[GRAPHIC OMITTED]

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


                       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, 2001

                         Commission file number 1-12193


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


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



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

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

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

As of May 7, 2001 there were 63,658,200 shares of the registrant's common stock,
$.01 par value, issued and outstanding.


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


<PAGE>





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

<TABLE>
<CAPTION>
                                                                                                            PAGE NO.
                                                                                                            --------

PART I.           FINANCIAL INFORMATION

                  Item 1.  Financial Statements
<S>               <C>                                                                                           <C>
                           Consolidated Balance Sheets as of March 31, 2001 (unaudited) and
                             December 31, 2000................................................................... 3

                           Consolidated Statements of Income for the three months ended
                             March 31, 2001 and 2000 (unaudited)................................................. 4

                           Consolidated Statements of Cash Flows for the three months ended
                             March 31, 2001 and 2000 (unaudited)................................................. 5

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

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

                  Item 3.  Quantitative and Qualitative Disclosures about Market Risk........................... 20



PART II.          OTHER INFORMATION............................................................................. 21

                  SIGNATURES.................................................................................... 22
</TABLE>


<PAGE>


Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements
<TABLE>
<CAPTION>
                               ARDEN REALTY, INC.
                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                                                                                             March 31,       December 31,
                                                                                               2001              2000
                                                                                           ------------      ------------
ASSETS                                                                                     (unaudited)
Investment in real estate:
<S>                                                                                       <C>                <C>
   Land.........................................................................           $   466,426       $   466,426
   Buildings and improvements...................................................             1,992,243         1,985,950
   Tenant improvements and leasing commissions..................................               239,622           225,620
                                                                                           ------------      ------------
                                                                                             2,698,291         2,677,996
   Less:  accumulated depreciation..............................................              (246,741)         (227,463)
                                                                                           ------------      ------------
                                                                                             2,451,550         2,450,533
   Properties under development.................................................               117,626            93,384
   Properties held for disposition, net.........................................                59,963            59,649
                                                                                           ------------      ------------
     Net investment in real estate..............................................             2,629,139         2,603,566

Cash and cash equivalents.......................................................                 5,077             5,432
Restricted cash.................................................................                20,299            19,367
Rent and other receivables......................................................                16,495            13,198
Mortgage notes receivable, net of discount......................................                13,708            13,761
Deferred rent...................................................................                33,380            31,588
Prepaid financing costs, expenses and other assets, net of amortization.........                19,051            18,685
                                                                                           ------------      ------------
     Total assets...............................................................           $ 2,737,149       $ 2,705,597
                                                                                           ============      ============

LIABILITIES
Mortgage loans payable..........................................................           $   575,368       $   576,055
Unsecured lines of credit.......................................................               288,350           253,350
Unsecured senior notes, net of discount.........................................               348,421           348,364
Accounts payable and accrued expenses...........................................                39,247            37,415
Security deposits...............................................................                20,031            19,470
Dividends payable...............................................................                31,192            29,596
                                                                                           ------------      ------------
     Total liabilities..........................................................             1,302,609         1,264,250

Minority interests..............................................................                85,671            86,176

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 20,000,000 shares authorized, none issued......                   --                --
Common stock, $.01 par value, 100,000,000 shares authorized,
   63,658,200 and 63,646,871 issued and outstanding, respectively...............                   637               637
Additional paid-in capital......................................................             1,356,600         1,363,407
Deferred compensation...........................................................                (8,368)           (8,873)
                                                                                           ------------      ------------
     Total stockholders' equity.................................................             1,348,869         1,355,171
                                                                                           ------------      ------------
     Total liabilities and stockholders' equity.................................           $ 2,737,149       $ 2,705,597
                                                                                           ============      ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      -3-


<PAGE>

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


<TABLE>
<CAPTION>
                                                                                           Three Months Ended
                                                                                                 March 31,
                                                                                           ------------------

                                                                                        2001              2000
                                                                                     ----------        ----------
<S>                                                                                  <C>                  <C>
Revenue.........................................................................     $  103,121         $  89,678
Property operating expenses.....................................................         29,842            25,347
                                                                                     ----------        ----------
                                                                                         73,279            64,331

General and administrative expenses.............................................          2,866             1,821
Interest expense................................................................         21,158            17,852
Depreciation and amortization...................................................         24,146            20,147
Interest and other income.......................................................           (861)             (855)
                                                                                     ----------        ----------
Income before minority interests................................................         25,970            25,366
Minority interests..............................................................         (1,897)           (1,875)
                                                                                     ----------        ----------
Net income......................................................................     $   24,073         $  23,491
                                                                                     ==========        ==========

Net income per common share:
     Basic......................................................................     $     0.38         $    0.37
                                                                                     ==========        ==========
     Diluted....................................................................     $     0.38         $    0.37
                                                                                     ==========        ==========

Weighted average common shares outstanding:
     Basic......................................................................         63,658            63,316
                                                                                     ==========        ==========
     Diluted....................................................................         63,899            63,414
                                                                                     ==========        ==========
</TABLE>
          See accompanying notes to consolidated financial statements.





