,079                  --
Accounts payable and accrued expenses ..............................................             28,181              34,482
Security deposits ..................................................................             18,074              16,073
Dividends payable ..................................................................             29,442              28,195
                                                                                          -------------       -------------
      Total liabilities ............................................................          1,158,797           1,108,406
                                                                                          -------------       -------------

Minority interests .................................................................             86,133              86,294

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 20,000,000 shares authorized, none issued .........                 --                  --
Common stock, $.01 par value, 100,000,000 shares authorized,
  63,316,424 and 63,358,977 issued and outstanding, respectively ...................                633                 633
Additional paid-in capital .........................................................          1,370,417           1,377,292
Notes receivable from officers for purchase of common stock ........................             (1,320)             (2,167)
                                                                                          -------------       -------------
      Total stockholders' equity ...................................................          1,369,730           1,375,758
                                                                                          -------------       -------------
      Total liabilities and stockholders' equity ...................................      $   2,614,660       $   2,570,458
                                                                                          =============       =============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>   4



                               ARDEN REALTY, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED
                                                                      MARCH 31,
                                                            ----------------------------
                                                                2000           1999
                                                            -------------  -------------

<S>                                                         <C>            <C>
Revenue ..............................................      $      89,678  $      79,336
Property operating expenses ..........................             25,347         23,510
                                                            -------------  -------------
                                                                   64,331         55,826

General and administrative expenses ..................              1,821          1,496
Interest expense .....................................             17,852         13,183
Depreciation and amortization ........................             20,147         16,215
Interest and other income ............................               (855)          (670)
                                                            -------------  -------------
Income before minority interest ......................             25,366         25,602
Minority interests ...................................             (1,875)        (1,211)
                                                            -------------  -------------
Net income ...........................................      $      23,491  $      24,391
                                                            =============  =============

Net income per common share:
      Basic ..........................................      $        0.37  $        0.39
                                                            =============  =============
      Diluted ........................................      $        0.37  $        0.39
                                                            =============  =============

Weighted average common shares outstanding:
      Basic ..........................................             63,316         62,408
                                                            =============  =============
      Diluted ........................................             63,414         62,501
                                                            =============  =============
</TABLE>



          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>   5

                               ARDEN REALTY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                    THREE MONTHS ENDED
                                                                                         MARCH 31,
                                                                                 -------------------------
                                                                                    2000            1999
                                                                                 ---------       ---------
<S>                                                                              <C>             <C>
OPERATING ACTIVITIES:
  Net income ..............................................................      $  23,491       $  24,391
  Adjustments to reconcile net income to net cash
    provided by operating activities:

    Minority interests ....................................................          1,875           1,211
    Depreciation and amortization .........................................         20,147          16,215
    Amortization of loan costs ............................................            884             568
    Changes in operating assets and liabilities:
        Rent and other receivables ........................................            363           1,801
        Deferred rent .....................................................         (1,398)         (1,609)
        Prepaid financing costs, expenses and other assets ................         (4,001)         (6,091)
        Accounts payable and accrued expenses .............................          2,124           5,730
        Security deposits .................................................          2,001             178
                                                                                 ---------       ---------
  Net cash provided by operating activities ...............................         45,486          42,394
                                                                                 ---------       ---------
INVESTING ACTIVITIES:
  Acquisitions and improvements to investment in real estate ..............        (73,082)        (44,614)
                                                                                 ---------       ---------
FINANCING ACTIVITIES:
  Proceeds from mortgage loans ............................................         31,500          30,002
  Repayments of mortgage loans ............................................       (151,135)           (170)
  Proceeds from unsecured lines of credit .................................         21,000          12,200
  Repayments of unsecured lines of credit .................................        (97,000)        (12,200)
  Proceeds from unsecured senior notes, net of discount ...................        249,079              --
  Distributions to preferred operating partnership unit holders ...........         (1,078)             --
  Increase in restricted cash .............................................           (172)         (2,776)
  Distributions to minority interests .....................................           (958)         (1,303)
  Dividends paid ..........................................................        (28,195)        (26,210)
                                                                                 ---------       ---------
  Net cash provided by (used in) financing activities .....................         23,041            (457)
                                                                                 ---------       ---------
  Net decrease in cash and cash equivalents ...............................         (4,555)         (2,677)
  Cash and cash equivalents at beginning of period ........................          7,056           4,578
                                                                                 ---------       ---------
  Cash and cash equivalents at end of period ..............................      $   2,501       $   1,901
                                                                                 =========       =========
  Supplemental Disclosure of Cash Flow Information:
  Cash paid during the period for interest, net of amount capitalized .....      $  19,227       $  15,102
                                                                                 =========       =========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>   6

                               ARDEN REALTY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000
                                   (UNAUDITED)


1.    DESCRIPTION OF BUSINESS

           The terms "Arden Realty", "us", "we" and "our" as used in this report
refer to Arden Realty, Inc. Through our controlling interest in Arden Realty
Limited Partnership (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, 2000, our portfolio was
comprised of 142 primarily suburban office properties (the "Properties") with
approximately 18.5 million net rentable square feet and three properties with
approximately 700,000 net rentable square feet under development.

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

2.    INTERIM FINANCIAL DATA

           The accompanying consolidated financial statements should be read in
conjunction with our 1999 Annual Report on Form 10-K as filed with the
Securities and Exchange Commission. The accompanying financial information
reflects all adjustments, which are, in our opinion, of a normal recurring
nature and necessary for a fair presentation of our financial position, results
of operations and cash flows for the interim periods. Interim results of
operations are not necessarily indicative of the results to be expected for the
full year.

