---

# Securities and Exchange Commission

# Washington, D.C. 20549

# FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13

 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended June 30, 2002

Commission file number 1-12193

ARDEN REALTY, INC.

(Exact name of registrant as specified in its charter)

Maryland

      
            
            
            
            
            
            
            
            
            
            
            
            

95-4578533


(State or other jurisdiction of incorporation
            
            
            
            
            
            
            
            
            
(I.R.S.   Employer  Identification
No.)

or organization)

11601 Wilshire Boulevard,

4th Floor

Los Angeles, California 90025-1740

(Address and zip code of principal executive offices)

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

Indicate by check mark
whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes
 
 
X
 
 
No

 
 
 
 
-----
 
-----

As of August 12, 2002 there
were 64,667,719 shares of the registrants common stock, $0.1 par value, issued
and outstanding.

---

# ARDEN REALTY, INC.

FORM 10-Q

TABLE OF
CONTENTS

`PAGE NO.
                                                                                              --------
 PART I.  FINANCIAL INFORMATION

          Item 1.  Financial Statements
                   Consolidated Balance Sheets as of June 30, 2002 (unaudited) and
                     December 31, 2001.........................................................  3

                   Consolidated Statements of Income for the three and six months ended
                     June 30, 2002 and 2001 (unaudited)........................................  4

                   Consolidated Statements of Cash Flows for the six months ended
                     June 30, 2002 and 2001 (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.................. 24


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

          SIGNATURES............................................................................26`

# Part I.
 
 
 
FINANCIAL INFORMATION

Item 1.
 
 
Financial Statements

# Arden Realty, Inc.

Consolidated Balance Sheets

(in thousands, except share amounts)

`June 30,     December 31,
                                                                                 2002           2001
                                                                             ------------  ------------
 Assets                                                                      (unaudited)
 Investment in real estate:
    Land....................................................................  $   469,165   $   447,753
    Buildings and improvements..............................................    2,051,859     1,975,427
    Tenant improvements and leasing commissions.............................      286,490       251,201
                                                                             ------------  ------------
                                                                                2,807,514     2,674,381
    Less:  accumulated depreciation and amortization........................     (349,724)     (293,385)
                                                                             ------------  ------------
                                                                                2,457,790     2,380,996
    Properties under development............................................      148,487       133,012
    Properties held for disposition, net....................................           --       108,972
                                                                             ------------  ------------
      Net investment in real estate.........................................    2,606,277     2,622,980

 Cash and cash equivalents..................................................       14,351        37,041
 Restricted cash............................................................       18,948        18,768
 Rent and other receivables, net of allowance of $8,936 and $3,770 at
    June 30, 2002 and December 31, 2001, respectively.......................        4,494         9,685
 Mortgage notes receivable, net of discount.................................       13,149        13,495
 Deferred rent..............................................................       42,009        38,989
 Prepaid financing costs, expenses and other assets, net of amortization....       18,977        20,485
                                                                             ------------  ------------
      Total assets..........................................................  $ 2,718,205   $ 2,761,443
                                                                             ------------  ------------
                                                                             ------------  ------------

 Liabilities
 Mortgage loans payable.....................................................  $   572,082   $   573,452
 Unsecured lines of credit..................................................       88,350       180,350
 Unsecured term loan........................................................       75,000            --
 Unsecured senior notes, net of discount....................................      497,871       497,681
 Accounts payable and accrued expenses......................................       37,787        43,002
 Security deposits..........................................................       18,688        19,683
 Dividends payable..........................................................       32,649        31,408
                                                                             ------------  ------------
      Total liabilities.....................................................    1,322,427     1,345,576

 Minority interests.........................................................       75,958        78,661

 Stockholders' Equity
 Preferred stock, $0.1 par value 20,000,000 shares authorized, none issued..           --            --
 Common stock, $0.1 par value, 100,000,000 shares authorized,
    64,650,719 and 64,098,110 issued and outstanding at June 30, 2002 and
    December 31, 2001, respectively.........................................          647           641
 Additional paid-in capital.................................................    1,331,854     1,345,698
 Deferred compensation......................................................      (12,681)       (9,133)
                                                                             ------------  ------------
      Total stockholders' equity............................................    1,319,820     1,337,206
                                                                             ------------  ------------
      Total liabilities and stockholders' equity............................  $ 2,718,205   $ 2,761,443
                                                                             ------------  ------------
                                                                             ------------  ------------

 See accompanying notes to consolidated financial statements.`

3

# Arden Realty, Inc.

Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)

`Three Months Ended            Six Months Ended
                                                               June 30,                     June 30,
                                                   ---------------------------   -------------------------
                                                      2002             2001          2002           2001
                                                   ----------       ----------   ----------     ----------

Revenue......................................      $ 102,635        $ 102,980     $ 204,899      $ 206,101
Property operating expenses..................         30,918           29,274        61,144         59,116
                                                   ----------       ----------   ----------     ----------
                                                      71,717           73,706       143,755        146,985

General and administrative expenses..........          2,951            2,716         5,911          5,582
Interest expense.............................         21,584           21,081        42,981         42,239
Depreciation and amortization................         28,822           24,176        55,205         48,322
Interest and other income....................           (512)            (764)       (1,052)        (1,625)
                                                   ----------       ----------   ----------     ----------
Income before gain and minority interests....         18,872           26,497        40,710         52,467
Gain on sale of properties...................             81            3,551         1,273          3,551
                                                   ----------       ----------   ----------     ----------
Income before minority interests.............         18,953           30,048        41,983         56,018
Minority interests...........................         (1,546)          (2,031)       (3,223)        (3,928)
                                                   ----------       ----------   ----------     ----------
Net income...................................      $  17,407        $  28,017     $  38,760      $  52,090
                                                   ----------       ----------   ----------     ----------
                                                   ----------       ----------   ----------     ----------

Net income per common share:
     Basic...................................      $    0.27        $    0.44     $    0.60      $    0.82
                                                   ----------       ----------   ----------     ----------
                                                   ----------       ----------   ----------     ----------
     Diluted.................................      $    0.27        $    0.44     $    0.60      $    0.81
                                                   ----------       ----------   ----------     ----------
                                                   ----------       ----------   ----------     ----------

Weighted average common shares outstanding:
     Basic...................................         64,529           63,659        64,366         63,657
                                                   ----------       ----------   ----------     ----------
                                                   ----------       ----------   ----------     ----------
     Diluted.................................         65,106           63,964        64,836         63,919
                                                   ----------       ----------   ----------     ----------
                                                   ----------       ----------   ----------     ----------


 See accompanying notes to consolidated financial statements.`

4

# Arden Realty, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

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

                                                                               2002         2001
                                                                            ----------    ----------
Operating Activities:
  Net income...............................................................$   38,760    $   52,090
  Adjustments to reconcile net income to net cash
    provided by operating activities:

    Minority interests.....................................................     3,223         3,928
    Gain on sale of property...............................................    (1,273)       (3,551)
    Depreciation and amortization..........................................    55,205        48,322
    Amortization of loan costs.............................................     1,901         1,753
    Non-cash compensation expense..........................................       560           850
    Changes in operating assets and liabilities:
       Rent and other receivables..........................................     5,537         1,636
       Deferred rent.......................................................    (3,020)       (3,113)
       Prepaid financing costs, expenses and other assets..................      (599)       (3,295)
       Accounts payable and accrued expenses...............................    (5,425)       (2,906)
       Security deposits...................................................      (995)          295
                                                                            ----------    ----------
  Net cash provided by operating activities................................    93,874        96,009
                                                                            ----------    ----------
Investing Activities:
  Improvements to investment in real estate.................................  (58,412)      (86,162)
  Proceeds from sale of property............................................   21,919        18,755
                                                                            ----------    ----------
  Net cash used in investing activities.....................................  (36,493)      (67,407)
                                                                            ----------    ----------
Financing Activities:
  Proceeds from term loan...................................................   75,000            --
  Repayments of mortgage loans..............................................   (1,370)       (1,317)
   Proceeds from unsecured lines of credit..................................   30,500        99,500
   Repayments of unsecured lines of credit.................................. (122,500)      (59,500)
   Proceeds from issuance of common stock...................................    6,351            89
   Distributions to preferred operating partnership unit holders............   (2,156)       (2,156)
   Increase in restricted cash..............................................     (180)         (371)
   Distributions to minority interests......................................   (1,784)       (2,071)
   Dividends paid...........................................................  (63,932)      (60,789)
                                                                            ----------    ----------
   Net cash used in financing activities....................................  (80,071)      (26,615)
                                                                            ----------    ----------
 Net increase (decrease) in cash and cash equivalents.......................  (22,690)        1,987
 Cash and cash equivalents at beginning of period...........................   37,041         5,432
                                                                            ----------    ----------
 Cash and cash equivalents at end of period.................................$  14,351     $   7,419
                                                                            ----------    ----------
                                                                            ----------    ----------

 Supplemental Disclosure of Cash Flow Information:
     Cash paid during the period for interest, net of amounts capitalized...$  44,961     $  42,638
                                                                            ----------    ----------
                                                                            ----------    ----------


 See accompanying notes to consolidated financial statements.`

5

# Arden Realty, Inc.

Notes to Consolidated Condensed Financial Statements

June 30, 2002
(unaudited)

1.
 
