BURNHAM PACIFIC PROPERTIES INC
S-3, 1998-12-30
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>

   As filed with the Securities and Exchange Commission on December 30, 1998

                                    Registration Statement No. 333-_________

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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            -------------------------

                                    FORM S-3

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                            -------------------------

                        BURNHAM PACIFIC PROPERTIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
          MARYLAND                                              33-0204162
  (STATE OR OTHER JURISDICTION                               (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                           IDENTIFICATION NO.)
                        610 WEST ASH STREET, 16TH FLOOR
                          SAN DIEGO, CALIFORNIA 92101
                                 (619) 652-4700
   (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                    REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                        -------------------------------

            J. DAVID MARTIN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
  DANIEL B. PLATT, CHIEF ADMINISTRATIVE OFFICER AND CHIEF FINANCIAL OFFICER
                        610 WEST ASH STREET, 16TH FLOOR
                          SAN DIEGO, CALIFORNIA 92101
                               (619) 652-4700
            (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)

                                   COPY TO:

                           WILLIAM B. KING, P.C.
                        GOODWIN, PROCTER & HOAR  LLP
                                EXCHANGE PLACE
                     BOSTON, MASSACHUSETTS  02109-2881
                                 (617) 570-1000
                       -----------------------------

Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.

        If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

        If any of the securities being registered on this form are to be 
offered on a delayed or continuous basis pursuant to Rule 415 under the 
Securities Act of 1933, other than securities offered only in connection with 
dividend or interest reinvestment plans, check the following box. [X]

        If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

        If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

        If delivery of the Prospectus is expected to be made pursuant to Rule 
434, please check the following box.  [ ]

                           CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Title of Securities Being                                 Proposed Maximum Offering   Proposed Maximum Aggregate     Amount of
    Registered                  Amount to be Registered        Price Per Share              Offering Price        Registration Fee
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                             <C>                    <C>                         <C>
 Series 1997-A Convertible           4,800,000
Preferred Stock, $.01 par value                                     $25(1)                 $120,000,000(1)
Common Stock, $.01 par value,       7,804,878(2)
issuable upon conversion of the
 Series 1997-A Convertible
      Preferred Stock
- -------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value          574,483(3)               $11.0625(4)                   $6,355,218(4)
- ----------------------------  ------------------------ -------------------------- ---------------------------
           Total                                                                      $126,355,218(1)(4)               $35,127
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  Estimated solely for the purpose of calculating the registration fee in 
     accordance with Rule 457(i) based upon the stated value of the Series 
     1997-A Convertible Preferred Stock.
(2)  Number of shares of Common Stock based upon an initial conversion ratio of
     1.626-to-1 plus, pursuant to Rule 416, an indeterminate number of 
     additional shares as may from time to time be issuable pursuant to 
     anti-dilution provisions of the Series 1997-A Convertible Preferred Stock.
(3)  These are shares potentially issuable in exchange for a like number of
     common limited partnership units of Burnham Pacific Operating Partnership,
     L.P.
(4)  Estimated solely for the purpose of calculating the registration fee in
     accordance with Rule 457(c), based upon the average of the high and low
     sales prices of the Common Stock on the New York Stock Exchange on 
     December 24, 1998.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

<PAGE>



The information in this Prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

                Subject to Completion. Dated December 30, 1998
Prospectus
                              BURNHAM PACIFIC PROPERTIES, INC.
            4,800,000 Shares of Series 1997-A Convertible Preferred Stock,
           7,804,878 Shares of Common Stock Issuable Upon Conversion Thereof
                          and 574,483 Other Shares of Common Stock
                                      ------------