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



                                       6
<PAGE>   7

3. MORTGAGE LOANS PAYABLE, UNSECURED LINES OF CREDIT AND UNSECURED SENIOR NOTES

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

<TABLE>
<CAPTION>

                                                                       STATED ANNUAL
                                     MARCH 31,                       INTEREST RATE AT                       NUMBER OF      MATURITY
                                        2000         DECEMBER 31,     MARCH 31, 2000    FIXED/FLOATING      PROPERTIES      MONTH/
TYPE OF DEBT                        (UNAUDITED)          1999           (UNAUDITED)           RATE         SECURING LOAN     YEAR
------------                        -----------     ---------------  ----------------   ---------------    -------------  ---------
                                              (IN THOUSANDS)
<S>                               <C>               <C>              <C>                <C>                <C>            <C>
MORTGAGE LOANS PAYABLE:
Fixed Rate
Mortgage Financing I(1)........   $    175,000      $    175,000            7.52%       Fixed                     18          6/04
Mortgage Financing III(2)......        136,100           136,100            6.74        Fixed                     22          4/08
Mortgage Financing IV(2).......        111,200           111,200            6.61        Fixed                     12          4/08
Mortgage Financing V(3)........        113,566           114,016            6.94        Fixed                     12          4/09
Mortgage Financing VI(3).......         22,392            22,426            7.54        Fixed                      3          4/09
Westwood Center(3).............         14,778            14,859            8.09        Fixed                      1          5/03
Activity Business Center(3)....          7,981             8,003            8.85        Fixed                      1          5/06
299 North Euclid(1)............             --             5,000            7.00        Fixed                      1          7/02
145 South Fairfax(3)...........          4,042             4,050            8.93        Fixed                      1          1/27
Marin Corporate Center(3)......          3,137             3,168            9.00        Fixed                      1          7/15
Conejo Business Center(3)......          3,083             3,114            8.75        Fixed                (Note 4)         7/15
Conejo Business Center(3)......          1,343             1,358            7.88        Fixed                (Note 4)         7/15
                                  ------------      ------------
                                       592,622           598,294
Floating Rate
Lehman Prepayable Term Loan II
   and III(1)..................             --           120,475              --        LIBOR + 2.25%              9         11/00
Construction Loan(6)...........         28,549            22,037            8.13        LIBOR + 2.0%         (Note 5)        12/00
                                  ------------      ------------
                                       621,171           740,806
UNSECURED LINES OF CREDIT:
Floating Rate
Wells Fargo(1).................        212,850           280,850            7.38        LIBOR + 1.3%              --          6/00
City National Bank(1)..........             --             8,000              --        Prime Rate - 0.875%       --          8/00
                                  ------------      ------------
                                       212,850           288,850
UNSECURED SENIOR NOTES:
Fixed Rate
2005 Notes(7)..................        199,488                --            8.88        Fixed                     --          3/05
2010 Notes(7)..................         49,591                --            9.15        Fixed                     --          3/10
                                  ------------      ------------
                                       249,079                --
                                  ------------      ------------
   Total Debt..................   $  1,083,100      $  1,029,656
                                  ============      ============
</TABLE>

      ----------

(1)  Requires monthly payments of interest only, with outstanding principal
     balance due upon maturity.
(2)  Requires monthly payments of interest only for five years and monthly
     payments of principal and interest thereafter.
(3)  Requires monthly payments of principal and interest.
(4)  Both mortgage loans are secured by the Conejo Business Center property.
(5)  This loan is secured by certain property and construction improvements
     relating to the 6060 Center Drive office building in the Howard Hughes
     Center.
(6)  All interest and principal due upon maturity. This loan matures in December
     2000 with two one-year extension options.
(7)  Requires semi-annual interest payments only, with principal balance due
     upon maturity.

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

           On March 17, 2000, the Operating Partnership issued $250 million of
senior unsecured notes in two tranches. One tranche was for $200 million at an
interest rate of 8.875% due in March 2005 and the other tranche was for $50
million at an interest rate of 9.150% due in March 2010. These notes are the
Operating Partnership's senior unsecured obligations and pay interest
semi-annually on March 1, and September 1, of each year. Net proceeds from this
offering were used to repay two prepayable term loans to an affiliate of Lehman
Brothers described above totaling $145.5 million, a $5.0 million mortgage loan
and approximately $96.1 million under our unsecured lines of credit. These
senior unsecured notes were issued in a private placement in reliance upon an
exemption from registration provided by Rule 144 under the Securities Act. As
part of issuing these notes, the Operating Partnership filed a registration
statement

                                       7
<PAGE>   8

with the Securities and Exchange Commission enabling the holders of the notes to
exchange the privately placed notes for publicly traded notes.

           This registration statement became effective on May 10, 2000 and the
holders of the privately placed notes will have until June 5, 2000 to exchange
such notes for the Operating Partnership's registered notes.

           On May 3, 2000, we extended our unsecured line of credit with a group
of banks led by Wells Fargo, or the Lenders. The extended line of credit
provides for borrowings up to $275 million with an option to increase the amount
to $325 million and bears interest at a rate ranging between LIBOR plus 1.15%
and LIBOR plus 1.80% (including an annual facility fee ranging from .20% to .40%
based on the aggregate amount of the facility) depending on our unsecured debt
rating. In addition, as long as we maintain an unsecured debt rating of
BBB-/Baa3 or better, the agreement contains a competitive bid option, whereby
the Lenders may bid on the interest rate to be charged for up to $137.5 million
of the unsecured line of credit. Under certain circumstances, we also have the
option to convert the interest rate on this line of credit to the prime rate
plus 0.5%. This line of credit matures in May 2003 with an option to extend the
maturity date for one year.

4.    STOCKHOLDERS' EQUITY

           On March 17, 2000, we declared a first quarter dividend of $0.465 per
share to shareholders of record on March 31, 2000.