                                      -4-


<PAGE>

                               ARDEN REALTY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                              Three Months Ended
                                                                                                    March 31,
                                                                                      -----------------------------------

                                                                                            2001                2000
                                                                                      ----------------   ----------------
OPERATING ACTIVITIES:
<S>                                                                                    <C>                 <C>
  Net income....................................................................        $  24,073          $  23,491

  Adjustments to reconcile net income to net cash
    provided by operating activities:

    Minority interests..........................................................            1,897              1,875
    Depreciation and amortization...............................................           24,146             20,147
    Amortization of loan costs..................................................              871                884
    Non-cash stock compensation expense.........................................              423                 --
    Changes in operating assets and liabilities:
       Rent and other receivables...............................................           (3,244)               363
       Deferred rent............................................................           (1,792)            (1,398)
       Prepaid financing costs, expenses and other assets.......................           (1,180)            (4,001)
       Accounts payable and accrued expenses....................................            1,832              2,124
       Security deposits........................................................              561              2,001
                                                                                        ---------          ---------
  Net cash provided by operating activities.....................................           47,587             45,486
                                                                                        ---------          ---------
INVESTING ACTIVITIES:
  Improvements to investment in real estate.....................................          (49,638)           (73,082)
                                                                                        ---------          ---------
FINANCING ACTIVITIES:
  Proceeds from mortgage loans..................................................               --             31,500
  Repayments of mortgage loans..................................................             (687)          (151,135)
  Proceeds from unsecured lines of credit.......................................           57,000             21,000
  Repayments of unsecured lines of credit.......................................          (22,000)           (97,000)
  Proceeds from unsecured senior notes, net of discount.........................               --            249,079
  Distributions to preferred operating partnership unit holders.................           (1,078)            (1,078)
  Increase in restricted cash...................................................             (932)              (172)
  Distributions to minority interests...........................................           (1,011)              (958)
  Dividends paid................................................................          (29,596)           (28,195)
                                                                                        ---------          ---------
  Net cash provided by financing activities.....................................            1,696             23,041
                                                                                        ---------          ---------
  Net decrease in cash and cash equivalents.....................................             (355)            (4,555)
  Cash and cash equivalents at beginning of period..............................            5,432              7,056
                                                                                        ---------          ---------
  Cash and cash equivalents at end of period....................................        $   5,077          $   2,501
                                                                                        =========          =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during the period for interest, net of amount capitalized.........        $  24,744          $  19,227
                                                                                        =========          =========
</TABLE>
             See accompanying notes to consolidated financial statements.


                                      -5-


<PAGE>

                               ARDEN REALTY, INC.
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (UNAUDITED)


1.   DESCRIPTION OF BUSINESS

     The terms "Arden Realty", "us", "we" and "our" as used in this report refer
to Arden Realty,  Inc. Through our controlling  interest in Arden Realty Limited
Partnership, or the Operating Partnership,  and our other subsidiaries,  we own,
manage,  lease,  develop,  renovate  and acquire  commercial  office  properties
located  in  Southern  California.  As of March  31,  2001,  our  portfolio  was
comprised of 142 primarily suburban office properties,  or the Properties,  with
approximately  18.7 million net rentable  square feet and three  properties with
approximately 725,000 net rentable square feet under development.

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

     The minority interests at March 31, 2001 and December 31, 2000 consisted of
limited  partnership  interests in the Operating  Partnership  of  approximately
3.3%, exclusive of ownership interests of our preferred unit holders.

2.   INTERIM FINANCIAL DATA

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

3.   NEW ACCOUNTING STANDARDS

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

     As of March 31, 2001 we had no  outstanding  interest  rate cap or swaps or
other types of derivative instruments.









                                      -6-


<PAGE>

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

         A summary of our outstanding indebtedness as of March 31, 2001 and
December 31, 2000 is as follows:
<TABLE>
<CAPTION>
                                                               Stated Annual
                                 March 31,                   Interest Rate at                             Number of      Maturity
                                   2001       December 31,    March 31, 2001         Rate                Properties       Month/
Type of Debt                    (unaudited)       2000           (unaudited)    Fixed/Floating          Securing Loan      Year
------------                    -----------   -------------   ---------------   --------------          -------------     ------
                                      (in thousands)
MORTGAGE LOANS PAYABLE:
Fixed Rate
<S>                            <C>             <C>                <C>          <C>                       <C>             <C>
Mortgage Financing I(1)....    $   175,000    $   175,000           7.52%       Fixed                         18           6/04
Mortgage Financing III(2)..        136,100        136,100           6.74%       Fixed                         22           4/08
Mortgage Financing IV(2)...        111,200        111,200           6.61%       Fixed                         12           4/08
Mortgage Financing V(3)....        111,708        112,212           6.94%       Fixed                         12           4/09
Mortgage Financing VI(3)...         22,186         22,241           7.54%       Fixed                          3           4/09
Activity Business Center(3)          7,847          7,881           8.85%       Fixed                          1           5/06
145 South Fairfax(3).......          4,011          4,021           8.93%       Fixed                          1           1/27
Marin Corporate Center(3)..          3,037          3,071           9.00%       Fixed                          1           7/15
Conejo Business Center(3)..          2,983          3,017           8.75%       Fixed                    (Note 4)          7/15
Conejo Business Center(3)..          1,296          1,312           7.88%       Fixed                    (Note 4)          7/15
                               -----------    -----------
                                   575,368        576,055