     This Prospectus relates to the 
offer and sale from time to time of 
(i) up to 2,800,000 shares (the 
"Preferred Shares") of our Series 
1997-A Convertible Preferred Stock, 
$.01 par value per share (the 
"Preferred Stock"), by the holders of 
such Preferred Shares (the "Selling 
Stockholders"), (ii) up to an 
additional 2,000,000 shares of our 
Preferred Stock which we may issue 
upon redemption of preferred units of 
limited partnership interest (the 
"Preferred Units") of Burnham Pacific 
Operating Partnership, L.P. (the 
"Operating Partnership"), (iii) up to 
7,804,878 shares of our Common Stock, 
$.01 par value per share (the "Common 
Stock"), which we may issue upon 
conversion of the above referenced 
Preferred Stock at the initial 
conversion ratio of approximately 
1.626 shares of Common Stock for each 
Preferred Share, (iv) up to an 
additional 574,483 shares of our 
Common Stock which we may issue upon 
redemption of certain common units of 
limited partnership interest (the 
"Common Units") of the Operating 
Partnership, and (v) an indeterminate 
number of additional shares of our 
Common Stock which we may issue as a 
result of the anti-dilution 
provisions of the Preferred Stock. We 
are filing the registration statement 
of which this Prospectus is a part to 
fulfill our contractual obligations 
to the Selling Stockholders and to 
the holders of the Preferred and 
Common Units and to provide them with 
freely tradable securities.

     Our Common Stock trades on the 
New York Stock Exchange under the 
symbol "BPP." The Common and 
Preferred Stock are subject to 
certain restrictions on ownership and 
transfer designed to assist us in 
maintaining our status as a real 
estate investment trust for federal 
income tax purposes. See "Description 
of Securities--Common 
Stock--Restrictions on Transfers."

     Selling Stockholders from time 
to time may offer and sell the 
Preferred Shares or shares of Common 
Stock into which the Preferred Shares 
are convertible (collectively, the 
"Shares") held by them directly or 
through agents or broker-dealers on 
terms to be determined at the time of 
sale. To the extent required, the 
names of any agent or broker-dealer 
and applicable commissions or 
discounts and any other required 
information with respect to any 
particular offer will be set forth in 
an accompanying Prospectus 
Supplement. See "Plan of 
Distribution." Each of the Selling 
Stockholders reserves the sole right 
to accept or reject, in whole or in 
part, any proposed purchase of the 
Shares to be made directly or through 
agents.

     We will not receive any proceeds 
from the sale of the Shares by the 
Selling Stockholders or the issuance 
of the other securities offered by 
this Prospectus. We have agreed to 
bear certain expenses of registration 
of the Shares and other securities 
offered by this Prospectus under 
federal and state securities laws.

     The Selling Stockholders and any 
agents or broker-dealers that 
participate with the Selling 
Stockholders in the distribution of 
Shares may be deemed to be 
"underwriters" within the meaning of 
the Securities Act, and any 
commissions received by them and any 
profit on the resale of the Shares 
may be deemed to be underwriting 
commissions or discounts under the 
Securities Act of 1933, as amended.

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

        INVESTING IN SHARES OF OUR COMMON STOCK OR PREFERRED STOCK INVOLVES 
VARIOUS RISKS. IN CONSIDERING WHETHER TO REDEEM EITHER PREFERRED UNITS OR 
COMMON UNITS OF THE OPERATING PARTNERSHIP FOR SHARES OF PREFERRED STOCK OR 
COMMON STOCK OR WHETHER TO PURCHASE SHARES OF EITHER CLASS OF STOCK, YOU 
SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS" 
BEGINNING ON PAGE 6 OF THIS PROSPECTUS.

        NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE 
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR 
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.  ANY REPRESENTATION TO 
THE CONTRARY IS A CRIMINAL OFFENSE.

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

                  The date of this Prospectus is January __, 1999.


<PAGE>



                               AVAILABLE INFORMATION

        We have filed with the Securities and Exchange Commission (the "SEC") 
a Registration Statement on Form S-3 (the "Registration Statement") under the 
Securities Act of 1933, as amended (the "Securities Act"), to register the 
securities offered in this Prospectus. This Prospectus is part of the 
Registration Statement. This Prospectus does not contain all the information 
contained in the Registration Statement because we have omitted certain parts 
of the Registration Statement in accordance with the rules and regulations of 
the SEC. For further information, we refer you to the Registration Statement, 
which you may read and copy at the public reference facilities maintained by 
the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, 
D.C. 20549, and at the SEC's Regional Offices at 7 World Trade Center, 13th 
Floor, New York, New York 10048, and Citicorp Center, 500 W. Madison Street, 
Suite 1400, Chicago, Illinois 60661-2511. You may also obtain copies at the 
prescribed rates from the Public Reference Section of the SEC at its 
principal office in Washington, D.C. You may call the SEC at 1-800-SEC-0330 
for further information about the public reference rooms. The SEC maintains a 
web site that contains reports, proxy and information statements and other 
information regarding registrants, including Burnham Pacific Properties, 
Inc., that file electronically with the SEC. You may access the SEC's web 
site at http://www.sec.gov.

