Arden Realty, Inc. Reports Fourth Quarter 2002 FFO of $0.69 per Share.

Business Editors/Real Estate Writers

LOS ANGELES--(BUSINESS WIRE)--Feb. 5, 2003

Arden Realty, Inc. (NYSE:ARI), a Los Angeles-based office real estate investment trust, today reported Funds From Operations (FFO) for the fourth quarter of 2002 of $44.6 million or $0.69 per share on a fully diluted basis and $181.5 million or $2.75 per share on a fully diluted basis for the year ended December 31, 2002, compared with FFO of $49.5 million or $0.75 per share on a fully diluted basis for the fourth quarter of 2001 and $198.2 million or $3.00 per share on a fully diluted basis for the year ended December 31, 2001.

Revenues for the fourth quarter of 2002 were $106.9 million and $414.6 million for the year ended December 31, 2002, compared with $106.2 million for the fourth quarter of 2001 and $417.4 million for the year ended December 31, 2001. Net income for the fourth quarter of 2002 was $16.3 million or $0.26 per share on a fully diluted basis and $70.2 million or $1.09 per share on a fully diluted basis for the year ended December 31, 2002, compared with $22.2 million or $0.35 per share on a fully diluted basis for the fourth quarter of 2001 and $97.8 million or $1.53 per share on a fully diluted basis for the year ended December 31, 2001.

Adjusting FFO for non-cash compensation expense, the amortization of prepaid financing costs, straight-line rents and costs incurred for recurring capital expenditures, second generation tenant improvements and leasing commissions resulted in Funds Available for Distribution (FAD) for the fourth quarter of 2002 of $36.2 million or $0.56 per share on a fully diluted basis, compared with FAD of $42.5 million or $0.64 per share on a fully diluted basis for the fourth quarter of 2001. A dividend of $0.505 per share was declared for the fourth quarter of 2002.

Total debt was approximately $1.4 billion, representing approximately 48.6% of total market capitalization at December 31, 2002.

Arden Realty will host a conference call to discuss fourth quarter 2002 operating results on February 6, 2003, at 1:00 p.m. Eastern time. A live webcast (listen only mode) of the conference call will be available at this time. A hyperlink to the live webcast will be available from the Investor Information section of our website at www.ardenrealty.com or at www.companyboardroom.com. A replay of the conference call may be heard by calling [phone] (U.S.) or [phone] (International), access code 7449561, from 3:00 p.m. Eastern time on February 6, 2003 through 3:00 p.m. Eastern time on February 20, 2003. During this period, an on-demand webcast replay of the call will also be available from the Investor Information section of our website at www.ardenrealty.com or at www.companyboardroom.com.

Financial schedules follow. A detailed analysis of the quarter's results can be obtained by viewing the Supplemental Operating and Financial Data available in the Investor Information section (Financial Reports) of our website at www.ardenrealty.com, or by calling Rick Davis, CFO, at the number listed above.

Arden Realty is a self-administered, self-managed REIT which owns, manages, leases, develops, renovates and acquires commercial office properties located in Southern California. As of December 31, 2002, the Company's portfolio contained 137 properties comprising 223 buildings and approximately 19.4 million rentable square feet including a development property with approximately 283,000 rentable square feet under lease-up.

Statements made in this press release or during the conference call which are not historical may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Arden Realty believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, these statements are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from the Company's expectations include general and Southern California specific real estate and economic conditions, competition within the industry, the availability and cost of capital for future investments and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.