UNSECURED LINES OF CREDIT:
Floating Rate
Wells Fargo(1).............        207,350        172,350           6.29%       LIBOR + 1.15% (Note 5)        --           4/03
Lehman Brothers(1),(6).....         75,000         75,000           6.50%       LIBOR + 1.30%                 --           7/02
City National Bank(1)......          6,000          6,000           7.13%       Prime Rate - 0.875%           --           8/01
                               -----------    -----------
                                   288,350        253,350
UNSECURED SENIOR NOTES:
Fixed Rate
2005 Notes(7)..............        199,590        199,564           8.88%       Fixed                         --           3/05
2010 Notes(7)..............         49,632         49,622           9.15%       Fixed                         --           3/10
2010 Notes(7)..............         99,199         99,178           8.50%       Fixed                         --          11/10
                               -----------    -----------
                                   348,421        348,364

   Total Debt..............    $ 1,212,139    $ 1,177,769
                               ===========    ===========
----------
</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 line of credit also has an annual 25 basis point facility fee on the
     entire $275 million commitment amount.
(6)  This line of credit has a one-year extension option.
(7)  Requires  semi-annual  interest  payments only, with principal  balance due
     upon maturity.

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






                                      -7-

<PAGE>


5.   STOCKHOLDERS' EQUITY

     On March 6, 2001, we declared a first  quarter  dividend of $0.49 per share
to stockholders of record on March 30, 2001, which equates to $1.96 per share on
an annualized basis.

6.   REVENUE FROM RENTAL OPERATIONS AND PROPERTY EXPENSES

     Revenue from rental  operations  and property  expenses are  summarized  as
follows (in thousands):
<TABLE>
<CAPTION>
                                                                                                Three Months
                                                                                               Ended March 31,
                                                                                     ------------------------------------
                                                                                           2001               2000
                                                                                     -----------------  -----------------
                                                                                                 (unaudited)
Revenue from Rental Operations:
<S>                                                                                       <C>                <C>
   Rental.......................................................................       $  87,467          $  77,513
   Tenant reimbursements........................................................           5,550              3,592
   Parking, net of expenses ....................................................           5,305              3,972
   Other rental operations......................................................           4,799              4,601
                                                                                       ---------          ---------
                                                                                         103,121             89,678
                                                                                       ---------          ---------
Property Expenses:
   Repairs and maintenance......................................................           9,008              8,402
   Utilities....................................................................           7,392              6,110
   Real estate taxes............................................................           7,414              6,264
   Insurance....................................................................           1,216              1,041
   Ground rent..................................................................           1,151                198
   Administrative...............................................................           3,661              3,332
                                                                                       ---------          ---------
                                                                                          29,842             25,347
                                                                                       ---------          ---------
                                                                                       $  73,279          $  64,331
                                                                                       =========          =========
</TABLE>















                                      -8-









<PAGE>

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

OVERVIEW

     The following  discussion relates to our consolidated  financial statements
and should be read in  conjunction  with the  financial  statements  and related
notes thereto included in our 2000 Annual Report on Form 10-K.

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

     As of March 31, 2001, we are Southern  California's largest publicly traded
office  landlord as measured by total net rentable square feet owned. As of that
date,  our  portfolio  consisted of 142  primarily  suburban  office  properties
containing  approximately  18.7  million  net  rentable  square  feet and  three
properties   with   approximately   725,000  net  rentable   square  feet  under
development.  As of March 31, 2001,  our  properties  were  approximately  95.5%
leased.

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











                                      -9-


<PAGE>

RESULTS OF OPERATIONS

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

     Comparison  of the three  months  ended March 31, 2001 to the three  months
ended  March  31,  2000  (in   thousands,   except  number  of  properties   and
percentages):
<TABLE>
<CAPTION>

                                                            Three Months Ended
                                                                 March 31,
                                                        ----------------------------                              Percent
                                                            2001             2000                Change            Change
                                                        ----------        ----------            --------          --------
                                                               (unaudited)
REVENUE
  Revenue from rental operations:
<S>                                                   <C>               <C>                  <C>                   <C>
    Rental..........................................    $  87,467         $  77,513            $   9,954             13%
    Tenant reimbursements...........................        5,550             3,592                1,958             55
    Parking, net of expense.........................        5,305             3,972                1,333             34
    Other rental operations.........................        4,799             4,601                  198              4
                                                        ---------         ---------            ---------           ----
      Total.........................................      103,121            89,678               13,443             15
  Interest and other income.........................          861               855                    6              1
                                                        ---------         ---------            ---------           ----
      Total revenue.................................    $ 103,982         $  90,533            $  13,449             15%
                                                        =========         =========           ==========           ====