        We are subject to the informational requirements of the Securities 
Exchange Act of 1934, as amended (the "Exchange Act"), and we are required to 
file reports and proxy statements and other information with the SEC. Such 
reports, proxy statements and other information can be inspected and copied 
at the locations described above. Copies of such materials can be obtained by 
mail from the Public Reference Section of the SEC at Judiciary Plaza, 450 
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. 
Our Common Stock is listed on the New York Stock Exchange under the symbol 
"BPP." You may also read our reports, proxy and other information statements 
and other information which we file at the offices of the New York Stock 
Exchange, 20 Broad Street, New York, New York 10005.

               INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

        This Prospectus is part of the Registration Statement that we filed 
with the SEC to register the shares of Common Stock and Preferred Stock 
referenced on the cover page of this Prospectus. It does not repeat important 
information that you can find in our Registration Statement or in the annual, 
quarterly and special reports, proxy statements and other documents that we 
file with the SEC. The SEC allows us to "incorporate by reference" the 
information we file with it, which means that we can disclose in this 
Prospectus important information to you by referring you to those documents. 
The information below is incorporated in this Prospectus by reference and is 
an important part of this Prospectus, and certain information that we file 
after the date of this Prospectus with the SEC will automatically be 
incorporated in this Prospectus and update and supersede this information. We 
incorporate by reference the documents listed below and any future filings 
made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange 
Act until all of the securities offered by this Prospectus are sold:

  -  our Annual Report on Form 10-K for the fiscal year ended December 31, 1997;

  -  our Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
     June 30, 1998 and September 30, 1998;

  -  our Proxy Statement dated April 7, 1998 with respect to our Annual Meeting
     of Stockholders on May 11, 1998;

  -  our Current Reports on Form 8-K filed with the SEC on January 14,
     1998, April 6, 1998, June 1, 1998 and December 23, 1998; and


                                       2

<PAGE>



   -  the description of our Common Stock contained or incorporated by
      reference in the Company's Registration Statement on Form 8-B 
      filed on June 2, 1997, including any amendments thereto.


        WE WILL PROVIDE, WITHOUT CHARGE, AT THE WRITTEN OR ORAL REQUEST OF 
ANYONE TO WHOM THIS PROSPECTUS IS DELIVERED, COPIES OF THE DOCUMENTS 
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, OTHER THAN AN EXHIBIT TO A 
FILING UNLESS THAT EXHIBIT IS SPECIFICALLY INCORPORATED BY REFERENCE INTO 
THAT FILING. WRITTEN REQUESTS SHOULD BE DIRECTED TO BURNHAM PACIFIC 
PROPERTIES, INC., 610 WEST ASH STREET, SAN DIEGO, CALIFORNIA 92101, 
ATTENTION: CHIEF FINANCIAL OFFICER. TELEPHONE REQUESTS MAY BE DIRECTED TO 
(619) 652-4700.

        You should rely only on the information incorporated by reference or 
provided in this Prospectus. We have not authorized anyone to provide you 
with different information. Any statement contained in this Prospectus or in 
a document incorporated by reference in this Prospectus shall be deemed to be 
modified or superseded to the extent that a statement contained in this 
Prospectus (in the case of a statement in a previously filed document 
incorporated by reference herein), in any applicable Prospectus Supplement or 
in any other subsequently filed document which also is incorporated by 
reference herein modifies or supersedes such statement. Any such statement so 
modified or superseded shall not be deemed, except as so modified or 
superseded, to constitute a part of this Prospectus or any accompanying 
Prospectus Supplement. Subject to the foregoing, all information appearing in 
this Prospectus and each accompanying Prospectus Supplement is qualified in 
its entirety by the information appearing in the documents incorporated by 
reference.