                          ARDEN REALTY, INC.
                      CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                            December 31,  December 31,
                                                2002          2001
                                             (unaudited)
Assets
 Investment in real estate:
   Commercial properties                      $3,008,114   $2,635,085
   Less: accumulated depreciation and
    amortization                                (388,057)    (290,079)
                                               2,620,057    2,345,006
   Properties under development                   65,296      116,822
   Land available for development                 23,731       19,255
   Properties held for disposition, net           32,540      141,897
     Net investment in real estate             2,741,624    2,622,980

 Cash and cash equivalents                         4,063       37,041
 Restricted cash                                  20,498       18,768
 Rent and other receivables                        2,917        9,685
 Mortgage notes receivable, net of discount           --       13,495
 Deferred rent                                    43,646       38,989
 Prepaid financing costs, expenses and other
  assets, net of amortization                     19,661       20,485
       Total assets                           $2,832,409   $2,761,443

Liabilities and Stockholders' Equity
 Mortgage loans payable                         $570,654     $573,452
 Unsecured lines of credit                       208,587      180,350
 Unsecured term loan                             125,000           --
 Unsecured senior notes, net of discount         498,063      497,681
 Accounts payable and accrued expenses            55,705       43,002
 Security deposits                                20,645       19,683
 Dividends payable                                31,807       31,408
       Total liabilities                       1,510,461    1,345,576
 Minority interest                                74,791       78,661
 Stockholders' equity:
   Common stock                                      631          641
   Additional paid-in capital                  1,260,553    1,345,698
   Deferred compensation                         (11,259)      (9,133)
   Accumulated other comprehensive loss           (2,768)          --
       Total stockholders' equity              1,247,157    1,337,206
       Total liabilities and stockholders'
        equity                                $2,832,409   $2,761,443


                          ARDEN REALTY, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)

                               For the Three        For the Twelve
                                Months Ended        Months  Ended
                                December 31,          December 31,
                                2002     2001       2002       2001
                                 (unaudited)     (unaudited)
Revenue:
 Revenues from rental
  operations:
   Scheduled cash rents        $91,279  $87,706     $352,682 $343,224
   Straight-line rents             795    2,257        5,348    9,120
   Tenant reimbursements         5,906    6,042       24,968   22,683
   Parking, net of expenses      5,421    5,217       20,814   21,256
   Other rental operations       2,527    4,383        8,242   18,202
                               105,928  105,605      412,054  414,485
 Interest and other income         966      610        2,542    2,941
     Total revenue             106,894  106,215      414,596  417,426

Expenses:
 Property expenses:
   Repairs and maintenance      10,894    9,440       39,422   36,151
   Utilities                     9,397    8,536       35,726   33,579
   Real estate taxes             7,909    7,347       29,921   29,089
   Insurance                     2,210    1,505        8,116    5,685
   Ground rent                     279      261          895    1,885
   Property administrative       4,054    3,961       15,643   14,697
     Total property expenses    34,743   31,050      129,723  121,086

 General and administrative      3,932    4,056       13,166   12,143
 Interest                       23,132   21,137       88,516   84,195
 Depreciation and amortization  28,254   27,339      110,202  100,775
Income from continuing
 operations before gain and
 minority interest              16,833   22,633       72,989   99,227
Gain on sale of properties         694    1,016        1,967    4,591
Income from continuing
 operations before minority
 interest                       17,527   23,649       74,956  103,818
Minority interest               (1,527)  (1,751)      (6,198)  (7,517)
Income from continuing
 operations                     16,000   21,898       68,758   96,301
Discontinued operations, net
 of    minority interest           302      282        1,417    1,458
Net income                     $16,302  $22,180      $70,175  $97,759

Net income per share:
   Basic                         $0.26    $0.35        $1.09    $1.53
   Diluted                       $0.26    $0.35        $1.09    $1.53

Weighted average common
 shares:
   Basic                        63,295   63,937       64,151   63,754
   Diluted                      63,382   64,254       64,351   64,014


                          ARDEN REALTY, INC.
                 CALCULATION OF FUNDS FROM OPERATIONS
                 AND FUNDS AVAILABLE FOR DISTRIBUTION
               (in thousands, except per share amounts)
                              (unaudited)