EXPENSES
  Property expenses:
    Repairs and maintenance.........................    $   9,008         $   8,402            $     606              7%
    Utilities.......................................        7,392             6,110                1,282             21
    Real estate taxes...............................        7,414             6,264                1,150             18
    Insurance.......................................        1,216             1,041                  175             17
    Ground rent.....................................        1,151               198                  953            481
    Administrative..................................        3,661             3,332                  329             10
                                                        ---------         ---------            ---------           ----
      Total property expenses.......................       29,842            25,347                4,495             18%

  General and administrative........................        2,866             1,821                1,045             57%
  Interest..........................................       21,158            17,852                3,306             19
  Depreciation and amortization.....................       24,146            20,147                3,999             20
                                                        ---------         ---------            ---------           ----
      Total expenses................................    $  78,012         $  65,167            $  12,845             20%
                                                        =========         =========            =========           ====

OTHER DATA:
  Number of properties owned at end of period.......          142               142
  Net rentable square feet owned at end of period...       18,658            18,492

</TABLE>

     General and administrative  expenses  increased  approximately $1.0 million
for the three  months  ended  March 31,  2001 as  compared to the same period in
2000.  This increase was primarily  related to higher  personnel  costs in 2001,
including   approximately   $295,000  in  non-cash   compensation  expense  from
restricted  stock awards  granted to several key executives in July and December
of 2000.

     Interest  expense  increased  approximately  $3.3 million or 19% during the
three months ended March 31, 2001, as compared to the same period in 2000.  This
increase was primarily  due to higher  outstanding  balances in 2001,  resulting
from the  funding  of  tenant  improvements  and  leasing  commission  costs and
development and renovation  projects  placed in service  subsequent to March 31,
2000.

     Depreciation  and  amortization  expense  increased by  approximately  $4.0
million or 20% during the three months ended March 31,  2001,  primarily  due to
depreciation  related to newly developed and renovated  properties,  and capital
expenditures,  tenant  improvements  and leasing  commissions  placed in service
subsequent to March 31, 2000.

     Variances  for revenue from rental  operations  and  property  expenses are
discussed below.


                                      -10-


<PAGE>

VARIANCES FOR REVENUE FROM RENTAL OPERATIONS AND PROPERTY EXPENSES

     The increase in revenue from rental  operations  and property  expenses for
the three months ended March 31, 2001 as compared to the same period in 2000 was
partially due to a development  property  placed in service in the third quarter
of 2000,  a  property  sold in the fourth  quarter of 2000 and three  properties
under  renovation  for all or a  portion  of the  periods  presented.  Operating
results for properties  under renovation may  significantly  vary from period to
period depending on the status of the renovation and occupancy levels maintained
during the renovation.

     Following is a summary of the  increase in revenue  from rental  operations
and property  operating  expenses that relates to the five  properties that were
either sold or placed in service after January 1, 2000 or were under  renovation
for all or a portion of the period  beginning  after January 1, 2000 and for the
138  non-renovation/development  properties  we owned for all of the three month
periods ended March 31, 2001 and 2000  (unaudited  and in thousands,  except for
number of properties).

<TABLE>
<CAPTION>


                                                                 Properties Sold, Placed      Non-Renovation/Development
                                                                       in Service or       Properties Owned for all of the
                                                                     Under Renovation             Three Months Ended
                                                 Total Variance    after January 1, 2000      March 31, 2001 and 2000(1)
                                                 --------------    ---------------------   -------------------------------


REVENUE FROM RENTAL OPERATIONS:
<S>                                               <C>                    <C>                        <C>
   Rental...................................      $   9,954              $   5,036                  $   4,918
   Tenant reimbursements....................          1,958                     75                      1,883
   Parking, net of operations...............          1,333                    336                        997
   Other rental operations..................            198                  1,136                       (938)
                                                  ---------              ---------                  ---------
                                                  $  13,443              $   6,583                  $   6,860
                                                  =========              =========                  =========

PROPERTY EXPENSES:
   Repairs and maintenance..................      $     606              $     315                  $     291
   Utilities................................          1,282                    290                        992
   Real estate taxes........................          1,150                    394                        756
   Insurance................................            175                     34                        141
   Ground rent..............................            953                    385                        568
   Administrative...........................            329                    401                        (72)
                                                  ---------              ---------                  ---------
                                                  $   4,495              $   1,819                  $   2,676
                                                  =========              =========                  =========

OTHER DATA:
   Number of properties.....................                                     5                        138
   Net rentable square feet.................                                   960                     17,774

----------
</TABLE>

(1) See analysis for these Properties below.












                                      -11-




<PAGE>


NON-RENOVATION/DEVELOPMENT PROPERTIES OWNED FOR ALL OF 2000 AND 2001

     Following is a comparison of property  operating  data  computed  under the
GAAP basis and cash basis of accounting  for the 138  non-renovation/development
properties  we owned for the entire three month periods ended March 31, 2001 and
2000 (in thousands, except number of properties and percentages):

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                              March 31,
                                                    -------------------------------
                                                                                          Dollar          Percent
                                                        2001              2000            Change           Change
                                                    -------------     -------------    -------------    ------------
                                                              (unaudited)
GAAP BASIS:
<S>                                                 <C>                <C>              <C>                   <C>
Revenue from rental operations.................     $  94,961          $  88,101        $  6,860              7.8%
Property expenses..............................        27,393             24,717           2,676             10.8%
                                                    ---------          ---------       ---------         ---------
                                                    $  67,568          $  63,384        $  4,184              6.6%
                                                    =========          =========        ========         =========

CASH BASIS (1):

Revenue from rental operations.................     $  93,336          $  86,713        $  6,623              7.6%
Property expenses..............................        27,393             24,717           2,676             10.8%
                                                    ---------          ---------       ---------         ---------
                                                    $  65,943          $  61,996        $  3,947              6.4%
                                                    =========          =========        ========         =========

Number of non-renovation properties............           138                138
Average occupancy..............................         95.1%              94.1%
Net rentable square feet.......................        17,774             17,774

----------
</TABLE>

(1)  Excludes straight-line rent adjustments.