 
Description of Business

The terms "Arden  Realty",  "us",  "we" and "our" as used in this report  refer to Arden  Realty,  Inc.  Through our
controlling interest in Arden Realty Limited Partnership, or the Operating Partnership,  and our other subsidiaries,  we own,
manage,  lease,  develop,  renovate and acquire commercial office properties located in Southern  California.  As of June 30,
2002,  our  portfolio  was  comprised  of  130  primarily  suburban  office  properties,  consisting  of 214  buildings  with
approximately  18.0 million net rentable square feet and two properties with  approximately  566,000 net rentable square feet
under development. As of June 30, 2002 our properties were 89.9% occupied.

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

The minority interests at June 30, 2002 consisted of limited partnership  interests in the
Operating  Partnership of approximately 2.6%, exclusive of ownership interests of the
Operating Partnership's preferred unit holders.

2.
 
 
Interim Financial Data

The accompanying  consolidated  condensed  financial  statements  should be read in conjunction with our 2001 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 October 2001, the Financial  Accounting  Standards Board issued  Statement No. 144 "Accounting for the Impairment
or Disposal of  Long-Lived  Assets",  which is required to be adopted in fiscal  years  beginning  after  December  15, 2001.
Statement No. 144 supercedes  Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived  Assets to Be Disposed Of," and provide a single  accounting  model for  long-lived  assets to be disposed of. We
adopted  Statement  No.  144 on  January  1, 2002 and its  adoption  did not have a  significant  impact on our  consolidated
financial statements.

6

4.
 
 
Property Dispositions

The following  table sets forth  information  regarding our  disposition  activities during the three and
six months ended June 30, 2002.

`Property                 Sales Price
Property           County         Submarket          Date of Sale     Type      Square Feet  (in thousands)
-------------      ------         ---------          ------------   --------    -----------  --------------
Harbor Corporate   Los Angeles    Torrance          March 7, 2002    Office       63,925        $ 6,900
  Center

Renaissance Court  Los Angeles    Simi / Conejo     April 16, 2002   Office       61,245          8,300
                                     Valley

6800 Owensmouth    Los Angeles  West San Fernando   May 1, 2002      Office       80,014          8,400
                                     Valley                                      -------        -------

       Total                                                                     205,184       $ 23,600
                                                                                 -------        -------
                                                                                 -------        -------`

5.
 
 
Outstanding Indebtedness

A summary of our outstanding indebtedness as of June 30, 2002 and December 31, 2001 is as follows:

`Stated Annual
                                 June 30,                  Interest Rate at      Rate         Number of
                                   2002       December 31,   June 30, 2002      Fixed/       Properties
Type of Debt                    (unaudited)       2001        (unaudited)      Floating     Securing Loan Maturity
                                -----------   -----------  ----------------- -------------- ------------- --------
                                     (in thousands)
Mortgage Loans Payable:
Fixed Rate
Mortgage Financing I(1)....    $   175,000    $   175,000        7.52%           Fixed            18        6/04
Mortgage Financing III(2)..        136,100        136,100        6.74%           Fixed            22        4/08
Mortgage Financing IV(2)...        111,200        111,200        6.61%           Fixed            12        4/08
Mortgage Financing V(3)....        109,211        110,253        6.94%           Fixed            12        4/09
Mortgage Financing VI(3)...         21,942         22,036        7.54%           Fixed             3        4/09
Activity Business Center(3)          7,661          7,737        8.85%           Fixed             1        5/06
145 South Fairfax(3).......          3,969          3,987        8.93%           Fixed             1        1/27
Marin Corporate Center(3)..          2,909          2,966        9.00%           Fixed             1        7/15
Conejo Business Center(3)..          2,854          2,911        8.75%           Fixed       (Note 4)       7/15
Conejo Business Center(3)..          1,236          1,262        7.88%           Fixed       (Note 4)       7/15
                               -----------    -----------
                                   572,082        573,452

Unsecured Lines of Credit:
Floating Rate
Wells Fargo-$275 mm(1).....         88,350        105,350        3.03%     LIBOR + 1.15% (Note 5)  --        4/03
Lehman Brothers-$75 mm(6)..             --         75,000          --      LIBOR + 1.30%           --          --
City National Bank-$10 mm(1)            --             --          --      Prime Rate - 0.875%     --        8/03
                               -----------    -----------
                                    88,350        180,350

Unsecured Term Loan:
Floating Rate
Wells Fargo-$75 mm(1),(8)..         75,000             --        3.13%     LIBOR + 1.25%           --        6/04

Unsecured Senior Notes:
Fixed Rate
2005 Notes(7)..............        199,718        199,667        8.88%           Fixed             --        3/05
2010 Notes(7)..............         49,683         49,663        9.15%           Fixed             --        3/10
2010 Notes(7)..............         99,303         99,262        8.50%           Fixed             --       11/10
2007 Notes(7)..............        149,167        149,089        7.00%           Fixed             --       11/07
                               -----------    -----------
                                   497,871        497,681
                               -----------    -----------
   Total Debt..............    $ 1,233,303    $ 1,251,483
                               -----------    -----------
                               -----------    -----------

----------

(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 was repaid in June 2002.
(7) Requires semi-annual interest payments only, with principal balance due upon maturity.
(8) This loan has a two-year extension option.`

On June 13, 2002,  our Operating  Partnership  closed on a $75 million  unsecured  term loan with Wells Fargo.  This
loan matures in June 2004,  has a two-year  extension  option and bears interest at LIBOR + 1.25% during the initial term and
LIBOR + 1.45% during the  extension  period.  The proceeds from this loan were used to repay the  outstanding  balance on our
Lehman Brothers unsecured line of credit that was scheduled to mature in July 2002.

7

6.
 
 
Stockholders' Equity and Minority Interests

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

 
 
 
 
 
 
 
On January 1, 2002, we extended the vesting period of a total of 477,600  unvested  restricted stock awards granted to several
key executive  officers in 2000 and 2001, from their initial  four-year and five-year vesting periods to a ten-year vesting period from
their initial grant date.

 
 
 
 
 
 
 
On February  28, 2002 we issued a total of 182,500  restricted  stock  awards to several key  executive  officers.  Holders of
these shares have full voting rights and will receive any  dividends  paid but are  prohibited  from selling or  transferring  unvested
shares.  Of the 182,500  restricted  shares  awarded,  15,500  shares vest  equally  over three years and 167,000 vest equally over ten
years.  We recorded a deferred  compensation  charge of  approximately  $4.7 million,  based on the market value of these shares on the
date of award and will amortize the compensation charge to expense on a straight-line basis over the respective vesting periods.

 
 
 
 
 
 
 
On September 7, 1999, our operating partnership completed a $50 million private placement of 8 5/8% Series B Cumulative Redeemable
Preferred operating partnership units, or Preferred OP Units, to an institutional investor.  The Preferred OP Units are callable by
us after five years and are exchangeable after ten years by the holder into our 8 5/8% Series B Cumulative Redeemable Preferred Stock,
on a one-for-one basis.  The Preferred OP Units have no stated maturity or mandatory redemption and are subordinate to all debt.

 
 
 
 
 
 
 
On June 11, 2002, we declared a quarterly dividend of $0.505 per share to stockholders of record on June 28, 2002.

7.
 
 
Revenue from Rental Operations and Property Expenses

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

`Three Months                          Six Months
                                               Ended June 30,                       Ended June 30,
                                     --------------------------------      ------------------------------
                                          2002            2001                  2002            2001
                                     --------------- ----------------     ---------------  --------------
                                                                (unaudited)
Revenue from Rental Operations:
   Scheduled cash rents.............   $  86,978       $  85,225            $ 174,314        $ 170,331
   Straight-line rents..............       2,135           2,149                3,785            4,510
   Tenant reimbursements............       6,347           5,352               13,297           10,902
   Parking, net of expenses ........       5,383           5,558               10,533           10,863
   Other rental operations..........       1,792           4,696                2,970            9,495
                                       ---------       ---------            ---------        ---------
                                         102,635         102,980              204,899          206,101
                                       ---------       ---------            ---------        ---------
Property Expenses:
   Repairs and maintenance..........       9,604           9,228               19,049           18,236
   Utilities........................       8,009           7,366               15,857           14,758
   Real estate taxes................       7,234           7,272               14,612           14,686
   Insurance........................       2,104           1,495                3,764            2,711
   Ground rent......................         270             233                  338            1,384
   Administrative...................       3,697           3,680                7,524            7,341
                                       ---------       ---------            ---------        ---------
                                          30,918          29,274               61,144           59,116
                                       ---------       ---------            ---------        ---------
                                       $  71,717       $  73,706            $ 143,755        $ 146,985
                                       ---------       ---------            ---------        ---------
                                       ---------       ---------            ---------        ---------`

8.
 