                                 For the Three      For the Twelve
                                  Months Ended       Months Ended
                                  December 31,       December 31,
                                 2002     2001      2002      2001
Funds From Operations:(1)
 Income from continuing
  operations                    $16,000  $21,898    $68,758   $96,301
 Plus -
   FFO from discontinued
    operations                      618      594      2,670     2,550
   Depreciation and
    amortization of
     real estate assets          28,254   27,339    110,202   100,775
   Minority interest              1,527    1,751      6,198     7,517
 Less -
   Gain on sale of properties      (694)  (1,016)    (1,967)   (4,591)
   Income allocated to
    Preferred Operating
     Partnership Units           (1,078)  (1,078)    (4,312)   (4,312)

Funds From Operations (2)       $44,627  $49,488   $181,549  $198,240

Funds Available for
 Distribution:(3)
 Funds From Operations          $44,627  $49,488   $181,549  $198,240
 Plus -
   Non-cash compensation
    expense                         324      545      1,199     1,938
    Amortization of prepaid
     financing costs                993      930      3,807     3,568
 Less-
   Straight-line rent              (800)  (2,270)    (5,465)   (9,208)
   Recurring capital
    expenditures, second
    generation tenant
    improvements and leasing
    commissions                  (8,980)  (6,143)   (28,458)  (21,460)
Funds Available for
 Distribution                   $36,164  $42,550   $152,632  $173,078

Per share:
 Funds From Operations -
  Diluted                         $0.69    $0.75      $2.75     $3.00
 Funds Available for
  Distribution - Diluted          $0.56    $0.64      $2.31     $2.62
 Dividends declared              $0.505    $0.49      $2.02     $1.96

Weighted average shares and
 Operating
Partnership Units outstanding -
 Diluted                         65,099   66,241     66,098    66,132

(1) We believe that funds from operations, or FFO, is a useful supplemental measure of our operating performance. We compute funds from operations in accordance with standards established by the White Paper on funds from operations approved by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, in April 2002. The White Paper defines funds from operations as net income or loss computed in accordance with generally accepted accounting principles, or GAAP, excluding extraordinary items, as defined by GAAP, and gains and losses from sales of depreciable operating property plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.

We believe that funds from operations, by excluding depreciation costs, the gains or losses from the sale of operating real estate properties and extraordinary items as defined by GAAP, provides an additional perspective on our operating results. However, because these excluded items have real economic effect, funds from operations is a limited measure of performance.

Funds from operations captures trends in occupancy rates, rental rates and operating costs. Funds from operations excludes depreciation and amortization costs and it does not capture the changes in value in our properties that result from use or changes in market conditions or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs, therefore, it's ability to measure performance is limited.

Because funds from operations excludes significant economic components of net income determined in accordance with GAAP, funds from operations should be used as an adjunct to net income and not as an alternative to net income. Funds from operations should also not be used as an indicator of our financial performance, or as a substitute for cash flow from operating activities determined in accordance with GAAP or as a measure of our liquidity. Funds from operations is not by itself indicative of funds available to fund our cash needs, including our ability to pay dividends or service our debt. Therefore, funds from operations only provides investors with an additional performance measure that when combined with measures computed in accordance with GAAP such as net income, cash flow from operating activities, investing activities and financing activities provides investors with an indication of our ability to service debt and to fund acquisitions and other expenditures.

Funds from operations is used by investors to compare our performance with other REITs. Other REITs may use different methodologies for calculating funds from operations and, accordingly, our funds from operations may not be comparable to other REITs.

(2) Includes $324,000 and $545,000 in non-cash compensation expense for the three months ended December 31, 2002 and December 31, 2001, respectively and $1.2 million and $1.9 million in non-cash compensation expense for the twelve months ended December 31, 2002 and December 31, 2001, respectively.

(3) Consists of funds from operations excluding non-cash compensation expense, amortization of prepaid financing costs, straight-line rents and less costs incurred for recurring capital expenditures, second generation tenant improvements and leasing commissions.