5.    REVENUE FROM RENTAL OPERATIONS AND PROPERTY OPERATING EXPENSES

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

<TABLE>
<CAPTION>

                                                               THREE MONTHS ENDED MARCH 31,
                                                              ------------------------------
                                                                  2000              1999
                                                              ------------      ------------
                                                                       (UNAUDITED)
<S>                                                           <C>               <C>
Revenue from Rental Operations:
   Rental ..............................................      $     77,513      $     69,510
   Tenant reimbursements ...............................             3,592             3,467
   Parking, net of expenses ............................             3,972             3,182
   Other rental operations .............................             4,601             3,177
                                                              ------------      ------------
                                                                    89,678            79,336
                                                              ------------      ------------
Property Operating Expenses:
   Repairs and maintenance .............................             8,402             7,670
   Utilities ...........................................             6,110             6,341
   Real estate taxes ...................................             6,264             5,747
   Insurance ...........................................             1,041               982
   Ground rent .........................................               198               181
   Marketing and other .................................             3,332             2,589
                                                              ------------      ------------
                                                                    25,347            23,510
                                                              ------------      ------------
                                                              $     64,331      $     55,826
                                                              ============      ============
</TABLE>


6.    RELATED PARTY TRANSACTIONS

      Andrew Sobel resigned as Executive Vice President and Director of Property
Operations effective February 18, 2000. At the time of his termination, Mr.
Sobel surrendered 42,553 shares of our common stock underlying a promissory note
in the amount of $1.0 million payable to Arden Realty and executed a new
promissory note in the amount of $223,887, representing the difference between
the value of the common stock surrendered and the unpaid principal and interest
on his original promissory note. The new promissory note bears interest at
6.56%, with all accrued interest and principal due on February 18, 2002. In
addition, effective with his termination, Mr. Sobel entered into a consulting
and non-competition agreement with us for a term of two years. Under this
agreement, Mr. Sobel will


                                       8
<PAGE>   9

receive compensation of $6,000 per month, which will be applied against the
unpaid interest and principal on the new promissory note.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW

           The following discussion relates to our consolidated financial
statements and should be read in conjunction with the financial statements and
related notes thereto included in our 1999 Annual Report on Form 10-K.

           We are a self-administered and self-managed real estate investment
trust, or REIT, that owns, manages, leases, develops, renovates and acquires
commercial properties located in Southern California. We are a full-service real
estate organization managed by 11 senior executive officers who have an average
of 16 years of experience in the real estate industry. We perform all property
management, accounting, finance and acquisition activities and a majority of our
leasing transactions with our own staff of approximately 300 employees.

           We are Southern California's largest publicly traded office landlord
as measured by total net rentable square feet owned, as of March 31, 2000. Since
our formation in 1996, we have acquired 118 properties containing approximately
14.5 million net rentable square feet for a total purchase price of
approximately $1.9 billion. As of March 31, 2000, our portfolio consisted of 142
primarily suburban office properties containing approximately 18.5 million net
rentable square feet and three properties with approximately 700,000 net
rentable square feet under development. As of March 31, 2000, our properties
were approximately 95.4% leased, excluding three existing properties under
renovation.

           Our primary business strategy is to actively manage our portfolio to
achieve gains in occupancy and rental rates, maximize income from ancillary
operations and services and to reduce operating expenses. When market conditions
permit, we may also develop or acquire new properties in submarkets where we can
use our local market expertise and extensive real estate experience.

                                       9
<PAGE>   10

RESULTS OF OPERATIONS

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

           Comparison of the three months ended March 31, 2000 to the three
months ended March 31, 1999 (in thousands, except number of properties and
percentages):

<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED
                                                                MARCH 31,
                                                         ----------------------       DOLLAR         PERCENT
                                                           2000          1999         CHANGE          CHANGE
                                                         --------      --------      --------        --------
<S>                                                      <C>           <C>           <C>             <C>
REVENUE
  Revenue from rental operations:
    Rental ........................................      $ 77,513      $ 69,510      $  8,003              12%
    Tenant reimbursements .........................         3,592         3,467           125               4%
    Parking, net of expenses ......................         3,972         3,182           790              25%
    Other rental operations .......................         4,601         3,177         1,424              45%
                                                         --------      --------      --------        --------
                                                           89,678        79,336        10,342              13%
  Interest and other income .......................           855           670           185              28%
                                                         --------      --------      --------        --------
    Total revenue .................................      $ 90,533      $ 80,006      $ 10,527              13%
                                                         ========      ========      ========        ========

EXPENSES
  Property operating expenses:
    Repairs and maintenance .......................      $  8,402      $  7,670      $    732              10%
    Utilities .....................................         6,110         6,341          (231)             (4%)
    Real estate taxes .............................         6,264         5,747           517               9%
    Insurance .....................................         1,041           982            59               6%
    Ground rent ...................................           198           181            17               9%
    Marketing and other ...........................         3,332         2,589           743              29%
                                                         --------      --------      --------        --------
        Total property operating expenses .........        25,347        23,510         1,837               8%
  General and administrative ......................         1,821         1,496           325              22%
  Interest ........................................        17,852        13,183         4,669              35%
  Depreciation and amortization ...................        20,147        16,215         3,932              24%
                                                         --------      --------      --------        --------
    Total expenses ................................      $ 65,167      $ 54,404      $ 10,763              20%
                                                         ========      ========      ========        ========

OTHER DATA:
NUMBER OF PROPERTIES
  Acquired during period ..........................            --             1
  Owned at end of period ..........................           142           139

NET RENTABLE SQUARE FEET:
  Acquired during period ..........................            --            60
  Owned at end of period ..........................        18,492        18,028
</TABLE>

                                       10
<PAGE>   11


           The increase in revenue from rental operations and property operating
expenses for the three months ended March 31, 2000 as compared to the same
period in 1999 was primarily due to the 4 properties we acquired and the 5
properties placed in renovation after January 1, 1999.