 
Subsequent Events

On  August  6,  2002,  we  acquired  Gateway  Towers,  an  office  property  located  in  Torrance,
California, containing approximately  433,000 net rentable  square feet for  approximately  $66.0 million.
Gateway Towers consists of two buildings that were approximately 93% leased and includes an additional
5-acre development parcel.  The proceeds for this acquisition were funded from property dispositions and
borrowings under our Wells Fargo unsecured line of credit.

 
 
 
 
 
 
 
On August 9, 2002, our Operating Partnership renewed and increased its unsecured line of credit with a group of banks
led by Wells Fargo. The renewed line of credit provides for borrowings up to $310 million with an option to increase the
amount to $350 million and bears interest at a rate ranging between LIBOR + 0.80% and LIBOR + 1.25% (including an annual
facility fee ranging from 0.15% to 0.40% based on the aggregate amount of the facility) depending on the Operating
Partnership's unsecured debt rating.  This new credit facility replaces the previous $275 million unsecured line of credit
that was scheduled to mature in April 2003.  This line of credit matures in April 2006.  In addition, as long as the
Operating Partnership maintains an unsecured debt rating of BBB-/Baa3 or better, the agreement contains a competitive bid
option, whereby the lenders may bid on the interest rate to be charged for up to $150.0 million of the unsecured line of credit.
The Operating Partnership also has the option to convert the interest rate on this line of credit to the higher of Wells Fargo's
prime rate or the Federal Funds rate plus 0.5%.

 
 
 
 
 
 
 
On July 15, 2002, each non-employee director was granted 1,000 shares of restricted stock under our Stock Option and Incentive Plan
as part of their annual compensation.  The fair market value on the date of the grant for restricted shares was $25.09 per share.
These restricted stock awards will vest equally on the anniversary date of the awards over five years.

8

# 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 2001 Annual
Report on Form 10-K.

We are a  self-administered  and self-managed real estate  investment trust that owns,  manages,  leases,  develops,
renovates and acquires commercial  properties located in Southern California.  We are managed by 9 senior  executive
officers who have experience in the real estate industry  ranging from 10 to 33 years and who collectively  have
an average of 19 years  experience.  We perform  all  property  and  development  management,  accounting,
finance and acquisition activities and a majority of our leasing transactions with our staff of approximately 300 employees.

As of June 30, 2002, we were Southern  California's  largest  publicly  traded office  landlord as measured by total
net rentable  square feet owned. As of that date, our portfolio was comprised of 130 primarily  suburban  office  properties,
consisting of 214 buildings with  approximately  18.0 million net rentable square feet and two properties with  approximately
566,000 net rentable square feet under development. As of June 30, 2002, our properties were approximately 89.9% occupied.

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

9

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 property developments, acquisitions and dispositions.

Comparison of the three months ended June 30, 2002 to the three months ended June 30, 2001
(in thousands, except number of properties and percentages):

`Three Months Ended
                                                June 30,
                                       --------------------------    Dollar         Percent
                                         2002            2001        Change         Change
                                       --------        --------     --------       ---------
                                             (unaudited)
Revenue
  Revenue from rental operations:
    Scheduled cash rents............  $  86,978      $  85,225     $   1,753          2%
    Straight-line rents.............      2,135          2,149           (14)        (1)
    Tenant reimbursements...........      6,347          5,352           995         19
    Parking, net of expense.........      5,383          5,558          (175)        (3)
    Other rental operations.........      1,792          4,696        (2,904)       (62)
                                       --------        --------     --------       ---------
      Total.........................    102,635        102,980          (345)        (1)
  Interest and other income..........       512            764          (252)       (33)
                                       --------        --------     --------       ---------
      Total revenue.................  $ 103,147      $ 103,744     $    (597)        (1)%
                                       --------        --------     --------       ---------
                                       --------        --------     --------       ---------
Expenses
  Property expenses:
    Repairs and maintenance.........  $   9,604      $   9,228     $     376          4%
    Utilities.......................      8,009          7,366           643          9
    Real estate taxes...............      7,234          7,272           (38)        (1)
    Insurance.......................      2,104          1,495           609         41
    Ground rent.....................        270            233            37         16
    Administrative..................      3,697          3,680            17          1
                                       --------        --------     --------       ---------
      Total property expenses.......     30,918         29,274         1,644          6%

  General and administrative........      2,951          2,716           235          9%
  Interest..........................     21,584         21,081           503          2
  Depreciation and amortization.....     28,822         24,176         4,646         19
                                       --------        --------     --------       ---------
      Total expenses................  $  84,275      $  77,247     $   7,028          9%
                                       --------        --------     --------       ---------
                                       --------        --------     --------       ---------

Number of Properties:
  Sold during period.................        (2)            (2)
  Owned at end of period.............       130            140

Net Rentable Square Feet:
  Sold during period.................      (141)          (256)
  Owned at end of period.............    18,042         18,402`

Variances from rental operations and property expenses are discussed on the next page.

Interest and other income decreased by  approximately  $252,000 for the three months ended June 30, 2002 as compared
to the same period in 2001,  primarily due to lower  effective  interest rates in 2002 on investment of our  restricted  cash
balances required by mortgage loans.

General and  administrative  expenses as a percentage of total revenues were approximately 2.9% for the three months
ended June 30, 2002, as compared to approximately 2.6% for the same period in 2001.

Interest expense increased  approximately  $503,000, or 2%, during the three months ended June 30, 2002, as compared
to the same period in 2001.  This increase was primarily due to lower  interest  capitalized  during 2002 resulting from fewer
properties under development in 2002, including ceasing the capitalization of interest in our 6080 Center Drive development
property in May 2002, which was partially offset by lower effective interest rates in 2002.

Depreciation and amortization  expense increased by approximately  $4.6 million or 19% during the three months ended
June 30,  2002,  as  compared to the same  period in 2001,  primarily  due to  depreciation  related to a property  placed in
service in the fourth quarter of 2001 and depreciation expense recorded in 2002 related to properties previously held
for sale in 2001.

10

Variances for Revenue from Rental Operations and Property Expenses

The decrease in revenue from rental  operations and property  expenses for the three months ended
June 30, 2002 as compared to the  same  period  in 2001 was  primarily  due to a 4.1%  reduction
in the  average  occupancy  and the  timing  of lease  termination settlements  and other
non-recurring  items in our portfolio of 129 properties  that we owned for all of the three month
periods ended June 30, 2001 and 2002.

Following is a summary of the decrease in revenue from rental operations and property  operating
expenses that relates to the fourteen  properties  that were either  sold or placed in service  after
March 31, 2001 and for the 129  non-development  properties  we owned for all of the three month periods
ended June 30, 2001 and 2002 (unaudited and in thousands, except for number of properties):

`Non-Development Properties
                                                      Properties Sold or        Owned for all of the
                                                      Placed in Service          Three Months Ended
                                   Total Variance    after March 31, 2001    June 30, 2002 and 2001 (1)
                                   --------------    --------------------    ---------------------------

Revenue from Rental Operations:
   Scheduled cash rents...........  $   1,753            $   1,065                 $     688
   Straight-line rents............        (14)                 618                      (632)
   Tenant reimbursements..........        995                  693                       302
   Parking, net of expenses.......       (175)                (250)                       75
   Other rental operations........     (2,904)              (1,309)                   (1,595)
                                     ---------           ----------                ----------
                                    $    (345)           $     817                 $  (1,162)
                                     ---------           ----------                ----------
                                     ---------           ----------                ----------

Property Expenses:
   Repairs and maintenance........  $     376            $     180                 $     196
   Utilities......................        643                   82                       561
   Real estate taxes..............        (38)                 108                      (146)
   Insurance......................        609                    1                       608
   Ground rent....................         37                   --                        37
   Administrative.................         17                   95                       (78)
                                     ---------           ----------                ----------
                                    $   1,644            $     466                 $   1,178
                                     ---------           ----------                ----------
                                     ---------           ----------                ----------

