California

1-10709

95-4300881

(State or Other Jurisdiction of Incorporation)

(Commission File Number)

(I.R.S. Employer Identification Number)

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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

For Release:

Immediately

Date:

August 4, 2008

Contact:

Edward A. Stokx

For the Six Months Ended

Rental income:

Same Park (18.7 million rentable square feet) ⁽¹⁾

$    66,638

$    64,675

3.0%

$  133,034

$  128,822

3.3%

Non-Same Park (870,000 rentable square feet) ⁽²⁾

3,808

2,600

46.5%

7,523

3,577

110.3%

Total rental income

70,446

67,275

4.7%

140,557

132,399

6.2%

Cost of operations:

Same Park

20,763

20,251

2.5%

42,006

40,423

3.9%

Non-Same Park

1,176

771

52.5%

2,423

1,038

133.4%

Total cost of operations

21,939

21,022

4.4%

44,429

41,461

7.2%

Net operating income ⁽³⁾:

Same Park

45,875

44,424

3.3%

91,028

88,399

3.0%

Non-Same Park

2,632

1,829

43.9%

5,100

2,539

100.9%

Total net operating income

48,507

46,253

4.9%

96,128

90,938

5.7%

Other income and expenses:

Facility management fees

177

182

(2.7%)

372

365

1.9%

Interest and other income

282

1,189

(76.3%)

610

2,990

(79.6%)

Interest expense

(990)

(1,012)

(2.2%)

(1,983)

(2,119)

(6.4%)

Depreciation and amortization

(25,120)

(24,916)

0.8%

(50,567)

(46,556)

8.6%

General and administrative

(2,085)

(2,112)

(1.3%)

(4,131)

(3,814)

8.3%

Income before minority interests

$    20,771

$    19,584

6.1%

$    40,429

$    41,804

(3.3%)

Same Park gross margin ⁽⁴⁾

68.8%

68.7%

0.1%

68.4%

68.6%

(0.3%)

Same Park weighted average for the period:

Occupancy

93.7%

93.5%

0.2%

94.0%

93.3%

0.8%

Annualized realized rent per square foot ⁽⁵⁾

$       15.22

$     14.81

2.8%

$      15.15

$      14.78

2.5%

(1)

See above for a definition of Same Park.

(2)

Represents operating properties owned by the Company as of June 30, 2008 not included in Same Park.

(3)

Net operating income (“NOI”) is an important measurement in the commercial real estate industry for determining the value of the real estate generating the NOI. The Company’s calculation of NOI may not be comparable to those of other companies and should not be used as an alternative to measures of performance in accordance with generally accepted accounting principles (“GAAP”).

(4)

Same Park gross margin is computed by dividing NOI by rental income.

(5)

Same Park realized rent per square foot represents the annualized revenues earned per occupied square foot.

Ratio of FFO to fixed charges ⁽¹⁾

47.4x

Ratio of FFO to fixed charges and preferred distributions ⁽¹⁾

3.0x

Debt and preferred equity to total market capitalization (based on

common stock price of $51.60 at June 30, 2008)

37.8%

Available under line of credit at June 30, 2008

$100.0 million

(1)

Fixed charges include interest expense of $990,000.

Series

Dividend Rate

Dividend Declared

Series H

7.000%

$ 0.437500

Series I

6.875%

$ 0.429688

Series K

7.950%

$ 0.496875

Series L

7.600%

$ 0.475000

Series M

7.200%

$ 0.450000

Series O

7.375%

$ 0.460938

Series P

6.700%

$ 0.418750

June 30,

December 31,

2008

2007

(Unaudited)

ASSETS

Cash and cash equivalents

$        38,309

$        35,041

Real estate facilities, at cost:

Land

494,849

494,849

Buildings and equipment

1,503,218

1,484,049

1,998,067

1,978,898

Accumulated depreciation

(589,657)

(539,857)