           Following is a summary of the increase in revenue from rental
operations and property operating expenses that relates to the 9 properties we
acquired or placed in renovation after January 1, 1999 and for the 133
stabilized properties we owned for all of the three month periods ended March
31, 2000 and 1999 (in thousands, except number of properties).

<TABLE>
<CAPTION>

                                                                                                         STABILIZED PROPERTIES OWNED
                                                                            PROPERTIES ACQUIRED OR             FOR ALL OF THE
                                                                             PLACED IN RENOVATION            THREE MONTHS ENDED
                                                      TOTAL VARIANCE         AFTER JANUARY 1, 1999      MARCH 31,  1999 AND 2000(1)
                                                      --------------        -----------------------     ----------------------------
<S>                                                   <C>                   <C>                         <C>
REVENUE FROM RENTAL OPERATIONS:
   Rental .........................................       $  8,003                $  4,143                        $  3,860
   Tenant reimbursements ..........................            125                     314                            (189)
   Parking, net of operations .....................            790                     321                             469
   Other rental operations ........................          1,424                     485                             939
                                                          --------                --------                        --------
                                                          $ 10,342                $  5,263                        $  5,079
                                                          ========                ========                        ========

PROPERTY OPERATING EXPENSES:
   Repairs and maintenance ........................       $    732                $    519                        $    213
   Utilities ......................................           (231)                    407                            (638)
   Real estate taxes ..............................            517                     383                             134
   Insurance ......................................             59                      54                               5
   Ground rent ....................................             17                      --                              17
   Marketing and other ............................            743                     157                             586
                                                          --------                --------                        --------
                                                          $  1,837                $  1,520                        $    317
                                                          ========                ========                        ========

OTHER DATA:
   Number of properties ...........................                                      9                            133
   Net rentable square feet .......................                                  1,592                         16,900
</TABLE>

---------

(1) See the Same Properties analysis below.

           Interest and other income increased by approximately $185,000 or 28%
during the three months ended March 31, 2000, as compared to the same period in
1999, primarily due to higher interest income earned in 2000 on higher
restricted cash balances required by certain mortgage loans entered into after
March 31, 1999.

           General and administrative expenses as a percentage of total revenues
were approximately 2.0% of total revenues during the three months ended March
31, 2000, which were consistent with general and administrative expenses of 1.9%
of total revenues during the same period in 1999.

           Interest expense increased approximately $4.7 million or 35% during
the three months ended March 31, 2000, as compared to the same period in 1999.
This increase was due to higher outstanding debt balances in 2000, primarily
used to fund property acquisitions, capital expenditures and tenant
improvements, as well as higher effective interest rates in 2000.

           Depreciation and amortization expense increased by approximately $3.9
million during the three months ended March 31, 2000, primarily due to
depreciation related to properties acquired and for capital expenditures and
tenant improvements placed in service since April 1, 1999.


                                       11
<PAGE>   12

SAME PROPERTIES

           Following is a comparison of property operating data computed under
generally accepted accounting principles ("GAAP Basis") and excluding the
straight-line rent adjustment ("Cash Basis") for the 133 stabilized properties
we owned for the entire three month periods ended March 31, 2000 and 1999 (in
thousands, except number of properties and percentages):


<TABLE>
<CAPTION>

                                                                     THREE MONTHS ENDED
                                                                          MARCH 31,
                                                             --------------------------------            DOLLAR            PERCENT
                                                                2000                 1999                CHANGE             CHANGE
                                                             -----------          -----------           ---------         ----------
                                                                        (Unaudited)
<S>                                                          <C>                  <C>                   <C>                     <C>
GAAP BASIS:
Revenue from rental operations........................       $    83,066          $    77,987           $   5,079               6.5%
Property operating expenses...........................            23,433               23,116                 317               1.3%
                                                             -----------          -----------           ---------         ----------
        Net...........................................       $    59,633          $    54,871           $   4,762               8.7%
                                                             ===========          ===========           =========         ==========

CASH BASIS(1):

Revenue from rental operations........................       $    81,892          $    76,376           $   5,516               7.2%
Property operating expenses...........................            23,433               23,116                 317               1.3%
                                                             -----------          -----------           ---------         ----------
        Net...........................................       $    58,459          $    53,260           $   5,199               9.8%
                                                             ===========          ===========           =========         ==========

Number of stabilized properties.......................               133                  133
Average occupancy.....................................              93.9%                91.0%
Net rentable square feet..............................            16,900               16,900
Percentage of total portfolio.........................              91.4%                96.2%
</TABLE>
----------------
(1)   Excludes straight-line rent adjustments.

           Revenue from rental operations for these properties, computed on a
GAAP basis, increased by approximately $5.1 million, or 6.5%, during the three
months ended March 31, 2000, compared to the same period in 1999, primarily due
to a 2.9% increase in average occupancy and increases in average rental rates.
This increase in occupancy not only contributed to higher rental revenue but
also resulted in higher parking income and miscellaneous tenant charges.
Miscellaneous tenant charges include revenue from after-hour utility billings,
signage, satellite income and lease termination settlements. Lease termination
settlements totaled approximately $2.5 million in 2000 compared to $2.6 million
in 1999 for these properties.

           Excluding only the straight-line rent adjustments for these
properties, revenue from rental operations for the three months ended March 31,
2000, computed on a Cash Basis, increased by approximately $5.5 million or 7.2%.