Other Data:
   Number of properties...........                              14                       129
   Net rentable square feet.......                           1,020                    17,880

----------

(1) See analysis for these properties below.`

11

Same Properties

Following is a comparison of property  operating  data computed  under the GAAP basis and cash basis
of accounting for the 129 non-development  properties we owned for the entire three month periods
ended June 30, 2002 and 2001 (in  thousands,  except number of properties and percentages):

`Three Months Ended
                                                   June 30,
                                        --------------------------      Dollar         Percent
                                            2002          2001          Change         Change
                                        ------------  ------------  --------------  ------------
                                                  (unaudited)
GAAP Basis:
Revenue from rental operations.........  $  97,922     $  99,084     ($  1,162)        (1.2%)
Property operating expenses............     29,651        28,473         1,178          4.1%
                                         ---------     ---------     ----------        ------
                                         $  68,271     $  70,611     ($  2,340)        (3.3%)
                                         ---------     ---------     ----------        ------
                                         ---------     ---------     ----------        ------

Cash Basis (1):

Revenue from rental operations.........  $  96,467     $  96,997     ($    530)        (0.5%)
Property operating expenses............     29,651        28,473         1,178          4.1%
                                         ---------     ---------     ----------        ------
                                         $  66,816     $  68,524     ($  1,708)        (2.5%)
                                         ---------     ---------     ----------        ------
                                         ---------     ---------     ----------        ------

Number of non-development properties...        129           129
Average occupancy......................
                                              90.3%         94.4%
Net rentable square feet...............     17,880        17,880

----------

(1) Excludes straight-line rent adjustments.`

Revenue from rental operations for these properties,  computed on a GAAP basis,  decreased by approximately
$1.2 million,  or 1.2%,  during the second  quarter of 2002 as compared to the same period in 2001.
This  decrease was  primarily  due to a $1.6 million decrease in revenue  from other  rental  operations
in 2002 which was  partially  offset by a $56,000  increase in rental  revenue,  a $300,000 increase
in tenant  reimbursements  and a $75,000 increase in parking income.  Revenue from other rental operations
decreased primarily due to lower lease termination  settlements and other  non-recurring  items in 2002.
Rental revenue increased  primarily due to rental rate growth  attained on new and renewed  leases which
were  partially  offset by the decrease in average  occupancy.  Tenant reimbursements  increased in 2002
primarily due to recovery  billings for higher property expenses in 2002 as discussed below which was
partially  offset by the timing of prior year  reconciliations.  Parking  income  increased  primarily
due to increases in rates which were partially offset by the decrease in average occupancy.

Straight-line  rents  for  these  properties  in  2002  was  approximately  $632,000  less  than  in  2001.
The  decrease  in straight-line  rents in 2002 was  primarily  due to the  turning  over of  straight-line
rents for older  leases  throughout  our same property portfolio and increases in our deferred rent reserves.

Property expenses for these properties  increased by approximately  $1.2 million,  or 4.1%, during the
three months ended June 30, 2002,  compared to the same period in 2001,  primarily due to an  approximate
$561,000  increase in utility  expenses and  a $608,000 increase in insurance  expense.  The increase in
utility  expenses was due primarily to rate  increases that went into effect in May of 2001.  Insurance
expense  increased  due to increases  in  industry-wide  insurance  rates in 2002 and premiums related to a
$100 million terrorism insurance policy acquired in the second quarter of 2002. As noted above, the increase in
property expenses was the primary reason for the $300,000 increase in tenant reimbursements.

12

Comparison  of the six months  ended June 30,  2002 to the six months  ended June 30,  2001 (in  thousands,
except  number of properties and percentages):

`Six Months Ended
                                                      June 30,
                                             -------------------------      Dollar        Percent
                                                2002           2001         Change        Change
                                             ----------     ----------      -------       --------
                                                    (unaudited)
Revenue
  Revenue from rental operations:
    Scheduled cash rents.................. $   174,314     $   170,331     $    3,983         2%
    Straight-line rents...................       3,785           4,510           (725)      (16)
    Tenant reimbursements.................      13,297          10,902          2,395        22
    Parking, net of expenses..............      10,533          10,863           (330)       (3)
    Other rental operations...............       2,970           9,495         (6,525)      (69)
                                           -----------     -----------     -----------      -----
                                               204,899         206,101         (1,202)       (1)
  Interest and other income...............       1,052           1,625           (573)      (35)
                                           -----------     -----------     -----------      -----
    Total revenue......................... $   205,951     $   207,726     $   (1,775)       (1)%
                                           -----------     -----------     -----------      -----
                                           -----------     -----------     -----------      -----

Expenses
  Property operating expenses:
    Repairs and maintenance............... $    19,049     $    18,236     $      813         4%
    Utilities.............................      15,857          14,758          1,099         7
    Real estate taxes.....................      14,612          14,686            (74)       (1)
    Insurance.............................       3,764           2,711          1,053        39
    Ground rent...........................         338           1,384         (1,046)      (76)
    Administrative........................       7,524           7,341            183         2
                                           -----------     -----------     -----------      -----
       Total property operating expenses..      61,144          59,116          2,028         3
  General and administrative..............       5,911           5,582            329         6

  Interest................................      42,981          42,239            742         2
  Depreciation and amortization...........      55,205          48,322          6,883        14
                                           -----------     -----------     -----------      -----
    Total expenses........................ $   165,241     $   155,259     $    9,982         6%
                                           -----------     -----------     -----------      -----
                                           -----------     -----------     -----------      -----

Number of Properties:
  Sold during period......................          (3)             (2)
  Owned at end of period..................         130             140

Net Rentable Square Feet:
  Sold during period......................        (205)           (256)
  Owned at end of period..................      18,042          18,402`

Variances from rental operations and property expenses are discussed on the next page.

 
 
 
 
 
 
 
Interest  and other  income  decreased  approximately  $573,000 for the six months ended June 30, 2002 as
compared to the same period in 2001,  primarily due to lower  effective  interest  rates in 2002 on
investment of our restricted  cash balances  required by mortgage loans.

General and  administrative  expenses on a percentage of total revenues were  approximately 2.9% for the
six months ended June 30, 2002, as compared to approximately 2.7% for the same period in 2001.

Interest  expense  increased  approximately  $742,000 or 2% during the six months ended June 30, 2002, as
compared to the same period  in 2001.  This  increase  was  primarily  due to lower  interest  capitalized
in 2002  resulting  from fewer  properties  under development in 2002, including ceasing the capitalization
of interest in our 6080 Center Drive development property in May 2002, which was partially offset by lower
effective interest rates in 2002.

Depreciation and  amortization  expense  increased by  approximately  $6.9 million or 14% during the six
months ended June 30, 2002 compared to the same period in 2001, primarily due to depreciation related to a
newly developed  property,  capital  expenditures, tenant  improvements and leasing  commissions
placed in service  subsequent to December 31, 2000 and depreciation expense recorded in 2002 related to
properties previously held for sale in 2001.

13

Variances for Revenue from Rental Operations and Property Expenses

The decrease in revenue  from rental  operations  and property  expenses for the six months ended June 30,
2002 as compared to the  same  period  in 2001 was  primarily  due to a 3.5%  reduction  in the  average
occupancy  and the  timing  of lease  termination settlements  and other  non-recurring  items in our
portfolio of 129  properties  that we owned for all of the six month periods ended June 30, 2001 and 2002.

