Glenborough Reports Annual FFO Increase of 5%.

Business Editors

SAN MATEO, Calif.--(BUSINESS WIRE)--Jan. 26, 2000

Glenborough Realty Trust Incorporated (NYSE:GLB, GLB PrA), a diversified real estate investment trust, announced that, for the year ended December 31, 1999, Funds from Operations (FFO) equaled $84.0 million or $2.37 per diluted common share.

This represents a 5.3% per share annual increase from $79.9 million or $2.25 per diluted common share in 1998. For the fourth quarter, FFO per diluted common share declined to $0.56 per share from $0.59 per share in the corresponding period in 1998. For the year, GAAP net income equaled $28.0 million or $0.89 per diluted common share, which represents a 19% annual increase from $24.0 million or $0.75 per diluted common share in 1998.

For the year, Cash Available for Distribution (CAD) equaled $66.6 million or $1.87 per diluted common share, down from $68.4 million or $1.92 per diluted common share in 1998. For the fourth quarter, CAD per diluted common share equaled $13.9 million or $0.40 per share, down from $18.2 million or $0.50 per share for the same period in 1998. The CAD figures reflect an increase in 1999 capital expenditures versus 1998, primarily comprising building upgrades, tenant improvements and leasing commissions for new and renewing leases.

Andrew Batinovich, Glenborough's President and Chief Operating Officer, said, &uot;While the 5% annual FFO increase is in line with analyst estimates, it is not in line with our historic growth trends and reflects a decline in commercial occupancy that we have identified as an area of focus in 2000. We are, however, pleased with our rent increases on lease renewals, the solid performance of our multifamily portfolio with stable occupancy and growing rents, and our excellent expense controls which limited annual expense growth to 1.3%.&uot;

                        SUMMARY FINANCIAL DATA
                 (in thousands, except per share data)

                         QUARTER    QUARTER       YEAR      YEAR
                          ENDED      ENDED      TO DATE    TO DATE
                        DEC 31 99  DEC 31 98   DEC 31 99  DEC 31 98

Funds from operations
 (FFO)                    $19,350    $21,507    $84,047    $79,920
Cash available for
 distribution (CAD)        13,887     18,214     66,576     68,357
Net income before
 preferred dividends       10,480      7,958     50,286     44,602
Net income before
 preferred dividends,
 plus depreciation and
 amortization              25,015     22,740    107,939     94,636
Net income                  4,910      2,388     28,006     23,982

Per diluted common share
Funds from operations
 (FFO)                      $0.56      $0.59      $2.37      $2.25
Cash available for
 distribution (CAD)          0.40       0.50       1.87       1.92
Net income before
 preferred dividends,
 plus depreciation
 and amortization            0.72       0.63       3.04       2.66
Net income                   0.16       0.08       0.89       0.75

Dividends declared per
 common share
 outstanding                $0.42      $0.42      $1.68      $1.68

Diluted weighted
 average
 common shares
outstanding for
 calculation
of FFO and CAD        34,726,581  36,191,009  35,522,627  35,576,210

Payout ratios
Dividend payout ratio
 (FFO)                      75.0%       71.2%     70.9%     74.7%
Dividend payout ratio
 (CAD)                     105.0%       84.0%     89.8%     87.5%

Fourth Quarter 1999 Dividends

On December 15, 1999, the Board of Directors declared a dividend of $0.42 per share of common stock for the fourth quarter of 1999. This dividend, representing an annualized dividend of $1.68 per share, was paid on January 18, 2000 to stockholders of record on January 1, 2000. This represented a yield of approximately 12.6% based on the December 31, 1999 closing price of $13.375 per share.

For the year, 70% of the common dividend was taxable as ordinary income, 6% was taxable as capital gains, and 24% represented a non-taxable return of capital. For the full year, the dividend/FFO payout ratio declined to 70.9% from 74.7% last year, reflecting increased dividend coverage.

The Board of Directors also declared a dividend of $0.484375 per share on the Company's 7.75% Series A Convertible Preferred Stock. This dividend was paid on January 18, 2000 to stockholders of record on December 25, 1999 and represented an annualized dividend of $1.9375 per share of Preferred Stock, yielding 13.8% on the December 31, 1999 closing price of $14.00 per share. For the year, 94% of the preferred dividend was taxable as ordinary income and 6% was taxable as capital gains.