        We are not making an offer of the Shares or other securities offered 
by this Prospectus in any state where the offer is not permitted. You should 
not assume that the information in this Prospectus, in any Prospectus 
Supplement or in any document incorporated by reference herein or in such 
Prospectus Supplement is accurate as of any date other than the date on the 
front of those documents.

        Statements contained in this Prospectus as to the contents of any 
contract or other document are not necessarily complete and, in each 
instance, reference is made to the copy of such contract or document filed as 
an exhibit to the Registration Statement or as an exhibit to another filing, 
each such statement being qualified in all respects by such reference and the 
exhibits and schedules thereto.

                                       3

<PAGE>



                               PROSPECTUS SUMMARY

        THIS SUMMARY ONLY HIGHLIGHTS THE MORE DETAILED INFORMATION APPEARING 
ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE. AS THIS IS 
A SUMMARY, IT MAY NOT CONTAIN ALL INFORMATION THAT IS IMPORTANT TO YOU. YOU 
SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY BEFORE DECIDING WHETHER TO 
PURCHASE SHARES OR TENDER YOUR COMMON OR PREFERRED UNITS FOR REDEMPTION.

        SOME IMPORTANT TERMS

        ALTHOUGH BURNHAM PACIFIC PROPERTIES, INC., BURNHAM PACIFIC OPERATING 
PARTNERSHIP, L.P. AND THEIR SUBSIDIARIES AND AFFILIATES ARE SEPARATE LEGAL 
ENTITIES, FOR EASE OF REFERENCE, THE TERMS "WE," "US," AND "OUR" REFER TO THE 
BUSINESS AND PROPERTIES OF ALL OF THESE ENTITIES, UNLESS THE CONTEXT 
INDICATES OTHERWISE. FOR EASE OF REFERENCE AND CLARITY, WE SOMETIMES REFER TO 
BURNHAM PACIFIC PROPERTIES, INC. AND ITS PREDECESSOR, SUBSIDIARIES AND 
AFFILIATES AS THE "COMPANY" AND BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P. 
AND ITS SUBSIDIARIES AND AFFILIATES AS THE "OPERATING PARTNERSHIP."

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

                                    THE COMPANY

        We are a fully-integrated real estate operating company which 
acquires, rehabilitates, develops and manages retail properties in the 
western region of the United States. Our properties are primarily 
neighborhood and community shopping centers located in major metropolitan 
areas. We focus on shopping centers in mature trade areas with a limited 
supply of vacant land and with established consumer shopping patterns. These 
characteristics help limit potential future competition in a trade area. We 
own our properties and conduct substantially all of our business through the 
Operating Partnership, of which the Company is the sole general partner and, 
as the holder of preferred and common limited partnership units, the owner of 
a substantial majority of the economic interests.

        The Company is incorporated under the laws of the State of Maryland. 
Our offices are located at 610 West Ash Street, San Diego, California 92101. 
Our telephone number is (619) 652-4700.

                           SECURITIES THAT MAY BE OFFERED

        This Prospectus relates to the offer and sale from time to time of 
the following securities:

        - up to 2,800,000 Preferred Shares by the Selling Stockholders;

        - up to an additional 2,000,000 shares of Preferred Stock which 
          the Company may issue upon redemption of Preferred Units of the 
          Operating Partnership;

        - up to 7,804,878 shares of Common Stock which the Company may 
          issue upon conversion of the above referenced Preferred Stock based
          upon the current conversion rate of approximately 1.626 shares of 
          Common Stock for each share of Preferred Stock;

        - up to an additional 574,483 shares of Common Stock which the 
          Company may issue upon redemption of Common Units of the Operating
          Partnership; and

        - an indeterminate number of additional shares of Common Stock 
          which the Company may issue as a result of the anti-dilution 
          provisions of the Preferred Stock.