1,408,410

1,439,041

Land held for development

7,869

7,869

1,416,279

1,446,910

Rent receivable

1,720

2,240

Deferred rent receivable

21,844

21,927

Other assets

7,149

10,465

Total assets

$   1,485,301

$   1,516,583

LIABILITIES AND SHAREHOLDERS’ EQUITY

Accrued and other liabilities

$        49,829

$        51,058

Mortgage notes payable

60,037

60,725

Total liabilities

109,866

111,783

Minority interests:

Preferred units

94,750

94,750

Common units

148,620

154,470

Commitments and contingencies

Shareholders’ equity:

Preferred stock, $0.01 par value, 50,000,000 shares authorized,

28,650 shares issued and outstanding at June 30, 2008 and

December 31, 2007

716,250

716,250

Common stock, $0.01 par value, 100,000,000 shares authorized,

20,439,118 and 20,777,219 shares issued and outstanding at

June 30, 2008 and December 31, 2007, respectively

204

207

Paid-in capital

357,305

371,267

Cumulative net income

586,007

552,069

Cumulative distributions

(527,701)

(484,213)

Total shareholders’ equity

1,132,065

1,155,580

Total liabilities and shareholders’ equity

$   1,485,301

$   1,516,583

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

2008

2007

2008

2007

Revenues:

Rental income

$   70,446

$   67,275

$ 140,557

$ 132,399

Facility management fees

177

182

372

365

Total operating revenues

70,623

67,457

140,929

132,764

Expenses:

Cost of operations

21,939

21,022

44,429

41,461

Depreciation and amortization

25,120

24,916

50,567

46,556

General and administrative

2,085

2,112

4,131

3,814

Total operating expenses

49,144

48,050

99,127

91,831

Other income and expenses:

Interest and other income

282

1,189

610

2,990

Interest expense

(990)

(1,012)

(1,983)

(2,119)

Total other income and expenses

(708)

177

(1,373)

871

Income before minority interests

20,771

19,584

40,429

41,804

Minority interests:

Minority interest in income — preferred units

(1,752)

(1,752)

(3,504)

(3,351)

Minority interest in income — common units

(1,639)

(1,294)

(2,987)

(3,324)

Total minority interests

(3,391)

(3,046)

(6,491)

(6,675)

Net income

17,380

16,538

33,938

35,129

Net income allocable to preferred shareholders:

Preferred stock distributions

12,757

12,757

25,513

25,425

Net income allocable to common shareholders

$     4,623

$     3,781

$     8,425

$     9,704

Net income per common share:

Basic

$      0.23

$      0.18

$      0.41

$      0.46

Diluted

$      0.22

$      0.17

$      0.41

$      0.45

Weighted average common shares outstanding:

Basic

20,430

21,334

20,432

21,325

Diluted

20,686

21,681

20,665

21,692

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

2008

2007

2008

2007

Computation of Diluted Funds From Operations  

per Common Share (“FFO”) ⁽¹⁾:

Net income allocable to common shareholders

$      4,623

$      3,781

$      8,425

$       9,704

Adjustments:

Depreciation and amortization

25,120

24,916

50,567

46,556

Minority interest in income – common units

1,639

1,294

2,987

3,324

FFO allocable to common shareholders/unit holders

$   31,382

$    29,991

$    61,979

$     59,584

Weighted average common shares outstanding

20,430

21,334

20,432

21,325

Weighted average common OP units outstanding

7,305

7,305

7,305

7,305

Weighted average common stock equivalents outstanding

256

347

233

367

Weighted average common shares and OP units for purposes of computing fully-diluted FFO per common share

27,991

28,986

27,970

28,997

Diluted FFO per common share equivalent

$       1.12

$        1.03

$        2.22

$        2.05

Computation of Funds Available for Distribution (“FAD”) ⁽²⁾:

FFO allocable to common shareholders/unit holders

$   31,382

$    29,991

$    61,979

$     59,584

Adjustments:

Recurring capital improvements

(3,016)

(3,069)

(4,950)

(4,891)

Tenant improvements

(5,200)

(3,062)

(9,654)

(7,501)