     Revenue from rental  operations  for these  properties,  computed on a GAAP
basis, increased by approximately $6.9 million, or 7.8%, during the three months
ended March 31, 2001,  compared to the same period in 2000.  Approximately  $4.9
million of this difference was related to rental revenue,  of which $4.7 million
was  related  to  scheduled  rents and  $200,000  was  related to  increases  in
straight-line rent. Approximately 65% of the increase in scheduled rents was due
to increases in rental rates in 2001 and the remaining 35% was related to higher
average occupancy in 2001. The increase in straight-line  rent was primarily due
to new leases and extensions  signed with higher rental rate escalations than in
2000.  Revenue from rental operations was also higher due to an approximate $1.9
million increase in tenant reimbursements and a $1.0 million increase in parking
income net of an  approximate  $900,000  decrease in revenue  from other  rental
operations.  Tenant  reimbursements were higher primarily due to the approximate
1.0%  increase in average  occupancy  in 2001 and higher  operating  expenses as
discussed  below,  as well as  approximately  $350,000  related  to  prior  year
reimbursement  reconciliations.  Parking income also increased in 2001 primarily
due to  the  1.0%  increase  in  occupancy,  while  revenue  from  other  rental
operations decreased primarily due to lower lease termination settlement fees in
2001.

     Excluding only the  straight-line  rent  adjustment  for these  properties,
revenue  from rental  operations  for the three  months  ended  March 31,  2001,
computed on a cash basis, increased by approximately $6.6 million or 7.6%.

     Property  expenses for these  properties  increased by  approximately  $2.7
million, or 10.8%, during the three months ended March 31, 2001, compared to the
same period in 2000, primarily due to higher utility, real estate tax and ground
rent expenses in 2001. The approximate $1.0 million increase in utility expenses
was due to both rate increases (most of which was recovered), and higher utility
usage related to the increase in average occupancy for these properties in 2001.
Real estate  taxes  increased  by  approximately  $756,000 in 2001 due to normal
annual  increases  and final  assessments  on certain  properties.  Ground  rent
expense  increased  by $568,000 due to higher  operating  income from one of our
properties with a participating ground lease.





                                      -12-


<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS

     Cash  provided by  operating  activities  increased by  approximately  $2.1
million to $47.6  million for the three months ended March 31, 2001, as compared
to  $45.5  million  for the  same  period  in 2000,  primarily  due to  improved
operating  results for the 138  properties we owned for both three month periods
presented as well as the four properties we developed or renovated subsequent to
January 1, 2000.  This  increase was  partially  offset by the loss of operating
cash flow on a property we sold in the fourth quarter of 2000.

     Cash used in investing activities decreased by approximately $23.5 million,
to $49.6  million for the three  months  ended March 31, 2001  compared to $73.1
million for the same period in 2000.  This  decrease  was  primarily  due to the
completion of several of our development and renovation projects after March 31,
2000.

     Cash  provided by financing  activities  decreased by  approximately  $21.3
million to $1.7 million for the three  months ended March 31, 2001,  as compared
to $23.0 million for the same period in 2000. This decrease was primarily due to
the timing of the issuance of $250 million in senior unsecured notes in March of
2000.

AVAILABLE BORROWINGS, CASH BALANCE AND CAPITAL RESOURCES

     We have an unsecured line of credit with a group of banks, the Lenders, led
by Wells Fargo.  This line of credit  provides for borrowings up to $275 million
with an option to increase  the amount to $325  million and bears  interest at a
rate ranging between LIBOR plus 1.15% and LIBOR plus 1.80%  (including an annual
facility  fee  ranging  from .20% to .40% based on the  aggregate  amount of the
facility),  depending on our unsecured debt rating.  In addition,  as long as we
maintain an unsecured debt rating of BBB-/Baa3 or better, the agreement contains
a competitive bid option,  whereby the Lenders on this line of credit may bid on
the interest rate to be charged for up to $137.5  million of the unsecured  line
of credit. Under certain  circumstances,  we also have the option to convert the
interest  rate on this line of credit to the prime rate plus 0.5%.  This line of
credit  matures in April 2003.  As of March 31,  2001,  there was  approximately
$207.4  million  outstanding  on this line of  credit  and  approximately  $67.6
million was available for additional borrowings.