        The Preferred Stock which we are registering for original issuance 
may be issued upon redemption of Preferred Units previously issued by the 
Operating Partnership when it acquired certain properties on December 31, 
1997. The 2,800,000 Preferred Shares which we are registering for resale by 
the Selling Stockholders were originally issued by the Company as part of a 
related financing on December 31, 1997.

                                       4

<PAGE>

        The shares of Common Stock being registered for original issuance by 
the Company may be issued in connection with:

   -  the conversion of shares of Preferred Stock, whether currently outstanding
      or issuable upon redemption of Preferred Units, and
   -  the redemption of Common Units issued by the Operating Partnership as a 
      part of the purchase price for a shopping center also acquired on
      December 31, 1997.

        Pursuant to the Agreement of Limited Partnership of the Operating 
Partnership, (the "Operating Partnership Agreement"), holders of Common Units 
may tender their Common Units to the Operating Partnership for cash equal to 
the value of an equivalent number of shares of Common Stock (subject to 
certain adjustments to prevent dilution), and holders of Preferred Units may 
tender their Preferred Units to the Operating Partnership for cash equal to 
the greater of the $25 per share Stated Value of an equivalent number of 
shares of Preferred Stock or the value of the number of shares of Common 
Stock for which the shares of Preferred Stock are exchangeable. In lieu of 
delivering cash, however, the Company may, at its option, choose to acquire 
any Common Units or Preferred Units (collectively the "Units") so tendered by 
issuing shares of Common Stock or Preferred Stock, respectively, in exchange 
for the Units. The shares of Common Stock and Preferred Stock will be 
exchanged for Common Units or Preferred Units, as appropriate, on a 
one-for-one basis.

        In connection with the property contributions and the sale of 
Preferred Shares to the Selling Stockholders described above, the Company 
entered into registration rights agreements with the contributors and with 
the Selling Stockholders. We are now registering the securities covered by 
this Prospectus in order to fulfill our contractual obligations under these 
agreements and to provide the Selling Stockholders and the holders of 
Preferred and Common Units with freely tradable securities. Registration of 
the securities being registered for original issuance does not necessarily 
mean that all or any portion of them will be issued by the Company.

        Neither the Company nor the Operating Partnership will receive any 
cash proceeds from the issuance of any Common Stock or Preferred Stock 
offered under this Prospectus. With each such issuance of Common Stock or 
Preferred Stock as a result of a redemption of Units, however, the Company's 
economic interest in the Operating Partnership will increase. The Company 
also will not receive any cash proceeds from the sale of the Shares by the 
Selling Stockholders.

                                    RISK FACTORS

        Investing in shares of our Common Stock or Preferred Stock involves 
various risks. Persons who currently hold Preferred Units may already be 
subject to certain of the business risks to which we are subject but should 
consider additional risks involved in redeeming Units or in owning stock of 
the Company rather than Units of the Operating Partnership. In considering 
whether to redeem either Preferred Units or Common Units for shares of 
Preferred Stock or Common Stock or whether to purchase shares of either class 
of stock, you should carefully consider the matters discussed under "Risk 
Factors" beginning on page 6 of this Prospectus.

                               TAX STATUS OF THE COMPANY

        The Company has elected to qualify as a real estate investment trust 
(a "REIT") under Sections 856 through 860 of the Internal Revenue Code of 
1986, as amended (the "Code"), in each year since 1987. As long as we qualify 
for taxation as a REIT, we generally will not be subject to federal income 
tax on that portion of our ordinary income and capital gains that is 
currently distributed to our stockholders. Even if we qualify for taxation as 
a REIT, we may be subject to certain state and local taxes on our income and 
property and to federal income and excise taxes on our undistributed income. 
See "Risk Factors--We Could Incur Unanticipated Expenses if We Fail to 
Qualify as a REIT" and "Federal Income Tax Considerations" for a more 
detailed explanation.