Lease commissions

(1,966)

(1,378)

(4,234)

(2,412)

Straight-line rent

(11)

(51)

83

(259)

Stock compensation expense

1,018

1,065

2,030

1,704

In-place lease adjustment

(48)

(36)

(96)

(9)

Lease incentives net of tenant improvement reimbursements

(38)

52

(69)

111

FAD

$   22,121

$    23,512

$    45,089

$     46,327

Distributions to common shareholders/unit holders

$   12,207

$    12,602

$    24,403

$     20,904

Distribution payout ratio

55.2%

53.6%

54.1%

45.1%

(1)

Funds From Operations (“FFO”) is computed in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”).  The White Paper defines FFO as net income, computed in accordance with GAAP, before depreciation, amortization, minority interest in income, gains or losses on asset dispositions and extraordinary items.  FFO should be analyzed in conjunction with net income.  However, FFO should not be viewed as a substitute for net income as a measure of operating performance or liquidity as it does not reflect depreciation and amortization costs or the level of capital expenditure and leasing costs necessary to maintain the operating performance of the Company’s properties, which are significant economic costs and could materially impact the Company’s results from operations.  Other REITs may use different methods for calculating FFO and, accordingly, the Company’s FFO may not be comparable to other real estate companies.

(2)

Funds available for distribution (“FAD”) is computed by adjusting consolidated FFO for recurring capital improvements, which the Company defines as those costs incurred to maintain the assets’ value, tenant improvements, lease commissions, straight-line rent, stock compensation expense, impairment charges, amortization of lease incentives and tenant improvement reimbursements, in-place lease adjustment and the impact of Emerging Issues Task Force (“EITF”) Topic D-42. Like FFO, the Company considers FAD to be a useful measure for investors to evaluate the operations and cash flows of a REIT. FAD does not represent net income or cash flow from operations as defined by GAAP.

A.

Pursuant to the terms of an amended and restated revolving credit agreement between Borrower and the Lender Parties dated October 29, 2002 ("Loan Agreement"), each Lender agreed to make revolving loans to Borrower in the principal amount not to exceed One Hundred Million and 00/100ths Dollars ($100,000,000.00) (collectively the "Loan"). The Loan is evidenced by an amended and restated note dated as of the date of the Loan Agreement, executed by Borrower in favor of Wells Fargo Bank, National Association, in the principal amount of the $100,000,000.00 ("Note").

B.

The Note and Loan Agreement have been previously amended and modified by modification agreement(s) dated: December 29, 2003 ("First Modification"); January 23, 2004 ("Second Modification"); and August 2, 2005 ("Third Modification").

C.

The Note, Loan Agreement, this Agreement, the other documents described in the Loan Agreement as "Loan Documents" together with all modifications and amendments thereto and any document required hereunder, are collectively referred to herein as the "Loan Documents".

D.

By this Agreement, Borrower and Lender intend to modify and amend certain terms and provisions of the Loan Documents.

1.

CONDITIONS PRECEDENT. The following are conditions precedent to Lender Parties obligations under this Agreement:

1.1

Receipt and approval by the Lender Parties of the executed originals of this Agreement, and any and all other documents and agreements which are required pursuant to this Agreement or which Lender Parties have requested pursuant to the Loan Documents, in form and content acceptable to Lender Parties;

1.2

Reimbursement to Lender Parties by Borrower of Lender Parties' reasonable costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including, without limitation, reasonable attorneys' fees (excluding, however, any fees or costs of in-house counsel), and documentation costs and charges, whether such services are furnished by Lender Parties' employees or agents or by independent contractors;

1.3

The representations and warranties contained herein are true and correct;

1.4

All payments due and owing to Lender Parties under the Loan Documents have been paid current as of the effective date of this Agreement; and

1.5

The payment to Lender of an extension fee in the amount of $300,000.00.

2.

REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants that no breach or failure of condition has occurred, or would exist with notice or the lapse of time or both, under any of the Loan Documents, as modified by this Agreement, and all representations and warranties herein and in the other Loan Documents are true and correct in all material respects, which representations and warranties shall survive execution of this Agreement.