           Property operating expenses for these properties increased by
approximately $300,000, or 1.3%, during the three months ended March 31, 2000,
compared to the same period in 1999, primarily due to higher repair and
maintenance, real estate taxes, and marketing and other expenses in 2000,
partially offset by lower utilities expense. Increases in certain repair and
maintenance expense items were primarily due to the approximate 2.9% increase in
average occupancy for these properties in 2000. Due to our continued focus on
raising our portfolio-wide occupancy, certain marketing and tenant retention
related expenses were also higher in 2000. These increases in property operating
expenses in 2000 were partially offset by an approximate $638,000 decrease in
utility expense in 2000 as a result of energy savings achieved from energy
enhancing capital improvements completed during 1999.


LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS

           Cash provided by operating activities increased by approximately $3.1
million to $45.5 million for the three months ended March 31, 2000, as compared
to $42.4 million for the same period in 1999, primarily due to the operating
results of the 9 properties acquired or placed in renovation since January 1,
1999 as well as the increases in occupancy and rates throughout our portfolio.

           Cash used in investing activities increased by approximately $28.5
million, to approximately $73.1 million for the three months ended March 31,
2000 compared to approximately $44.6 million for the same period in 1999,
primarily due to our increased development, renovation activity and tenant
improvements build out in 2000.

                                       12
<PAGE>   13

           Cash provided by financing activities increased by approximately
$23.5 million to $23.0 million for the three months ended March 31, 2000, as
compared to an outflow of $0.5 million for the same period in 1999. Cash
provided by financing activities for the three months ended March 31, 2000
consisted primarily of net proceeds from our offering of unsecured senior notes
partially offset by repayments of mortgage loans, paydowns of our unsecured
lines of credit and distributions to stockholders and minority interests.

AVAILABLE BORROWINGS, CASH BALANCE AND CAPITAL RESOURCES

           We have an unsecured line of credit with a total commitment of $10
million from City National Bank (the "City National Bank Credit Facility"). The
City National Bank Credit Facility accrues interest at the City National Bank
Prime Rate less 0.875% and is scheduled to mature on August 1, 2000. Proceeds
from the City National Bank Credit Facility will be 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, 2000, there was no
outstanding balance on the City National Bank Credit Facility and $10 million
was available for additional borrowing.

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

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

           On May 3, 2000, we extended our unsecured line of credit with a group
of banks led by Wells Fargo, or the Lenders. The extended line of credit
provides for borrowings up to $275 million with an option to increase the amount
to $325 million and bears interest at a rate ranging between LIBOR plus 1.15%
and LIBOR plus 1.80% (including an annual facility fee ranging from .20% to .40%
based on the aggregate amount of the facility) depending on our unsecured debt
rating. In addition, as long as we maintain an unsecured debt rating of
BBB-/Baa3 or better, the agreement contains a competitive bid option, whereby
the Lenders may bid on the interest rate to be charged for up to $137.5 million
of the unsecured line of credit. Under certain circumstances, we also have the
option to convert the interest rate on this line of credit to the prime rate
plus 0.5%. This line of credit matures in May 2003 with an option to extend the
maturity date for one year.

           Following is a summary of scheduled principal payments for our total
debt outstanding as of March 31, 2000 (in thousands):

<TABLE>
<CAPTION>

            YEAR                                                                         AMOUNT
        -----------                                                                   ------------
<S>     <C>                                                                           <C>
        2000.................................................................         $     30,664(1)
        2001.................................................................                3,004
        2002.................................................................                3,236
        2003.................................................................              232,307
        2004.................................................................              182,445
        2005.................................................................              207,472
        2006.................................................................               15,344
        2007.................................................................                8,936
        2008.................................................................              230,429
        2009.................................................................              112,104
        Thereafter...........................................................               57,159
                                                                                      ------------
            Total.............................................................        $  1,083,100
                                                                                      ============
</TABLE>

      ----------

(1)   Reflects extension of our Wells Fargo line of credit to May 2003.

                                       13
<PAGE>   14

           Following is certain other information related to our indebtedness as
of March 31, 2000 (in thousands, except percentage data):


           UNSECURED AND SECURED DEBT ANALYSIS:
<TABLE>
<CAPTION>

                                                                                              WEIGHTED
                                                                                              AVERAGE
                                                           BALANCE       PERCENT         INTEREST RATE(1)
                                                        -------------  -----------       -----------------

<S>                                                     <C>            <C>               <C>
           Unsecured Debt............................   $     461,929         43%              8.47%
           Secured Debt..............................         621,171         57%              7.47%
                                                        -------------     ------              -----
           Total Debt................................   $   1,083,100        100%              7.90%
                                                        =============     ======              =====

           FLOATING AND FIXED RATE DEBT ANALYSIS:

                                                                                              WEIGHTED
                                                                                              AVERAGE
                                                           BALANCE       PERCENT         INTEREST RATE(1)
                                                        -------------  -----------       -----------------
<S>                                                     <C>             <C>              <C>

           Floating Rate Debt........................   $     241,399          22%             7.99%
           Fixed Rate Debt...........................         841,701          78%             7.87%
                                                        -------------      ------             -----
           Total Debt................................   $   1,083,100         100%             7.90%
                                                        =============      ======             =====
</TABLE>

           (1) Includes amortization of prepaid financing costs.

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

<TABLE>
<CAPTION>

                                                 FOR THE THREE MONTHS ENDED MARCH 31,
                                                       2000               1999
                                                     --------           --------

<S>                                              <C>                    <C>
Total interest incurred ...................          $ 20,693           $ 15,487
Amount capitalized ........................            (2,841)            (2,304)
                                                     --------           --------
Amount expensed ...........................          $ 17,852           $ 13,183
                                                     ========           ========
</TABLE>


           As of March 31, 2000, we had $21.2 million in cash and cash
equivalents, including $18.7 million in restricted cash representing interest
bearing cash deposits required by five of our mortgage loans payable. Also
included in cash and cash equivalents were $4.9 million in cash impound accounts
for real estate taxes and insurance as required by several of our mortgage loans
payable.