     We also have a $75 million  unsecured line of credit with Lehman  Brothers.
Borrowings on this line of credit bear interest at a rate ranging  between LIBOR
plus 1.05% and LIBOR plus 1.70%, depending on our unsecured debt rating. We also
have the option to convert the interest  rate to the prime rate plus 0.5%.  This
line of credit  matures in July 2002 with an option to extend the maturity  date
for one year. As of March 31, 2001,  there was $75 million  outstanding  on this
line of credit.

     We also have an  unsecured  line of credit with a total  commitment  of $10
million from City National  Bank.  This line of credit  accrues  interest at the
City  National  Bank Prime Rate less 0.875% and is scheduled to mature on August
1, 2001.  Proceeds  from this line of credit are used,  among other  things,  to
provide funds for tenant  improvements and capital  expenditures and provide for
working capital and other corporate purposes. As of March 31, 2001, there was $6
million  outstanding balance on this line of credit and $4 million was available
for additional borrowings.

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



                                      -13-


<PAGE>

         Following is a summary of scheduled principal payments for our total
debt outstanding as of March 31, 2001 (in thousands):

  YEAR                                                               AMOUNT
  ----                                                               ------

   2001.......................................................   $     7,862
   2002.......................................................        77,618(1)
   2003.......................................................       212,804(2)
   2004.......................................................       182,218
   2005.......................................................       207,834
   2006.......................................................        15,220
   2007.......................................................         8,812
   2008.......................................................       230,305
   2009.......................................................       111,980
   2010.......................................................       150,565
   Thereafter.................................................         6,921
                                                                 -----------

     Total....................................................   $ 1,212,139
                                                                 ===========
----------

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

(2)  Consists primarily of $207.4 million outstanding on our Wells Fargo line of
     credit.


     Following is certain other  information  related to our  indebtedness as of
March 31, 2001 (in thousands, except percentage data):

<TABLE>
<CAPTION>

         UNSECURED AND SECURED DEBT:
         ---------------------------
                                                                                        Weighted
                                                                                         Average
                                                   Balance           Percent        Interest Rate(1)
                                                ---------------  ----------------   ----------------
         <S>                                   <C>               <C>                   <C>

         Unsecured Debt......................    $   636,771               53%               8.13%
         Secured Debt........................        575,368               47%               7.36%
                                                 -----------       -----------         -----------
         Total Debt..........................    $ 1,212,139              100%               7.76%
                                                 ===========       ===========         ===========
</TABLE>

<TABLE>
<CAPTION>
         FLOATING AND FIXED RATE DEBT:
         -----------------------------
                                                                                        Weighted
                                                                                         Average
                                                   Balance           Percent        Interest Rate(1)
                                                ---------------  ----------------   ----------------
         <S>                                   <C>               <C>                   <C>

         Floating Rate Debt..................    $   288,350               24%               6.94%
         Fixed Rate Debt.....................        923,789               76%               8.02%
                                                 -----------       -----------         -----------
         Total Debt..........................    $ 1,212,139              100%               7.76%
                                                 ===========       ===========         ===========
----------
</TABLE>

(1) Includes amortization of prepaid financing costs.

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

<TABLE>
<CAPTION>
                                                       For the Three Months Ended March 31,
                                                       ------------------------------------
                                                          2001                       2000
                                                       ---------                  ---------
         <S>                                           <C>                      <C>

         Total interest incurred............           $  23,746                  $ 20,693
         Amount capitalized.................              (2,588)                   (2,841)
                                                       ---------                  ---------
         Amount expensed....................           $  21,158                  $ 17,852
                                                       =========                  =========
</TABLE>
                                      -14-
<PAGE>

     As of March 31, 2001,  we had $25.4  million in cash and cash  equivalents,
including $20.3 million in restricted  cash.  Restricted cash consisted of $14.0
million in interest bearing cash deposits required by five of our mortgage loans
payable and $6.3  million in cash  impound  accounts  for real estate  taxes and
insurance as required by several of our mortgage loans payable.

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

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

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











































                                      -15-

<PAGE>


FUNDS FROM OPERATIONS AND FUNDS AVAILABLE FOR DISTRIBUTION

         The following table reflects the calculation of our funds from
operations and our funds available for distribution for the three-month periods
ended March 31, 2001 and 2000 (in thousands):
<TABLE>
<CAPTION>
                                                                                                    For the
                                                                                         Three Months Ended March 31,
                                                                                         ----------------------------
                                                                                           2001                2000
                                                                                         ---------          ---------
Funds From Operations:(1)                                                                         (unaudited)
<S>                                                                                     <C>                 <C>
  Net income....................................................................         $  24,073          $  23,491
  Depreciation and amortization of real estate assets...........................            24,146             20,147
  Minority interest.............................................................             1,897              1,875
  Income allocated to Preferred Units...........................................            (1,078)            (1,078)
                                                                                         ---------          ---------
Funds From Operations...........................................................         $  49,038(2)       $  44,435
                                                                                         =========          =========

Funds Available for Distribution:(3)

   Funds From Operations........................................................         $  49,038          $  44,435
   Straight-line rent adjustment................................................            (2,361)            (1,398)
   Capital expenditure, tenant improvement and leasing commission reserve.......            (7,700)            (7,794)
                                                                                         ---------          ---------
Funds Available for Distribution................................................         $  38,977          $  35,243
                                                                                         =========          =========

Weighted average shares and common units outstanding - Diluted..................            66,066             65,564
                                                                                         =========          =========
----------
</TABLE>

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

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

(2)  Includes $423,000 in non-cash compensation expense.