                                       5

<PAGE>

                                  RISK FACTORS

        BEFORE YOU PRESENT YOUR UNITS FOR REDEMPTION, WHICH MAY RESULT IN 
YOUR RECEIPT OF SHARES OF COMMON STOCK OR PREFERRED STOCK, OR BEFORE YOU 
PURCHASE PREFERRED SHARES FROM A SELLING STOCKHOLDER, YOU SHOULD BE AWARE 
THAT THERE ARE VARIOUS RISKS IN MAKING SUCH AN INVESTMENT, INCLUDING THOSE 
DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS TOGETHER 
WITH ALL OF THE INFORMATION INCLUDED OR INCORPORATED BY REFERENCE IN THIS 
PROSPECTUS BEFORE YOU DECIDE TO PRESENT YOUR UNITS FOR REDEMPTION OR BEFORE 
YOU PURCHASE PREFERRED SHARES. THIS SECTION INCLUDES OR REFERS TO CERTAIN 
FORWARD-LOOKING STATEMENTS. WE URGE YOU TO READ THE EXPLANATION OF THE 
QUALIFICATIONS AND LIMITATIONS ON SUCH FORWARD-LOOKING STATEMENTS IMMEDIATELY 
BELOW.

FORWARD-LOOKING STATEMENTS

        Certain statements made in this "Risk Factors" section or under the 
caption "The Company" and elsewhere in this Prospectus, or incorporated by 
reference into this Prospectus, are "forward-looking statements" within the 
meaning of Section 27A of the Securities Act and Section 21E of the Exchange 
Act. Such forward-looking statements include, without limitation, statements 
relating to acquisitions (including related pro forma financial information) 
and other business development activities, future capital expenditures, 
financing sources and availability and the effects of regulations (including 
environmental regulation) and competition.

        When we use the words "anticipate," "assume," "believe," "estimate," 
"expect," "intend" and other similar expressions, they are generally 
forward-looking statements. You should exercise caution in interpreting and 
relying on forward-looking statements since they involve known and unknown 
risks, uncertainties and other factors which are, in some cases, beyond our 
control and could materially affect our actual results, performance or 
achievements.

        Factors that could cause our actual results, performance or 
achievements to differ materially from those expressed or implied by such 
forward-looking statements include, but are not limited to, the following:

  -  we are subject to general risks affecting the real estate
     industry such as the need to enter into new leases or
     renew leases on favorable terms to generate rental
     revenues and dependence on our tenants' financial
     condition;

  -  we may fail to identify, acquire, construct or develop
     additional properties; we may develop properties that do
     not produce a desired yield on invested capital; or we may
     fail to effectively integrate acquisitions of properties
     or portfolios of properties;

  -  financing may not be available, or may not be available on favorable terms;

  -  we need to make distributions to our stockholders for us to qualify as a 
     REIT, and if we need to borrow the funds to make distributions the 
     borrowings may not be available on favorable terms;

  -  we depend on the primary markets where our properties are
     located, and these markets may be adversely affected by
     local economic and market conditions which are beyond our
     control;

  -  we are subject to potential environmental liabilities;

  -  we are subject to complex regulations relating to our status as a REIT
     and would be adversely affected if we failed to qualify as a REIT; and


                                       6

<PAGE>

  -  market interest rates could adversely affect the market
     prices for our Common Stock and our performance and cash
     flow.

GENERAL RISK FACTORS

WE ARE SUBJECT TO A VARIETY OF GENERAL REAL ESTATE INDUSTRY RISKS.

        GENERAL REAL ESTATE OWNERSHIP RISKS. If our properties do not 
generate revenues sufficient to meet our operating expenses, including debt 
service and capital expenditures, our cash flow and ability to pay 
distributions to our shareholders will be adversely affected. The following 
factors, among others, may adversely affect real estate values and our 
ability to generate revenues:

  -  changes in the general economic climate;

  -  local conditions (such as an oversupply of space or a reduction in demand
     for real estate in an area);

  -  the quality and philosophy of management;

  -  competition from other available space;

  -  the ability of the owner to provide adequate maintenance;

  -  insurance and variable operating costs;

  -  government regulations;

  -  changes in interest rate levels;

  -  the availability of financing; and

  -  potential liability due to changes in environmental and other laws.