Following is a summary of the decrease in revenue from rental operations and property  operating  expenses
that relates to the fourteen  properties  that were either sold or placed in service  after December 31, 2000
and for the 129  non-development  properties we owned for all of the six month periods ended June 30, 2001
and 2002 (unaudited and in thousands, except for number of properties):

`Non-Development
                                                                                  Properties Owned
                                                       Properties Sold or          for all of the
                                                       Placed in Service          Six Months Ended
                                   Total Variance  after December 31, 2000   June 30, 2002 and 2001 (1)
                                   --------------  -----------------------   --------------------------
Revenue from Rental Operations:
   Scheduled cash rents............ $   3,983          $   2,511                 $   1,472
   Straight-line rents.............      (725)             1,095                    (1,820)
   Tenant reimbursements...........     2,395                651                     1,744
   Parking, net of expenses........      (330)              (134)                     (196)
   Other rental operations.........    (6,525)            (2,084)                   (4,441)
                                    ----------         ----------                ----------
                                    $  (1,202)         $   2,039                 $  (3,241)
                                    ----------         ----------                ----------
                                    ----------         ----------                ----------

Property Operating Expenses:
   Repairs and maintenance......... $     813          $     383                 $     430
   Utilities.......................     1,099                123                       976
   Real estate taxes...............       (74)               194                      (268)
   Insurance.......................     1,053                  3                     1,050
   Ground rent.....................    (1,046)                --                    (1,046)
   Administrative..................       183                 18                       165
                                    ----------         ----------                ----------
                                    $   2,028          $     721                 $   1,307
                                    ----------         ----------                ----------
                                    ----------         ----------                ----------

Other Data:
   Number of properties............                           14                       129
   Net rentable square feet........                        1,020                    17,880

----------

(1) See analysis for these properties below.`

14

Same Properties

Following  is a  comparison  of  property  operating  data  computed  under  the  GAAP  Basis  and
Cash  Basis  for  the  129 non-development  properties  we owned for the entire six month
periods  ended June 30, 2002 and 2001 (in  thousands,  except number of properties and percentages):

`Six Months Ended
                                                    June 30,
                                         ------------------------------       Dollar        Percent
                                             2002             2001            Change         Change
                                         -------------    -------------    -------------   -----------
                                                   (unaudited)
GAAP Basis:
Revenue from rental operations..........   $ 195,912        $ 199,153       ($  3,241)       (1.6%)
Property operating expenses.............      58,723           57,416           1,307         2.3
                                           ---------        ---------       ----------       ------
                                           $ 137,189        $ 141,737       ($  4,548)       (3.2%)
                                           ---------        ---------       ----------       ------
                                           ---------        ---------       ----------       ------

Cash Basis (1):

Revenue from rental operations..........   $ 193,301        $ 194,722       ($  1,421)       (0.7%)
Property operating expenses.............      58,723           57,416           1,307         2.3
                                           ---------        ---------       ----------       ------
                                           $ 134,578        $ 137,306       ($  2,728)       (2.0%)
                                           ---------        ---------       ----------       ------
                                           ---------        ---------       ----------       ------


Number of non-development properties....         129             129
Average occupancy.......................        90.9%          94.4%
Net rentable square feet................      17,880          17,880

----------

(1)  Excludes straight-line rent adjustments.`

Revenue from rental operations for these properties,  computed on a GAAP basis,  increased by
approximately  $3.2 million,  or 1.6%,  during the first  quarter of 2002 as compared to the same period
in 2001.  The  decrease  was  primarily  due to a $4.4  million decrease in revenue from other rental
operations,  a $348,000  decrease in rental  revenue and a $196,000  decrease in parking  income which
was partially offset by a $1.7 million increase in tenant  reimbursements.  The decrease in revenue from
other rental  operations was due to lower lease  termination  settlements  and other  non-recurring  items
in 2002.  Rental  revenue  decreased due to our decrease in average  occupancy  in 2002 that was
partially  offset by rent growth  attained  in 2002 on new and renewed  leases,  while parking income
decreased  primarily due to our average  decrease in occupancy.  Tenant  reimbursements  increased in 2002
primarily due to recovery billings for higher property expenses in 2002 as discussed below and for 2001
reconciliation billings.

Straight-line  rents  for  these  properties  in 2002 was  approximately  $1.8  million  less than in 2001.
The  decrease  in straight-line  rents in 2002 was  primarily  due to the  turning  over of  straight-line
rents for older  leases  throughout  our same property portfolio and increases in our deferred rent reserves.

Property  expenses for these properties  increased by approximately  $1.3 million,  or 2.3%,  during the
six months ended June 30,  2002,  compared to the same period in 2001,  primarily  due to a $976,000
increase in utility  expenses,  a $430,000  increase in repairs and  maintenance  and a $1.0  million
increase  in  insurance  expense in 2002 which was  partially  offset by a $1.0  million decrease  in
ground  rent  expense.  The  increase  in utility  expenses  was due to rate  increases  enacted in
May 2001.  Repairs and maintenance  increased in 2002 primarily due to increases in janitorial  costs while
insurance  expense  increased due to increases in industry-wide  insurance rates in 2002 and premiums related
to a $100 million terrorism insurance policy acquired in the second quarter of 2002.  Ground rent
expense decreased due to lower operating income from one of our properties with a participating ground lease.
As noted above, the increase in property  expenses was the primary reason for the $1.7 million increase in
tenant reimbursements.

15

Liquidity and Capital Resources

Cash Flows

Cash provided by operating  activities  decreased by approximately  $2.1 million to $93.9 million for the six months
ended June 30, 2002,  as compared to $96.0 million for the same period in 2001,  primarily due to the loss of operating  cash
flows on ten  properties  sold in 2001 and one property we sold in the first  quarter of 2002 and two  properties  we sold in
the second quarter of 2002 which was partially offset by a reduction in tenant receivables in 2002 as a result of our
collection efforts and from cash flows for a development property placed in service in the fourth quarter of 2001.

Cash used in investing  activities  decreased by  approximately  $30.9  million to $36.5  million for the six months
ended June 30, 2002  compared to $67.4  million for the same period in 2001.  This decrease was primarily due to the decrease
in construction activity in 2002 as a result of our completion of a development project in the fourth quarter of 2001.

Cash used in financing  activities  increased by  approximately  $53.4  million to $80.0  million for the six months
ended June 30,  2002,  as compared to $26.6  million for the same period in 2001.  This  increase  was  primarily  due to the
timing of borrowings and repayments under our unsecured lines of credit.

Available Borrowings, Cash Balance and Capital Resources

We have an unsecured line of credit with a total  commitment of $10 million  from City National Bank. This line
of credit  accrues  interest at the City National  Bank Prime Rate less 0.875% and is scheduled to mature on August 1,  2003.
Proceeds  from this line of credit are used,  among  other  things,  to provide  funds for tenant  improvements  and  capital
expenditures  and provide for working capital and other  corporate  purposes.  As of June 30, 2002,  there was no outstanding
balance on this line of credit and $10 million was available for additional borrowings.

On March 7, 2002, we sold an  approximate  64,000 square foot office  property  located in Torrance,  California for
approximately  $6.9  million.  On April 16,  2002,  we sold an  approximate  60,000  square foot office  building  located in
Westlake,  California for  approximately  $8.3 million.  On May 1, 2002 we also  completed the sale of an approximate  80,000
square foot office property located in Canoga Park,  California for approximately  $8.4 million.  The net proceeds from these
dispositions were used to reduce the outstanding balance on the Wells Fargo unsecured line of credit.

On June 13, 2002, our Operating Partnership closed on a $75 million unsecured term loan with Wells Fargo.  This
loan matures in June 2004, has a two-year extension option and bears interest at LIBOR + 1.25% during the initial term and
LIBOR + 1.45% during the extension period.  The proceeds from this loan were used to repay the outstanding balance on the
Lehman Brothers unsecured line of credit that was scheduled to mature in July 2002.

On August 6, 2002, we acquired Gateway Towers, an office property located in Torrance, California, containing
approximately 433,000 net rentable square feet for approximately $66.0 million.  Gateway Towers consists of two buildings
that are approximately 93% leased and includes an additional 5-acre development parcel.  The proceeds for this acquisition
were funded from property dispositions and borrowings under the Wells Fargo unsecured line of credit.

 
 
 
 
 
 
 
On August 9, 2002, our Operating Partnership renewed and increased its unsecured line of credit with a group of
banks led by Wells Fargo. The renewed line of credit provides for borrowings up to $310 million with an option to
increase the amount to $350 million and bears interest at a rate ranging between LIBOR + 0.80% and LIBOR + 1.25%
(including an annual facility fee ranging from 0.15% to 0.40% based on the aggregate amount of the facility)
depending on the Operating Partnership's unsecured debt rating.  This new credit facility replaces the previous
$275 million unsecured line of credit that was scheduled to mature in April 2003.  This line of credit matures
in April 2006.  In addition, as long as the Operating Partnership maintains an unsecured debt rating of BBB-/Baa3
or better, the agreement contains a competitive bid option, whereby the lenders may bid on the interest rate to
be charged for up to $150.0 million of the unsecured line of credit.  The Operating Partnership also has the
option to convert the interest rate on this line of credit to the higher of Wells Fargo's prime rate or the
Federal Funds rate plus 0.5%.