1999 HIGHLIGHTS

Portfolio Results

For the fourth quarter, occupancy was stable in the commercial portfolio at 92%, and in the multifamily portfolio at 93%. Effective rents on commercial lease renewals rose 23% on average, and same store multifamily rents increased by 3.8%. Overall same store net operating income grew by 2.1% over the same period last year, led by office at 4.0% and multifamily at 3.1%. For the year, same store net operating income grew by 1.4% over 1998.

For the fourth quarter, Glenborough's portfolio net operating income (NOI) was segmented as follows: office 48%, multifamily 23%, office/flex 16%, industrial 8% and retail 5%. The property NOI contributions are fairly evenly spread throughout the country: East 33%, South 29%, Midwest 20% and West 18%. The Company's Form 8K for the period ending December 31, 1999 provides further detail on property and sector operating performance.

Acquisitions and Dispositions

For the year, property sales generated net proceeds of approximately $178 million, and the Company completed approximately $123 million of property investments, joint ventures and development activity. The remaining net proceeds from dispositions were used to reduce debt and fund the Company's stock repurchase program.

Acquisitions included Chase Monroe Phase II, a 96-unit addition to Glenborough's existing 120-unit complex in the Charlotte, North Carolina area, generated from the Company's development pipeline. The development pipeline also produced Bridgewater II, an 84,000 square foot office building fully leased to Lucent and other leading high-tech firms, which expanded Glenborough's existing presence in the Northern New Jersey market.

Bridgewater II and Chase Monroe Phase II are both performing at or above pro forma levels. The Company also expanded its San Francisco presence through the acquisition, in its Blackstone alliance, of Rincon Center, a major mixed use complex occupying a full city block near the waterfront in the financial district.

Financing Activities

To date, Glenborough has completed the repurchase of 1,705,216 shares of its common stock and 208,400 shares of its preferred stock. The Company continues to cull its portfolio, adjusting the geographic and property type mix, and the best use of the resulting sale proceeds continues to be the repurchase of the Company's common and preferred stock, while at the same time applying a portion of the sales proceeds to debt reductions so as to maintain prudent capital ratios.

Glenborough completed a number of debt financing transactions during 1999, focused on extending maturities, reducing interest rates and controlling variable rate exposure, while at the same time preserving flexibility to aggressively pursue the culling of the portfolio without triggering excessive prepayment penalties.

As a result of these efforts, by the end of 1999 Glenborough's debt was $25 million less than 12 months earlier; its overall interest rate was 7.2%, a very competitive level as compared with market rates; its average loan maturity stood at 6.8 years; and variable rate debt represented 28% of total debt.

Robert Batinovich, Chairman and Chief Executive Officer, commented, &uot;In 2000 we will be focusing on operations, and building on the successes we have achieved with our existing capital strategy. We are committed to improving same store performance by increasing commercial occupancy. On the capital side, our redeployment strategy is working and we will expand the program to encompass $300 million of property sales which will fund further debt reductions and stock repurchases. We also expect continued productivity from our development pipeline.&uot;

Glenborough is a self-administered and self-managed REIT with a diversified portfolio of 160 properties including, office, office/flex, industrial, multifamily and retail properties as of December 31, 1999. The portfolio encompasses approximately 22.5 million square feet in 32 metropolitan markets in 22 states.

                 GLENBOROUGH REALTY TRUST INCORPORATED
                 CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)

                     FOR THE THREE MONTHS ENDED    FOR THE YEAR ENDED
                        DEC 31 99  DEC 31 98   DEC 31 99   DEC 31 98

REVENUE
Rental revenue            $63,212    $65,053    $255,339   $227,956
Fees and
 reimbursements
 from affiliates              820        350       3,312      2,802
Interest and other
 income                       878      2,588       6,094      4,607
Equity in earnings
 (loss) of
 Associated
 Companies                     10       (376)      1,222      1,314
Net gain on sales of
 real estate assets         2,291      2,907       9,013      4,796
                         --------   --------    --------   --------
  Total revenue            67,211     70,522     274,980    241,475

EXPENSES
Property operating
 expenses                  22,031     21,044      88,037     74,079
General and
 administrative             2,634      2,841       9,688     11,038
Depreciation and
 amortization              14,717     14,942      58,295     50,194
Interest expense           16,104     17,373      64,782     53,289
Loss on interest
 rate protection
 agreement                    --       4,323         --       4,323
Loss on sale of
 note receivable            1,229        --        1,229        --
  Total expenses           56,715     60,523     222,031     192,923