           As of March 31, 2000, we had $97.1 million available under our lines
of credit.

           We expect to continue meeting our short-term liquidity and capital
requirements generally through net cash provided by operating activities and
proceeds from our lines of credit. We believe that the net cash provided by
operating activities will continue to be sufficient to pay any distributions
necessary to enable us to continue qualifying as a REIT. We also believe the
foregoing sources of liquidity will be sufficient to fund our short-term
liquidity needs for the foreseeable future, including recurring non-revenue
enhancing capital expenditures, tenant improvements and leasing commissions.

           We expect to meet our long-term liquidity and capital requirements
such as scheduled principal repayments, renovation costs, property acquisitions
and other non-recurring capital expenditures through the refinancing of existing
indebtedness and/or the issuance of long-term debt and equity securities.

                                       14
<PAGE>   15

FUNDS FROM OPERATIONS

           The following table reflects the calculation of our funds from
operations for the three month periods ended March 31, 2000 and 1999 (in
thousands):

<TABLE>
<CAPTION>

                                                                                 THREE MONTHS ENDED MARCH 31,
                                                                                -------------------------------
                                                                                  2000                  1999
                                                                                ---------             ---------
<S>                                                                             <C>                   <C>
         FUNDS FROM OPERATIONS(1):                                                        (Unaudited)
            Net income..................................................        $  23,491             $  24,391
            Depreciation and amortization of real estate assets.........           20,147                16,215
            Minority interest...........................................            1,875                 1,211
            Distributions on Preferred Operating Partnership Units......           (1,078)                    -
                                                                                ---------             ---------
              Funds From Operations.....................................        $  44,435             $  41,817
                                                                                =========             =========
</TABLE>

----------

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

        The White Paper on funds from operations approved by the Board of
        Governors of NAREIT in October 1999 defines funds from operations as net
        income or loss computed in accordance with GAAP, excluding gains or
        losses, from extraordinary items, as defined by GAAP, and gains and
        losses from sales of depreciable operating property plus real
        estate-related depreciation and amortization and after adjustments for
        unconsolidated partnerships and joint ventures. We compute funds from
        operations in accordance with standards established by the White Paper
        which may differ from the standards used by other REITs and,
        accordingly, our funds from operations may not be comparable to other
        REITs.


PORTFOLIO AND LEASE INFORMATION

           The following tables set forth certain information regarding our
Properties as of March 31, 2000.

                                PORTFOLIO SUMMARY

<TABLE>
<CAPTION>



        LOCATION                          NUMBER OF PROPERTIES                APPROXIMATE NET RENTABLE SQUARE FEET
                                                                                         (in thousands)
-------------------------    -------------------------------------------   -------------------------------------------
                                       Industrial                 % of                Industrial                 % of
                             Office    and Retail    Total        Total     Office    and Retail    Total        Total
                             -------   ----------   -------      -------   -------   ----------   -------      -------
<S>                          <C>       <C>          <C>          <C>       <C>       <C>          <C>          <C>
Los Angeles County
  West ...................        28            1        29           20%     4,684           37     4,721           26%
  North ..................        31           --        31           22%     2,767           --     2,767           15%
  South ..................        16           --        16           12%     2,202           --     2,202           12%
  Central ................         3           --         3            2%       609           --       609            3%
                             -------   ----------   -------      -------    -------   ----------   -------      -------

    Subtotal .............        78            1        79           56%    10,262           37    10,299           56%

Orange County ............        21           --        21           15%     3,317           --     3,317           18%
San Diego County .........        21           --        21           15%     2,487           --     2,487           13%
Ventura County ...........         4           --         4            3%       562           --       562            3%
Riverside/San
  Bernardino Counties ....         8            4        12            8%       554          415       969            6%
Kern County ..............         2           --         2            1%       216           --       216            1%
                             -------   ----------   -------      -------    -------   ----------   -------      -------

  Subtotal ...............       134            5       139           98%    17,398          452    17,850           97%

Renovation Properties ....         3           --         3            2%       642           --       642            3%
                             -------   ----------   -------      -------    -------   ----------   -------      -------

  Total ..................       137            5       142(1)       100%    18,040          452    18,492(1)       100%
                             =======   ==========   =======      =======    =======   ==========   =======      =======

<CAPTION>


                              PROPERTY OPERATING
                             INCOME FOR THE THREE
                              MONTHS ENDED MARCH
                                  31, 2000
                                (in thousands)
                             --------------------
                                         % of
                               Total     Total
                             -------   -------
<S>                         <C>        <C>
Los Angeles County
  West ...................   $23,432        36%
  North ..................     9,664        15%
  South ..................     6,236        10%
  Central ................     1,799         3%
                             -------   -------

    Subtotal .............    41,131        64%

Orange County ............    10,675        17%
San Diego County .........     7,881        12%
Ventura County ...........     1,679         3%
Riverside/San
  Bernardino Counties ....     1,897         3%
Kern County ..............       778         1%
                             -------   -------

  Subtotal ...............    64,041       100%


Renovation Properties ....       290         0%
                             -------   -------

  Total ..................   $64,331       100%
                             =======   =======
</TABLE>