16

Following is a summary of scheduled principal payments for our total debt outstanding as of June 30, 2002
(in thousands):

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

   2002................................................... $     1,398
   2003...................................................      93,648(1)
   2004...................................................     257,062
   2005...................................................     207,678
   2006...................................................      15,063
   2007...................................................     158,681
   2008...................................................     230,305
   2009...................................................     111,980
   2010...................................................     150,565
   2011...................................................         710
   Thereafter.............................................       6,213
                                                           ------------
     Total................................................ $ 1,233,303
                                                           ------------
                                                           ------------

----------

(1) Consists primarily of $88.4 million outstanding on our Wells Fargo line of credit whose maturity
    was extended to 2006 on August 9, 2002.`

Following is certain other  information  related to our  outstanding indebtedness  as of June 30, 2002 (in
thousands,  except  percentage data):

`Unsecured and Secured Debt:
--------------------------
                                                                             Weighted
                                                                              Average
                                          Balance           Percent        Interest Rate (1)
                                       --------------   ---------------  -------------------

Unsecured Debt......................    $   661,221             54%             7.41%
Secured Debt........................        572,082             46%             7.36%
                                        -----------           -----             -----
Total Debt..........................    $ 1,233,303            100%             7.38%
                                        -----------           -----             -----
                                        -----------           -----             -----

Floating and Fixed Rate Debt:
----------------------------
                                                                             Weighted
                                                                              Average
                                          Balance           Percent        Interest Rate (1)
                                       --------------   ---------------  -------------------

Floating Rate Debt..................    $   163,350             13%             3.97%
Fixed Rate Debt.....................      1,069,953             87%             7.91%
                                        -----------           -----             -----
Total Debt..........................    $ 1,233,303            100%             7.38%
                                        -----------           -----             -----
                                        -----------           -----             -----

----------

(1) Includes amortization of prepaid financing costs.`

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

`For the Three Months Ended June 30,    For the Six Months Ended June 30,
                                  -----------------------------------    ---------------------------------
                                      2002                 2001             2002                 2001
                                  ----------           ----------        ---------           ----------
Total interest incurred.........  $  23,114            $ 23,449          $ 46,098            $ 47,195
Amount capitalized..............     (1,530)             (2,368)           (3,117)             (4,956)
                                  ----------           ---------         ---------           ---------
Amount expensed.................  $  21,584            $ 21,081          $ 42,981            $ 42,239
                                  ----------           ---------         ---------           ---------
                                  ----------           ---------         ---------           ---------`

17

As of June 30, 2002,  we had $33.3  million in cash and cash  equivalents,  including  $18.9  million in  restricted
cash.  Restricted  cash consisted of $13.6 million in interest  bearing cash deposits  required by five of our mortgage loans
payable  and $5.3  million in cash  impound  accounts  for real  estate  taxes and  insurance  as  required by several of our
mortgage loans payable.

We expect to  continue  meeting  our  short-term  liquidity  and  capital  requirements  generally  through net cash
provided by operating  activities  and proceeds from our lines of credit.  We 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 and/or the issuance of long-term debt and equity securities.

18

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 and six-month periods ended June 30, 2002 and 2001 (in thousands):

`For the                               For the
                                                       Three Months Ended June 30,           Six Months Ended June 30,
                                                    --------------------------------     --------------------------------
                                                       2002                 2001             2002                2001
                                                    ------------        ------------     ------------        ------------
 Funds From Operations:(1)                                                      (unaudited)

   Net income.....................................  $  17,407           $  28,017        $  38,760           $  52,090
   Depreciation and amortization of real estate
     assets.......................................     28,822              24,176           55,205              48,322
   Gain on sale of properties.....................        (81)             (3,551)          (1,273)             (3,551)
   Minority interest..............................      1,546               2,031            3,223               3,928
   Income allocated to preferred units............     (1,078)             (1,078)          (2,156)             (2,156)
                                                    ------------        ------------     ------------        ------------
 Funds From Operations(2).........................  $  46,616           $  49,595        $  93,759           $  98,633
                                                    ------------        ------------     ------------        ------------
                                                    ------------        ------------     ------------        ------------

 Funds Available for Distribution:(3)

    Funds From Operations.........................  $  46,616           $  49,595        $  93,759           $  98,633
    Non-cash compensation expense.................        315                 425              560                 850
    Amortization of prepaid financing costs.......        964                 880            1,901               1,746
    Straight-line rent adjustment.................     (2,135)             (2,149)          (3,785)             (4,510)
    Capital expenditure, tenant improvement
      and leasing commission reserve..............     (9,500)             (7,800)         (18,200)            (15,500)
                                                    ------------        ------------     ------------        ------------
 Funds Available for Distribution.................  $  36,260           $  40,951        $  74,235           $  81,219
                                                    ------------        ------------     ------------        ------------
                                                    ------------        ------------     ------------        ------------

 Weighted average shares
      outstanding - Diluted.................           66,850              66,127           66,610              66,084
                                                    ------------        ------------     ------------        ------------
                                                    ------------        ------------     ------------        ------------

----------

(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 April 2002
     defines funds from operations as net income or loss computed in accordance with GAAP,  excluding
     extraordinary items, as defined by GAAP, and gains and losses from sales of depreciable operating
     property plus real  estate-related  depreciation and amortization and after adjustments for
     unconsolidated  partnerships and joint ventures.  We compute funds from operations in accordance
     with standards  established by the White Paper which may differ from the standards used by other
     REITs and, accordingly, our funds from operations may not be comparable to other REITs.

(2)  Includes  non-cash  compensation  expense of $315,000 for the three  months  ended June 30, 2002,
     $425,000 for the three  months  ended June 30,  2001,  $560,000  for six months  ended June 30, 2002
     and $850,000 for the six months ended June 30, 2001.

(3)  Funds  available for  distribution  consists of funds from  operations  excluding  non-cash
     compensation  expense, amortization of prepaid financing costs,  straight-line rents and less a
     reserve for capital  expenditures,  tenant improvements and leasing commissions.`

19

Portfolio and Lease Information

The following tables set forth certain information regarding our properties as of June 30, 2002.

# PORTFOLIO SUMMARY

`Net Operating Income
                                                                                             ---------------------------------
                                                                                              For the Three      For the Six
                                                                                              Months Ended       Months Ended
     Location            Number of Properties         Approximate Net Rentable Square Feet   June 30, 2002      June 30, 2002
 -------------------   ----------------------------  --------------------------------------  --------------    ---------------
                                                                                                        (unaudited)
                             Industrial                        Industrial
                                and             % of              and                  % of     Total   % of     Total    % of
                      Office  Retail    Total  Total   Office   Retail      Total     Total    (000's)  Total   (000's)   Total
                      ------ ---------- -----  -----   ------  ----------   -----     -----    -------  -----   -------   -----
 Los Angeles County
   West..............   29     1        30     23%    4,697,608   36,959  4,734,567     26%   $ 28,561   40%  $ 56,540     39%

   North.............   29     -        29     22%    3,231,591     -     3,231,591     18%     11,395   16%    23,925     17%

   South.............   15     -        15     12%    2,625,031     -     2,625,031     15%      8,033   11%    15,657     11%
                       ---   ---       ---    ----   ----------  ------- ----------    ----   --------  ----  --------    ----

    Subtotal.........   73     1        74     57%   10,554,230   36,959 10,591,189     59%     47,989   67%    96,122     67%


 Orange County.......   24     -        24     19%    3,708,926     -     3,708,926     20%     12,118   17%    24,598     17%

 San Diego County....   21     -        21     16%    2,486,777     -     2,486,777     14%      8,116   11%    15,854     11%

 Ventura/Kern            6     -         6      4%      778,363     -       778,363      4%      2,267    3%     4,838      3%
 Counties............
 Riverside/San
   Bernardino            4     1         5      4%      342,980  133,481    476,461      3%      1,227    2%     2,343      2%
 Counties............
                       ---   ---       ---    ----   ----------  ------- ----------    ----   --------  ----  --------    ----

      Total..........  128     2       130(1) 100%   17,871,276  170,440 18,041,716(1) 100%   $ 71,717  100%  $143,755    100%
                       ---   ---       ---    ----   ----------  ------- ----------    ----   --------  ----  --------    ----
                       ---   ---       ---    ----   ----------  ------- ----------    ----   --------  ----  --------    ----

 ----------

 (1)  Including two properties currently under development, our total portfolio consists of 132 properties
      and approximately 18.6 million rentable square feet.`

# PORTFOLIO OCCUPANCY AND LEASING SUMMARY

`Annualized Base Rent
Location                          Percent Occupied              Percent Leased                  Per Leased Square Foot (1)
--------------------------   ------------------------   --------------------------     -------------------------------------
                                     Industrial                 Industrial                     Industrial         Full Service
                                        and                        and                            and                Gross
                              Office  Retail    Total   Office   Retail      Total      Office   Retail    Total   Leases(2)
                             ------- ---------- -----   ------  ----------   -----     ------- ----------  -----  ------------
Los Angeles County:
  West...................     89.3%    100.0%   89.4%    89.8%    100.0%     89.9%    $27.46    $24.60   $27.43     $27.54

  North..................     88.6%       -     88.6%    88.7%      -        88.7%     20.97       -      20.97      21.95