        ILLIQUIDITY OF REAL ESTATE. Real estate investments are relatively 
illiquid and therefore will tend to limit our ability to react promptly in 
response to changes in economic or other conditions. In addition, the Code 
limits a REIT's ability to make sales of properties held for fewer than four 
years, which may affect our ability to sell properties without adversely 
affecting returns to stockholders.

WE DEPEND SUBSTANTIALLY ON LOCAL ECONOMIC CONDITIONS.

        Our properties are all located in the western region of the United 
States, with a majority in the State of California, primarily in the San Diego 
County, greater Los Angeles and San Francisco Bay areas. This concentration 
of properties subjects us to the strengths or weaknesses of the western 
region economies and the aforementioned local economies in a number of ways. 
The performance of the economy in each locality affects occupancy, market 
rental rates and expenses and could cause our revenues and the underlying 
values of our properties to decline. Moreover, the financial results of major 
local employers may have an impact on our revenues and the value of some of 
our properties. If there is a downturn in the economy of the western region 
in general or of any of these local economies, our results of operations 
could suffer and we may be unable to make distributions to our stockholders. 
In that regard, certain areas of the western region (particularly the greater 
Los Angeles area) have in the past been harmed by reductions in defense 
spending, and certain other areas of California (particularly the San 
Francisco Bay area) may be substantially influenced by conditions in the high 
technology industries. Additionally, certain areas in California are subject 
to various natural disasters, including earthquakes and floods. See "-- Our 
Insurance Coverage is Limited."

                                       7

<PAGE>

OUR INVESTMENTS ARE CONCENTRATED IN THE RETAIL SEGMENT OF THE REAL ESTATE 
INDUSTRY.

        Our current strategy is to acquire interests only in retail shopping 
centers and related properties. As a result, we will be subject to risks 
inherent in investments in a single industry. If there is a downturn in the 
retail industry, we will be in a worse position to make distributions to our 
stockholders than if we diversified our portfolio by investing in other types 
of properties.

        We are subject to risks associated with retail tenants, including the 
volatile nature of the retail business and changes in consumer preferences. 
These risks may result in tenant failures or changes in physical requirements 
which we may have to accommodate to retain or attract tenants. Retail chains 
may overexpand in the same general market area, thereby creating competition 
with their own stores that may be in one or more of our properties. Because 
many anchor tenants have negotiating power to demand the exclusive or sole 
right to sell certain types of products in a shopping center, the existence 
of such rights may impair our ability to lease space to retailers of 
potentially competing products. These and similar factors may affect the 
revenues, and resulting value, of our properties.

WE HAVE COMPETITORS.

        Numerous retail properties compete with our properties in attracting 
tenants to lease space. Some of these properties are newer and better located 
or designed and may offer lower expenses or be better capitalized than our 
properties. Our ability to lease space at our properties or at newly 
developed or acquired properties and at rents currently charged could be 
impaired by the number of competitive commercial properties in a particular 
area. Additionally, we compete for investment opportunities with entities 
which have substantially greater financial resources than ours. These 
entities may generally be able to accept more risk than we can prudently 
manage. Competition may generally reduce the number of suitable investment 
opportunities offered to us and increase the bargaining power of property 
owners seeking to sell.

OUR FINANCIAL CONDITION DEPENDS IN PART ON THE FINANCIAL CONDITION OF OUR 
TENANTS.

        At any time, any of our tenants may seek the protection of the 
bankruptcy laws. This could result in the rejection and termination of that 
tenant's lease and thereby harm our results of operations and ability to make 
distributions to our stockholders. Although we have not experienced material 
losses from tenant bankruptcies, tenants could file for bankruptcy protection 
in the future and, if they do, they could terminate their leases or 
discontinue to pay their rent on time. In addition, a tenant from time to 
time may experience a downturn in its business which may weaken its financial 
condition and result in its failure to make rental payments when due. A 
tenant's failure to affirm their lease following bankruptcy or a weakening of 
their financial condition could impair our results of operations and ability 
to make distributions to our stockholders.

THERE ARE GENERAL RISKS ASSOCIATED WITH THE ACQUISITION AND DEVELOPMENT OF 
REAL ESTATE.