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

                                       15
<PAGE>   16

                           PORTFOLIO OCCUPANCY SUMMARY

<TABLE>
<CAPTION>

                                  PERCENT OCCUPIED                    PERCENT LEASED                 ANNUALIZED BASE RENT
         LOCATION                 AT MARCH 31, 2000                 AT MARCH 31, 2000               PER LEASED SQUARE FOOT (1)
--------------------------   ------------------------------   -------------------------------   -----------------------------------
                                                                                                                            Full
                                      Industrial                      Industrial                       Industrial          Service
                                         and                             and                              and              Gross
                            Office      Retail       Total    Office    Retail      Total       Office   Retail    Total   Leases(2)
                            ------    ----------    ------    ------    ------    ----------    ------   ------   ------   ------
<S>                         <C>       <C>           <C>       <C>     <C>         <C>           <C>    <C>        <C>      <C>
Los Angeles County:
  West ....................   93.8%        100.0%     93.9%     95.0%    100.0%         95.0%   $22.26   $24.60   $22.28   $22.26
  North ...................   94.7%           --      94.7%     95.4%       --          95.4%    19.87       --    19.87    21.40
  South ...................   93.9%           --      93.9%     95.7%       --          95.7%    17.63       --    17.63    19.23
  Central .................   85.7%           --      85.7%     94.8%       --          94.8%    19.74       --    19.74    19.74
Orange County .............   95.3%           --      95.3%     96.3%       --          96.3%    16.38       --    16.38    19.15
San Diego County ..........   97.5%           --      97.5%     98.0%       --          98.0%    15.89       --    15.89    18.74
Ventura County ............   98.3%           --      98.3%     98.3%       --          98.3%    17.26       --    17.26    17.26
Riverside/San
  Bernardino Counties .....   79.8%         94.8%     86.2%     79.8%     96.2%         86.8%    14.48     8.56    11.67    17.31
Kern County ...............   88.7%           --      88.7%     88.7%       --          88.7%    21.28       --    21.28       --
                            ------    ----------    ------    ------    ------    ----------    ------   ------   ------   ------

   SUBTOTAL/ WEIGHTED AVG..   94.1%         95.2%     94.2%     95.3%     96.5%         95.4%    18.75     9.92    18.52    20.47

Renovation Properties .....   27.3%           --      27.3%     64.9%       --          64.9%    30.01       --    30.01    30.01
                            ------    ----------    ------    ------    ------    ----------    ------   ------   ------   ------

   TOTAL/ WEIGHTED AVG ....   91.7%         95.2%     91.8%     94.3%     96.5%         94.3%   $19.02   $ 9.92   $18.80   $20.78
                            ======    ==========    ======    ======    ======    ==========    ======   ======   ======   ======
</TABLE>


(1)   Based on monthly contractual base rent under existing leases as of March
      31, 2000, multiplied by 12 and divided by leased net rentable square feet;
      for those leases where rent has not yet commenced or which are in a free
      rent period, the first month in which rent is to be received is used to
      determine annualized base rent.

(2)  Excludes 48 properties and 4,722,281 net rentable square feet under triple
     net and modified gross leases.



                                LEASE EXPIRATIONS

                              As of March 31, 2000

<TABLE>
<CAPTION>

                                       SQUARE
                                      FOOTAGE OF         PERCENTAGE OF                               ESTIMATED MARKET
                        NUMBER OF      EXPIRING            AGGREGATE     ANNUALIZED BASE RENT OF         RENT OF
   YEAR OF LEASE         LEASES        LEASES          PORTFOLIO LEASED     EXPIRING LEASES           EXPIRING LEASES
   EXPIRATION           EXPIRING    (IN THOUSANDS)        SQUARE FEET      (PER SQUARE FOOT)        (PER SQUARE FOOT) (1)
------------------    ------------  ---------------    ----------------  -----------------------    ---------------------
<S>                   <C>           <C>                <C>               <C>                        <C>
Month-to-Month ...       195              352                2.02%             $   21.84                   $  25.08
2000(2)...........       489            1,647                9.45%             $   18.09                   $  21.61
2001..............       626            2,435               13.96%             $   18.63                   $  22.93
2002..............       615            2,742               15.72%             $   18.78                   $  25.35
2003..............       465            2,908               16.68%             $   20.10                   $  26.00
2004..............       393            2,734               15.68%             $   20.30                   $  26.22
</TABLE>


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

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

                                       16
<PAGE>   17

                                LEASING ACTIVITY

                    For the Three Months Ended March 31, 2000

<TABLE>
<CAPTION>


       NET ABSORPTION                                      WEIGHTED AVERAGE      TENANT IMPROVEMENTS
        (SQUARE FEET)                                       NEW LEASE TERM         AND COMMISSIONS
       (IN THOUSANDS)               RETENTION RATE (1)        (IN MONTHS)        (PER SQUARE FOOT) (2)
------------------------------    ---------------------   ------------------   -----------------------
                                                                                   New        Renewal
                                                                                --------     --------
<S>                               <C>                     <C>                  <C>           <C>
              291                        72.0%                     60.5         $  15.80     $  10.35
          =======                     ========                 ========         ========     ========
</TABLE>


--------------------
  (1)  Percentage of leases in which tenants were retained at lease expiration.
  (2)  Excludes properties under renovation and development.