  South..................     88.0%       -     88.0%    89.0%      -        89.0%     18.48       -      18.48      19.79

Orange County.............    92.9%       -     92.9%    93.2%      -        93.2%     18.10       -      18.10      21.26

San Diego County..........    88.7%       -     88.7%    88.8%      -        88.8%     17.80       -      17.80      21.07

Ventura/Kern Counties.....    93.8%       -     93.8%    94.6%      -        94.6%     18.18       -      18.18      18.40

Riverside/San
Bernardino Counties.......    92.0%     86.5%   90.4%    92.5%     86.5%     90.8%     18.48     11.69    16.66      18.89
                              -----     -----   -----    -----     -----     -----    ------    ------   ------     ------

  Total/Weighted Average.     89.9%     89.4%   89.9%    90.3%     89.4%     90.3%    $21.08    $14.82   $21.02     $22.97
                              -----     -----   -----    -----     -----     -----    ------    ------   ------     ------
                              -----     -----   -----    -----     -----     -----    ------    ------   ------     ------
----------

(1) Based on monthly contractual base rent under existing leases as of June 30, 2002, 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 39 properties with approximately 3.9 million square feet under triple net and modified gross
    leases.`

20

# LEASE EXPIRATIONS

As of June 30, 2002

`2007 and
                                         Subtotal       2003         2004         2005        2006      Thereafter
                                         ---------      -------      -------      -------     -------   ----------

Los Angeles West....   Expiring SF (1)     234,212      594,317      771,745      874,451     380,396    1,362,747
                       % of Leased SF (2)     1.4%         3.7%         4.7%         5.4%        2.3%         8.4%
                       Rent per SF (3)       22.63        26.65        27.15        28.85       30.36        34.82

Los Angeles North...   Expiring SF (1)     190,109      521,003      631,417      409,479     337,181      731,038
                       % of Leased SF (2)     1.2%         3.2%         3.9%         2.5%        2.1%         4.5%
                       Rent per SF (3)       19.07        21.53        21.65        22.61       24.58        23.57

Los Angeles South...   Expiring SF (1)     158,525      279,965      488,266      602,666     247,494      512,471
                       % of Leased SF (2)     1.0%         1.7%         3.0%         3.7%        1.5%         3.1%
                       Rent per SF (3)       18.44        19.02        20.25        15.24       22.80        22.63
                                           -------      -------      -------      -------     -------      -------
Subtotal -
  Los Angeles County   Expiring SF (1)     582,846    1,395,285    1,891,428    1,886,596     965,071    2,606,256
                       % of Leased SF (2)     3.6%         8.6%        11.6%        11.6%        5.9%        16.0%
                       Rent per SF (3)       20.33        23.21        23.53        23.15       26.40        29.27

  Orange County.....   Expiring SF (1)     392,518      685,113      670,065      500,362     639,006      528,986
                       % of Leased SF (2)     2.4%         4.2%         4.1%         3.1%        4.0%         3.3%
                       Rent per SF (3)       13.79        18.15        17.72        21.30       20.64        24.22

  San Diego County..   Expiring SF (1)     132,946      605,780      262,956      390,973     145,082      623,987
                       % of Leased SF (2)     0.8%         3.7%         1.6%         2.4%        0.9%         3.8%
                       Rent per SF (3)       20.51        18.45        18.76        15.35       26.54        22.06

  All Others........   Expiring SF (1)      53,994      155,593      343,748      147,470     230,904      215,178
                       % of Leased SF (2)     0.3%         0.9%         2.1%         0.9%        1.4%         1.3%
                       Rent per SF (3)       18.63        19.29        18.33        19.65       19.09        18.24
                                           -------      -------      -------      -------     -------      -------
Total Portfolio.....   Expiring SF (1)   1,162,304    2,841,771    3,168,197    2,925,401   1,980,063    3,974,407
                       % of Leased SF (2)     7.1%        17.4%        19.4%        18.0%       12.2%        24.4%
                       Rent per SF (3)       18.06        20.76        21.34        21.61       23.70        26.87
--------------

(1) Represents the rentable square footage of expiring leases.  For 2002, represents expirations from
    July 1, 2002 through December 31, 2002, not including month-to-month tenants.
(2) Percentage of total rentable square footage expiring during the period.
(3) Represents annualized ending cash rents of expiring leases.`

# LEASING ACTIVITY

`For the                     For the
                                                     Three Months Ended           Six Months Ended
                                                       June 30, 2002               June 30, 2002
                                                  -------------------------   ------------------------
  Net Absorption (square feet)...................        (201,244)                  (424,448)
                                                         ---------                  ---------
                                                         ---------                  ---------
  Retention Rate.................................              70%                        71%
                                                         ---------                  ---------
                                                         ---------                  ---------
  Cash Rent Growth(1):
     Expiring Rate...............................          $ 19.23                    $ 20.04
                                                         ---------                  ---------
                                                         ---------                  ---------
     New / Renewed Rate..........................          $ 21.15                    $ 22.61
                                                         ---------                  ---------
                                                         ---------                  ---------
     Increase....................................              10%                        13%
  GAAP Rent Growth(2):
     Expiring Rate...............................          $ 18.67                    $ 19.46
                                                         ---------                  ---------
                                                         ---------                  ---------
     New / Renewed Rate..........................          $ 22.01                    $ 23.54
                                                         ---------                  ---------
                                                         ---------                  ---------
     Increase....................................              18%                        21%
                                                         ---------                  ---------
                                                         ---------                  ---------
  Weighted Average Lease Term in Months..........               53                         51
                                                         ---------                  ---------
                                                         ---------                  ---------
  Tenant Improvements and Commissions (per square
  foot):
     New(3)......................................          $ 17.44                    $ 16.88
                                                         ---------                  ---------
                                                         ---------                  ---------
     Renewal.....................................          $  9.28                    $  9.03
                                                         ---------                  ---------
                                                         ---------                  ---------
  Recurring Capital Expenditures(4) (per square
  foot)..........................................          $  0.04                    $  0.12
                                                         ---------                  ---------
                                                         ---------                  ---------

  -----------------

 (1) Represents the difference between initial market rents on new and renewed leases as compared to the expiring cash
     rents on the same space.
 (2) Represents estimated cash rent growth adjusted for straight-line rents.
 (3) Excludes all newly developed square footage or square footage vacant at acquisition.
 (4) Represents  non-incremental  building  improvements  and leasing costs  required to maintain  current  revenues.
     Recurring  capital   expenditures  do  not  include  immediate  building   improvements  that  were  taken  into
     consideration  when  underwriting  the  purchase of a building  or which are  incurred to bring a building up to
     "operating standards."`

21

The following  table  presents  information  as of June 30, 2002 regarding our ten largest  tenants based on the  percentage of
aggregate portfolio annualized base rent:

`Percentage
                                                 Weighted         of         Percentage
                                                  Average      Aggregate    of Aggregate
                                                 Remaining     Portfolio      Portfolio                    Annualized
                                     Number of   Lease Term      Leased       Annualized   Net Rentable     Base Rent
Tenant                                Leases     In Months     Square Feet   Base Rent(1)  Square Feet    (in thousands)
------------------------------------ ---------  ------------  ------------  -------------  -------------  --------------

Vivendi Universal...................     4          94           1.40%          2.31%        231,681        $ 8,111
State of California.................    39          49           2.03           1.99         336,418          6,986
University of Phoenix...............    20          28           1.45           1.30         240,162          4,575
Univision...........................     2         232           1.01           1.21         166,363          4,247
Ceridian Corporation................     4          89           0.83           0.88         137,695          3,098
SBC Communications..................     7          33           0.83           0.86         137,440          3,016
Sony................................     8          19           0.82           0.81         135,029          2,869
Atlantic Richfield..................    13          50           0.77           0.76         126,830          2,659
Verizon Communications Inc..........     8          26           0.95           0.74         156,612          2,610
U.S. Government.....................    21          46           0.71           0.73         117,368          2,584
                                       ---         ---          -----          -----       ---------         ------

Total/Weighted Average(2)...........   126          66          10.80%         11.59%      1,785,598         40,755
                                       ---         ---          -----          -----       ---------         ------
                                       ---         ---          -----          -----       ---------         ------

-----------------

(1) Annualized base rent is calculated as monthly contractual base rent under existing leases as of June 30, 2002,
    multiplied by 12; for those leases where rent has not yet commenced or which are in a free rent period, the first
    month in which rent is to be received is used to determine annualized base rent.
(2) The weighted average calculation is based on net rentable square footage leased by each tenant.`