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











                                      -16-


<PAGE>


PORTFOLIO AND LEASE INFORMATION

         The following tables set forth certain information regarding our
properties as of March 31, 2001.

                                PORTFOLIO SUMMARY
<TABLE>
<CAPTION>
                                                                                                        Net Operating Income
                                                                                                     for the Three Months Ended
                                                              Approximate Net Rentable Square Feet          March 31, 2001
Location                          Number of Properties                   (in thousands)              (in thousands and unaudited)
-------------------------   --------------------------------- -------------------------------------- ----------------------------
                                  Industrial                          Industrial
                                     and              % of               and                 % of                      % of
                            Office  Retail    Total   Total    Office   Retail     Total     Total       Total         Total
                            ------  ------    -----   -----    ------   ------     -----     -----       -----         -----
Los Angeles County
<S>                           <C>      <C>     <C>     <C>     <C>        <C>     <C>       <C>     <C>               <C>
  West..................       28       1       29      20%     4,536      37      4,573      25%     $ 25,526           35%
  North.................       33       -       33      23%     3,410       -      3,410      18%       12,356           17%
  South.................       16       -       16      11%     2,689       -      2,689      15%        9,253           13%
                            -----  ------    -----    -----   -------   -----   --------    -----    ---------         -----

   Subtotal.............       77       1       78      54%    10,635      37     10,672      58%       47,135           65%

Orange County...........       25       -       25      18%     3,752       -      3,752      20%       12,939           18%
San Diego County........       21       -       21      15%     2,487       -      2,487      13%        8,926           12%
Ventura/Kern Counties...        6       -        6       4%       778       -        778       4%        2,407            3%
Riverside/San
  Bernardino Counties...        8       4       12       9%       554     415        969       5%        1,872            2%
                            -----  ------    -----    -----   -------   -----   --------    -----    ---------         -----

     Total..............      137       5      142(1)  100%    18,206     452     18,658(1)  100%     $ 73,279          100%
                            =====  ======    =====    =====   =======   =====   --------    =====     ========         =====
----------
</TABLE>

(1)  Including three office properties  currently under  development,  our total
     portfolio  consists  of  145  properties  and  approximately  19.4  million
     rentable square feet.



                     PORTFOLIO OCCUPANCY AND LEASING SUMMARY

                              As of March 31, 2001
<TABLE>
<CAPTION>

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

Los Angeles County:
<S>                               <C>       <C>       <C>        <C>       <C>     <C>        <C>      <C>      <C>     <C>
  West.....................      95.1%     100.0%    95.2%      96.0%     100.0%  96.0%     $ 26.63   $ 24.60  $ 26.62   $ 26.63
  North....................      90.3%       -       90.3%      91.3%       -     91.3%       20.55       -      20.55     21.50
  South....................      93.2%       -       93.2%      95.3%       -     95.3%       17.92       -      17.92     19.02
Orange County..............      97.4%       -       97.4%      98.3%       -     98.3%       17.47       -      17.47     20.36
San Diego County...........      97.9%       -       97.9%      98.2%       -     98.2%       17.01       -      17.01     20.16
Ventura/Kern Counties......      93.5%       -       93.5%      95.5%       -     95.5%       17.62       -      17.62     17.71
Riverside/San
  Bernardino Counties......      85.3%      95.5%    89.6%      86.8%      95.5%  90.5%       15.29      9.19    12.53   $ 18.12
                                ------     ------   ------     ------     ------ ------     -------   -------  -------   -------

 Total/ Weighted Average...      94.4%      95.9%    94.5%      95.5%      95.9%  95.5%     $ 20.26   $ 10.50  $ 20.03   $ 22.17
                                ======     ======   ======     ======     ====== ======     =======   =======  =======   =======
  ----------
</TABLE>

(1)  Based on monthly  contractual  base rent under existing  leases as of March
     31, 2001,  multiplied by 12 and divided by leased net rentable square feet;
     for those  leases  where rent has not yet  commenced or which are in a free
     rent  period,  the first  month in which rent is to be  received is used to
     determine annualized base rent.

(2)  Excludes 46  properties  and  approximately  4.2 million  square feet under
     triple net and modified gross leases.

                                      -17-


<PAGE>

                                LEASE EXPIRATIONS

                              As of March 31, 2001
<TABLE>
<CAPTION>

                                                    Percentage of
                                Square Footage        Aggregate        Annualized Base       Estimated Market
                                 of Expiring          Portfolio        Rent of Expiring      Rent of Expiring   Estimated
                                    Leases             Leased               Leases                Leases        Cash Rent
Year of Lease Expiration        (in thousands)       Square Feet      (per square foot)   (per square foot)(1)    Growth
-----------------------------   ---------------    --------------     -----------------   --------------------  ----------
<S>                                  <C>               <C>              <C>                   <C>                 <C>
2001 (2).................           1,538                9%              $  20.55               $  24.97            22%
2002.....................           2,752               15%              $  18.46               $  25.32            37%
2003.....................           3,165               18%              $  20.43               $  26.56            30%
2004.....................           2,876               16%              $  20.50               $  26.67            30%
2005.....................           2,939               16%              $  22.04               $  28.85            31%

----------
</TABLE>

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

(2)  Represents leases expiring from April 1, 2001 through December 31, 2001.