3.

MODIFICATION OF LOAN DOCUMENTS. The Loan Documents are hereby supplemented and modified to incorporate the following, which shall supersede and prevail over any conflicting provisions of the Loan Documents:

3.1

Extension of Maturity Date. Effective as of August 1, 2008, the Maturity Date recited in the Loan Agreement is hereby extended to August 1, 2010.

3.2

Amended Defined Terms. Effective August 1, 2008, the following defined term, as stated in Section 1.1 of the Loan Agreement, is hereby deleted in its entirety and replaced as follows:

Range of Borrower’s Credit Rating

Applicable Margin for Base rate Loans (% per annum)

Applicable Margin for LIBOR loans (% per annum)

Level I

A-/A3 or better 0.0 0.70

0.0

0.70

Level II

BBB+/Baa1 0.0 0.75

0.0

0.75

Level III

BBB/Baa2 0.0 0.85

0.0

0.85

Level IV

BBB-/Baa3 0.0 1.10

0.0

1.10

Level V

BBB-/Baa3 0.0 1.50 (Unrated or Below Investment Grade)

0.0

1.50

3.3

Amended Financial Covenants. Effective August 1, 2008, Section 6.4.3 of the Loan Agreement is hereby deleted in its entirety and replaced as follows:

3.4

Interest Coverage. Effective August 1, 2008, Section 6.4.5 of the Loan Agreement is hereby deleted in its entirety.

3.5

Events of Default. Effective August 1, 2008, Section 7.1.2 of the Loan Agreement is hereby deleted in its entirety and replaced as follows:

3.6

Waiver of Right to Trial By Jury. Section 9.14 of the Loan Agreement and Section 30 of the Amended and Restated General Continuing Repayment Guaranty are hereby deleted in their entirety.

4.

FORMATION AND ORGANIZATIONAL DOCUMENTS. Borrower has previously delivered to the Lender Parties all of the relevant formation and organizational documents of Borrower, of the partners, members or joint venturers of Borrower (if any), and of all guarantors of Borrower's obligations under the Loan, and all such formation documents remain in full force and effect and have not been amended or modified since they were delivered to Lender Parties. Borrower hereby certifies that: (i) the above documents are all of the relevant formation and organizational documents of Borrower; (ii) they remain in full force and effect; and (iii) they have not been amended or modified since they were previously delivered to Lender Parties.

5.

NON-IMPAIRMENT. Except as expressly provided herein, nothing in this Agreement shall alter or affect any provision, condition, or covenant contained in any Loan Document or affect or impair any rights, powers, or remedies of the Lender Parties, it being the intent of the parties hereto that the provisions of the Loan Documents shall continue in full force and effect except as expressly modified hereby.

6.

MISCELLANEOUS; GOVERNING LAW; JURISDICTION. This Agreement and the other Loan Documents shall be governed by and interpreted in accordance with the laws of the State of California, except if preempted by federal law. In any action brought or arising out of this Agreement or the other Loan Documents, Agent, each Lender and Borrower, and the general partners, members and joint venturers of Borrower (if any), hereby consent to the exclusive jurisdiction of any federal or state court having proper venue within the State of California and also consent to the service of process by any means authorized by California or federal law. The headings used in this Agreement are for convenience only and shall be disregarded in interpreting the substantive provisions of this Agreement. All capitalized terms used herein, which are not defined herein, shall have the meanings given to them in the other Loan Documents. Time is of the essence of each term of the Loan Documents, including this Agreement. If any provision of this Agreement or any of the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this Agreement and the remaining parts shall remain in full force as though the invalid, illegal, or unenforceable portion had never been a part thereof.

7.

INTEGRATION; INTERPRETATION. The Loan Documents, including this Agreement, contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall not be modified except by written instrument executed by all parties. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Lender Parties in writing.

8.

EXECUTION IN COUNTERPARTS. To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.