22

# DEVELOPMENT SUMMARY

As of June 30, 2002

`Estimated               Estimated
                                     Costs                      Percent  Estimated                   Year 1      Estimated    Year 1
                                    Incurred       Estimated     Leased    Shell     Estimated     Stabilized     Year 1      Annual
                          Square    To Date       Total Cost(1)    at    Completion Stabilization  Cash NOI(3)    Annual       GAAP
Property                   Feet   (in thousands) (in thousands)  8/6/02     Date       Date(2)    (in thousands) Cash Yield  Yield(4)
------------------------- ------- -------------- -------------- -------- ---------- ------------- -------------- ---------- ----------

Howard Hughes Center:
 6080 Center Drive....... 283,000    $  72,981      $  77,100     89%(5)  Complete  3rd Qtr 2002    $ 8,200       10.6%       11.8%

 6100 Center Drive....... 283,000       58,207         81,500       --    Complete  2nd Qtr 2003    $ 7,500        9.2%       10.2%

 Unallocated
   Acquisition And
   Master Plan Costs(1)..      --       17,299         19,800
                          -------     --------     ----------

      Total Development
      Properties......... 566,000     $148,487      $ 178,400
                          -------     --------     ----------
                          -------     --------     ----------

----------

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

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

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

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

(5) As of August 6, 2002, 6080 Center Drive was 73% occupied and 89% leased.`

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

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

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

Current Economic Climate

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

o
 
 
 
 
Occupancy and rental rates have compressed in recent months due to the state of the local economy;

o
 
 
 
 
Larger tenants are taking more time to make their leasing decisions reflecting the uncertainty in the economy;

o
 
 
 
 
Some tenants are under-utilizing their existing space and can therefore expand internally before they need new space;

23

o
 
 
 
 
Sublease space, although stabilizing, stands at about 3% of total inventory throughout Southern California; and

o
 
 
 
 
Over-building in some sub-markets has pushed vacancy rates in those sub-markets to very high levels.

These factors have  contributed  to a decrease in the  occupancy of our portfolio  from 92.2% as of
December 31, 2001 to 89.9% as of June 30, 2002.  Furthermore,  problems  associated with deregulation
of the electric industry in California have also resulted in significantly higher utility costs in some areas of the state.

The timing and extent of future  changes in the national and local economy and their effects on our
properties and results of operations are difficult to accurately  predict.  It is possible,  however,
that these national and regional  issues may more directly affect us and our operating  results in the
future,  making it more difficult for us to lease and renew available space, to increase or maintain
rental rates as leases expire and to collect  amounts due from our tenants.  For additional
information,  see "Risk Factors - Further  declines in the economic  activity of Southern  California
will  adversely  affect our  operating  results," "- The financial condition and solvency of our
tenants may reduce our cash flow," and "- Rising  energy costs and power  outages in California
may have an adverse effect on our operations and revenue" sections of our 2001 annual report on Form 10-K.

# Item 3.
 
 
Quantitative and Qualitative Disclosure about Market Risk

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

Interest Rate Risk

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

Some of our future  earnings,  cash flows and fair values  relating to financial  instruments  are
dependent  upon  prevailing market  rates of  interest,  such as LIBOR.  Based on interest  rates and
outstanding  balances as of June 30,  2002, a 1% increase in interest rates on our $163.4 million of
floating rate debt would decrease annual future earnings and cash flows by  approximately  $1.6 million
and would not have an impact on the fair value of the floating rate debt.  Conversely,  a 1% decrease
in interest  rates on our $163.4 million of floating rate debt would increase annual future earnings
and cash flows by  approximately  $1.6 million and would not have an impact on the fair value of the
floating  rate debt.  A 1%  increase  or  decrease  in  interest  rates would  not have a  material  impact
on future  earnings,  cash  flows  and the fair  value of the  secured  notes receivable.
The weighted average interest rate on our floating debt as of June 30, 2002 was 3.97%.

Our fixed rate debt totaled  $1,070.0  million as of June 30, 2002 with a weighted  average interest
rate of 7.91% and a total fair value of  approximately  $1,107.5  million.  A 1% decrease in interest
rates would increase the fair value of our fixed rate debt by approximately $46.2 million and would
not have an impact on future  earnings and cash flows. A 1% increase in interest rates would decrease
the fair value of our fixed rate debt by  approximately  $43.6  million and would not have an impact
on 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  sensitive  analysis
assumes no changes in our capital structure.

24

# Part II.
 
 
OTHER INFORMATION

Item
 
1.
 
 
Legal Proceedings

We are presently subject to various lawsuits, claims and proceedings of a nature considered normal to our ordinary course of
business.  We expect most of these legal proceedings to be covered by our liability insurance.  The most significant of these
contingencies not covered by insurance is described below.

 
 
 
 
 
 
 
In December 2001, the owner of the entertainment center at our Howard Hughes Center project asserted a claim against us for
indemnification arising out of a Los Angeles Superior Court judgment against them, which invalidated a transfer of in-lieu credits
that we made in August of 1999 as part of our sale of the land for the entertainment center.  The value of these in-lieu
credits was approximately $6.0 million and were transferred to satisfy certain Transportation Impact Assessment fees related to the
entertainment center.  The owner of the entertainment center is currently appealing the judgment.

 
 
 
 
 
 
 
Based on our review of the current facts and circumstances and advice of our outside counsel, we are not able to express an opinion
as to the ultimate outcome of this matter.  However, we do not believe that the resolution of this matter or any of our ongoing legal
proceedings will have a material adverse effect on our consolidated results of operations, cash flow or financial position.

# Item
 
2.
 
 
Changes in Securities

During the three months ended June 30, 2002, we redeemed an aggregate of 19,375 common operating partnership units
of the Operating Partnership for shares of our common stock. The redemption of limited partnership units for shares of our
common stock was exempt from the registration requirement of the Securities Act pursuant to Section 4(2) of the Securities
Act and Rule 506 of Regulation D.

# Item
 
3.
 
 
Defaults Upon Senior Securities - None

Item
 
4.
 
 
Submission of Matters to a Vote of Securities Holders

On May 14, 2002 we held our annual meeting of  stockholders  in Santa Monica,  California.  The matters voted on at
the meeting and the results were as follows:

`1.       To elect  Directors of Arden Realty,  Inc. to hold office until the annual meeting of
         stockholders in the year 2005 or until their respective successors are elected and qualified,
         as follows:


                                               Number of Shares Voted For    Number of Shares Withheld
                                                --------------------------    -------------------------
            Director #1 - Victor J. Coleman             37,911,683                   20,630,655
            Director #2 - Richard S. Ziman              37,920,989                   20,021,349


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


            Number of Shares Voted For         Number of Shares Voted Against  Number of Shares Abstained
            --------------------------         ------------------------------  --------------------------
                    39,800,982                          11,924,509                      306,977`

# Item
 
5.
 
 
Other Information

On June 11, 2002 our Board of Directors approved the formation of an independent directors nominating
committee.  The committee will be comprised of independent directors who are not up for election the following year.

 
 
 
 
 
 
 
On July 24, 2002 our Board of Directors authorized a common stock repurchase program pursuant to which we would be authorized to
purchase up to $75 million of its common stock over the next 12 months.  We may repurchase shares from time to time in open market
transactions at prevailing prices or in privately negotiated transactions in compliance with the SEC's Rule 106-18, subject to market
conditions, applicable legal requirements and other factors.

# Item
 
6.
 
 
Exhibits and Reports on Form 8-K

(a)
 
 
 
 
 
 
Exhibits

10.20
 
 
Amended and Restated Employment Agreement dated March 29, 2002, between Mr. Andrew Sobel and Arden Realty, Inc.

10.40
 
 
Form of Promissory Note entered into February 18, 2002 between Arden Realty, Inc. and Mr. Andrew Sobel.

10.41*
 
Term Loan Agreement between Arden Realty Limited Partnership and Wells Fargo Bank, National

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Association dated as of June 12, 2002.

(*)
 
 
 
 
Incorporated by reference from Arden Realty Limited Partnership's quarterly report on Form 10-Q filed with
the Securities

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
and Exchange Commission on August 14, 2002.

# (b)
 
 
 
 
 
 
Reports on Form 8-K

 
 
 
 
 
 
 
 
 
None

25

# SIGNATURES

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

`ARDEN REALTY, INC.
                                                              By:  Arden Realty, Inc.
                                                              Its: General Partner




Date: August 14, 2002                                       By: /s/ Andrew J. Sobel
                                                                  ----------------------------
                                                                  Andrew J. Sobel
                                                                  Executive Vice President - Strategic Planning
                                                                  and Operations





Date: August 14, 2002                                       By: /s/  Richard S. Davis
                                                                  ----------------------------
                                                                  Richard S. Davis
                                                                  Senior Vice President and
                                                                  Chief Financial Officer`

26