Income from
 operations before
 minority interest
 and
 extraordinary item      10,496       9,999      52,949      48,552
Minority interest          (563)       (641)     (3,647)     (2,550)
                       --------    --------    --------    --------
Net income before
 extraordinary item       9,933       9,358      49,302      46,002
Net gain (loss) on
 early
 extinguishment of
 debt                       547      (1,400)        984      (1,400)
                       --------    --------    --------    --------
Net income               10,480       7,958      50,286      44,602
Preferred dividends      (5,570)     (5,570)    (22,280)    (20,620)
                       ========    ========    ========    ========
Net income available
 to Common
 Stockholders            $4,910      $2,388     $28,006     $23,982
                       ========    ========    ========    ========
Net income per
 diluted common
 share                    $0.16       $0.08       $0.89       $0.75

OTHER DATA
Income from
 operations before
 minority interest
 and
extraordinary item        $10,496    $9,999       $52,949    $48,552
Depreciation and
 amortization              14,535    14,782        57,653     50,034
Preferred dividends       (5,570)   (5,570)      (22,280)   (20,620)
Net (gain) loss on
 sales of real
 estate assets            (2,291)   (2,907)       (9,013)    (4,796)
Loss on interest
 rate protection
 agreement                  --        4,323         --        4,323
Loss on sale of note
 receivable                1,229        --         1,229        --
Costs of terminated
 stock offering             --         247          --          247
Adjustment to
 reflect FFO of
 unconsolidated JV's         788        --           788        --
Adjustment to
 reflect FFO of
 Associated Companies        163       633         2,721      2,180
                          -------   -------       -------    -------
FFO                       19,350    21,507        84,047     79,920
Amortization of
 deferred financing
 fees                        564       565         2,034      1,563
Capital reserve           (6,027)   (3,858)      (19,505)   (13,126)
                         --------  --------      --------   --------
CAD                      $13,887   $18,214       $66,576    $68,357

FFO per diluted
 common share              $0.56     $0.59         $2.37      $2.25
CAD per diluted
 common share              $0.40     $0.50         $1.87      $1.92
Diluted weighted
 average common
 shares outstanding
  for calculation of
  FFO and CAD         34,726,581   36,191,009  35,522,627  35,576,210


                 GLENBOROUGH REALTY TRUST INCORPORATED
                      CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                     DEC 31 99          DEC 31 98
ASSETS                               (Audited)          (Audited)

Properties, gross                   $ 1,761,536       $ 1,793,530
Accumulated depreciation               (114,170)          (72,951)
Properties, net                       1,647,366         1,720,579

Properties held for sale, gross              --            31,778
Accumulated depreciation                     --            (9,918)
Properties held for sale, net                --            21,860

Investments in Development               33,298            35,131
Investments in Associated
 Companies                                9,404             8,807
Mortgage loans receivable                37,582            42,420
Cash and cash equivalents                 6,482             4,357
Other assets                             60,472            45,862

  Total assets                      $ 1,794,604       $ 1,879,016

LIABILITIES
Mortgage loans                      $   701,715       $   708,578
Unsecured term debt                     125,015           150,000
Unsecured bank line                      70,628            63,519
Other liabilities                        30,625            28,921
       Total liabilities                927,983           951,018

MINORITY INTEREST                        82,287            99,465

STOCKHOLDERS' EQUITY
Common stock                                 31                32
Preferred stock                              11                11
Additional paid-in capital              846,693           865,692
Deferred compensation                      (613)             (181)
Retained earnings (deficit)             (61,788)          (37,021)
       Total equity                     784,334           828,533

       Total liabilities and        $ 1,794,604       $ 1,879,016

WARNING: Certain statements discussed in this press release, such as future revenues, the Company's successful consummation and timing of anticipated future loan transactions, acquisitions, dispositions, developments and joint ventures constitute &uot;forward-looking statements&uot; and involve risks, uncertainties and other factors which may cause the actual outcome to be materially different from the outcome expressed or implied by such statements. Such risks and uncertainties include general economic conditions, local real estate conditions, assumptions concerning future leasing activity at the Company's properties, the possibility that some or all of the anticipated future acquisitions, dispositions, and joint ventures may not be completed, the performance of recently acquired properties, and other risks detailed from time to time in Glenborough's Securities and Exchange Commission filings.