                         DEVELOPMENT/RENOVATION SUMMARY

                              As of March 31, 2000
<TABLE>
<CAPTION>


                                                   COSTS                       PERCENT      ESTIMATED
                                                 INCURRED        ESTIMATED      LEASED    CONSTRUCTION      ESTIMATED
                                                  TO DATE     TOTAL COST (1)      AT       COMPLETION     STABILIZATION
  PROPERTY                      SQUARE FEET    (IN THOUSANDS) (IN THOUSANDS)   4/24/00        DATE             DATE
  --------                      -----------    -------------- --------------   -------    ------------    --------------
<S>                             <C>            <C>            <C>              <C>        <C>             <C>
  DEVELOPMENT:
  HOWARD HUGHES CENTER
    6060 CENTER DRIVE                240,724    $   38,017      $   56,000      100%       2nd Qtr 2000    3rd Qtr 2000
    UNIVISION BUILDING               158,473         4,944          51,700      100%       3rd Qtr 2001    3rd Qtr 2001
    6080 CENTER DRIVE                283,204        15,822          75,330        0%       2nd Qtr 2001    4th Qtr 2002
    UNALLOCATED ACQUISITION
       AND MASTER PLAN
       COSTS (1),(2)                      --        20,750          34,600
                                ------------    ----------      ----------
  TOTAL DEVELOPMENT
    PROPERTIES                       682,401        79,533         217,630

  RENOVATION:
  535 BRAND BOULEVARD                109,187        20,418          20,750       90%         Complete      2nd Qtr 2000
  WESTWOOD CENTER                    313,000        78,196          91,122       90%         Complete      4th Qtr 2000
  TOURNEY POINTE                     219,991        32,367          33,500       35%         Complete      4th Qtr 2000
                                ------------    ----------      ----------
    TOTAL PROPERTIES UNDER
     RENOVATION                      642,178       130,981         145,372
                                ------------    ----------      ----------

  TOTAL PROPERTIES UNDER
    DEVELOPMENT AND RENOVATION     1,324,579    $  210,514      $ 363,002
                                ============    ==========      =========
<CAPTION>


                                  ESTIMATED
                                    YEAR 1
                                  STABILIZED    ESTIMATED
                                     NOI         ANNUAL
 PROPERTY                        (IN THOUSANDS)   YIELD
 --------                       --------------  --------
<S>                             <C>             <C>
 DEVELOPMENT:
 HOWARD HUGHES CENTER
   6060 CENTER DRIVE              $  6,250       11.2%
   UNIVISION BUILDING             $  5,199       10.1%
   6080 CENTER DRIVE              $  8,288       11.0%
   UNALLOCATED ACQUISITION
      AND MASTER PLAN
      COSTS (1),(2)

 TOTAL DEVELOPMENT
   PROPERTIES

 RENOVATION:
 535 BRAND BOULEVARD              $  1,876        9.0%
 WESTWOOD CENTER                  $  9,568       10.5%
 TOURNEY POINTE                   $  2,943        8.8%

   TOTAL PROPERTIES UNDER
    RENOVATION


 TOTAL PROPERTIES UNDER
   DEVELOPMENT AND RENOVATION

</TABLE>

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

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


                                       17
<PAGE>   18

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

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

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


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

INTEREST RATE RISK

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

           Certain of our future earnings, cash flows and fair values relating
to financial instruments are dependent upon prevailing market rates of interest,
such as LIBOR. Based on interest rates and outstanding balances at March 31,
2000, a one percentage point increase in interest rates on our $241.4 million of
floating rate debt would decrease annual future earnings and cash flows by
approximately $2.4 million and would not have an impact on the floating rate
debt fair value. A one percentage point decrease in interest rates on our $241.4
million of floating rate debt would increase annual future earnings and cash
flows by approximately $2.4 million and would not have an impact on the floating
rate debt fair value. A one percentage point increase or decrease in interest
rates on our secured note receivable would not have a material impact on annual
future earnings, cash flows and its fair value.

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

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<PAGE>   19

 PART II    OTHER INFORMATION

 ITEM 1.    LEGAL PROCEEDINGS - NONE

 ITEM 2.    CHANGES IN SECURITIES - NONE

 ITEM 3.    DEFAULTS UPON SENIOR SECURITIES - NONE

 ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS - NONE

 ITEM 5.    OTHER INFORMATION - NONE

 ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K


(a)          EXHIBITS

EXHIBIT
NUMBER       DESCRIPTION
------       -----------

3.1          Amended and Restated Articles of Incorporation as filed as an
             exhibit to Registration Statement on Form S-11 (No. 333-8163) and
             incorporated herein by reference.

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

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

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

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

3.6          Certificate of Amendment of the Bylaws of Arden Realty, Inc., dated
             March 17, 2000.

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

4.2          Indenture between Arden Realty Limited Partnership and The Bank of
             New York, as trustee, dated March 14, 2000, filed as an exhibit to
             Arden Realty Limited Partnership's Registration Statement on Form
             S-4 (No. 333-35406) filed with the Commission on April 21, 2000 and
             incorporated herein by reference.

10.1         Second Amended and Restated Agreement of Limited Partnership of the
             Arden Realty Limited Partnership dated as of September 7, 1999,
             filed as an exhibit to our quarterly report Form 10-Q filed with
             the Commission on November 15, 1999, and incorporated herein by
             reference.

10.44        Registration Rights Agreement between Arden Realty Limited
             Partnership and the initial purchasers of the unregistered notes,
             filed as an exhibit to Arden Realty Limited Partnership's
             Registration Statement on Form S-4 (No. 333-35406) filed with the
             Commission on April 21, 2000 and incorporated herein by reference.

10.45        Second Amended and Restated Revolving Credit Agreement between
             Arden Realty Limited Partnership and Wells Fargo Bank, dated May 2,
             2000.

27.1         Financial Data Schedule.

(b)          REPORTS ON FORM 8-K

             None

                                       19
<PAGE>   20

                                   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 11, 2000                        By: /s/  Diana M. Laing
                                              ---------------------------------
                                               Diana M. Laing
                                               Executive Vice President and
                                               Chief Financial Officer




Date: May 11, 2000                        By: /s/  Richard S. Davis
                                              ---------------------------------
                                               Richard S. Davis
                                               Senior Vice President and
                                               Chief Accounting Officer


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