<TABLE>
<CAPTION>
                                LEASING ACTIVITY

                    For the Three Months Ended March 31, 2001


                                                                      Weighted Average          Tenant Improvements
   Net Absorption                                  Cash Rent             Lease Term               and Commissions
   (square feet)          Retention Rate (1)       Growth (2)           (in months)              (per square foot)
---------------------   ---------------------    ------------------   ------------------   -----------------------------
                                                                                              New (3)          Renewal
                                                                                              -------          -------
<S>     <C>                  <C>                      <C>                   <C>             <C>              <C>
        16,079                 76%                      25%                   53              $ 14.32          $  9.07
      ========             =======                  =======              =======              =======          =======

----------
</TABLE>

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

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

(3)  Excludes all first generation space.




                                  -18-


<PAGE>

                               DEVELOPMENT SUMMARY

                              As of March 31, 2001

<TABLE>
<CAPTION>
                                                                                                          Estimated
                                           Costs                    Percent    Estimated                    Year 1       Estimated
                                          Incurred     Estimated     Leased      Shell        Estimated    Stabilized      Year 1
                                           To Date   Total Cost(1)     at     Completion   Stabilization  Cash NOI (3)     Annual
Property                  Square Feet (in thousands) (in thousands)  4/30/01     Date        Date (2)    (in thousands)  Cash Yield
--------                  ----------- -------------- --------------  -------  ----------   ------------- --------------  ----------
Howard Hughes Center
<S>                        <C>         <C>           <C>            <C>       <C>           <C>            <C>           <C>
  Univision Building.....  159,000      $  33,668      $  51,700      100%    2nd Qtr 2001   3rd Qtr 2001    $ 5,200        10.1%
  6080 Center Drive......  283,000         52,290         73,500       81%    2nd Qtr 2001   4th Qtr 2001    $ 8,400        11.4%
  6100 Center Drive......  283,000         18,805         79,000       --     2nd Qtr 2002   2nd Qtr 2003    $ 8,850        11.2%
  Unallocated Acquisition
   and Master Plan
      Costs (1)..........       --         12,863         19,800
                          --------     ----------     ----------
Total Development
 Properties..............  725,000      $ 117,626      $ 224,000
                          ========      =========      =========
----------
</TABLE>


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

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

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

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

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

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

CURRENT ECONOMIC CLIMATE

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


                                      -19-


<PAGE>

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

INTEREST RATE RISK.

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

     Some of our  future  earnings,  cash  flows  and fair  values  relating  to
financial  instruments are dependent upon  prevailing  market rates of interest,
such as LIBOR. Based on interest rates and outstanding  balances as of March 31,
2001,  a 1% increase in interest  rates on our $288.4  million of floating  rate
debt would decrease annual future earnings and cash flows by approximately  $2.9
million  and would not have an impact  on the fair  value of the  floating  rate
debt.  A 1% decrease in interest  rates on our $288.4  million of floating  rate
debt would increase annual future earnings and cash flows by approximately  $2.9
million  and would not have an impact  on the fair  value of the  floating  rate
debt.  A 1%  increase  or  decrease  in  interest  rates  on our  secured  notes
receivable  would not have a material  impact on annual  future  earnings,  cash
flows and the fair value of the secured notes  receivable.  The weighted average
interest rate on our floating debt as of March 31, 2001 was 6.94%.

     Our fixed rate debt  totaled  $923.8  million  as of March 31,  2001 with a
weighted  average interest rate of 8.02% and an unrealized loss of approximately
$36.5  million  for a total fair value of  approximately  $887.3  million.  A 1%
decrease  in  interest  rates on our  $923.8  million  of fixed  rate debt would
decrease  its fair value by  approximately  $43.7  million and would not have an
impact on annual future earnings and cash flows. A 1% increase in interest rates
in our  $923.8  million  of fixed  rate debt  would  increase  its fair value by
approximately  $43.7  million  and would  not have an  impact  of annual  future
earnings and cash flows.

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


                                      -20-


<PAGE>

  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

           None

(b)        Reports on Form 8-K

           None



























                                      -21-


<PAGE>

                                   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 7, 2001           By: /s/  Andrew J. Sobel
                                ----------------------------------------
                                Andrew J. Sobel
                                Executive Vice President - Strategic Planning
                                and Operations




Date: May 7, 2001           By: /s/  Daniel S. Bothe
                                ----------------------------------------
                                Daniel S. Bothe
                                Senior Vice President -
                                Co-Chief Financial Officer




Date: May 7, 2001           By: /s/  Richard S. Davis
                                ----------------------------------------
                                Richard S. Davis
                                Senior Vice President -
                                Co-Chief Financial Officer and
                                Treasurer










                                      -22-