        We intend to acquire existing retail commercial properties to the 
extent that they can be acquired on acceptable terms and meet our investment 
criteria. Acquisitions of retail commercial properties entail general 
investment risks associated with any real estate investment, including the 
risk that investments will not perform as expected or that estimated costs of 
improving an acquired property to bring it up to standards established for 
the intended market position may prove inaccurate.

        We are pursuing certain commercial property development projects and  
expect to develop other projects. Generally, developing properties carries 
more  risk than acquiring existing properties. For example, development 
projects generally require various governmental and other approvals which may 
not be obtained. Furthermore, approvals frequently require the improvement of 
public infrastructure, or other activities to

                                       8

<PAGE>

mitigate the effects of the proposed development, which may cost more than 
anticipated. Our development activities will entail a variety of other risks, 
including:

  -  that we will devote financial and management resources to projects which 
     may not come to fruition;

  -  that we will not complete a development project as scheduled;

  -  that we will incur higher construction costs than anticipated;

  -  that occupancy rates and rents at a completed project will be less than 
     anticipated; and

  -  that expenses at a completed development will be higher than anticipated.

These risks may harm our results of operations and ability to make 
distributions to our stockholders.

        We cannot be sure that we will be able to secure financing to acquire 
or develop properties or that, if we do, we will be able to secure it on 
favorable terms. Integrating the aforementioned acquisition and development 
properties into our current systems and procedures presents a challenge to 
our management. Failure to do so could have a material adverse effect on our 
results of operations and ability to make distributions to our stockholders.

WE DEPEND ON KEY PERSONNEL.

        We depend on the efforts of our executive officers, J. David Martin, 
our President and Chief Executive Officer, W. Joseph Byrne, our Executive 
Vice President and Chief Operating Officer, and Daniel B. Platt, our 
Executive Vice President, Chief Financial Officer and Chief Administrative 
Officer.  Loss of their services could harm our operations.  We have an 
employment agreement with Mr. Martin.  That agreement could be terminated by 
either party at will.

OUR DEVELOPMENT OF PROPERTIES ACQUIRED FROM AN EXECUTIVE OFFICER COULD CREATE 
CONFLICTS OF INTEREST.

        We have various development projects which we acquired from Mr. 
Martin, concurrently with his appointment as President and Chief Executive 
Officer in 1995. While we have adopted procedures for decision-making with 
respect to those projects (including Mr. Martin's absence from Board of 
Directors meetings during certain discussions involving those projects), 
nevertheless the arrangement could result in conflicts of interest in one or 
more of the projects.

WE COULD INCUR UNANTICIPATED EXPENSES IF WE FAIL TO QUALIFY AS A REIT.

        The Company has elected to qualify as a real estate investment trust 
under the Code. We believe that since 1987 we have satisfied the REIT 
qualification requirements. However, the IRS could challenge our REIT 
qualification for taxable years still subject to audit. Moreover, we may fail 
to qualify as a REIT in future years. A REIT generally is not taxed on 
distributed income if it distributes to its stockholders at least 95% of its 
real estate investment trust taxable income. Qualification as a REIT involves 
the satisfaction of numerous requirements (some on an annual or quarterly 
basis) established under highly technical and complex provisions of the Code 
for which there are only limited judicial or administrative interpretations. 
In addition, REIT qualification involves the determination of various factual 
matters and circumstances not entirely within our control.

                                       9

<PAGE>

        If in any taxable year we failed to qualify as a REIT, we would not 
be allowed to deduct distributions to stockholders in computing taxable 
income. Furthermore, we would be subject to federal income tax on our taxable 
income at regular corporate rates. Unless entitled to relief under certain 
statutory provisions, we would also be disqualified from treatment as a REIT 
for the four taxable years following the year during which qualification was 
lost. As a result, the funds available for distribution to our stockholders 
would be reduced for each of the years involved. Although we currently intend 
to operate as a qualified REIT, future economic, market, legal, tax or other 
considerations may impair our REIT qualification or may cause our Board of 
Directors to revoke the REIT election. See "Federal Income Tax 
Considerations."

WE COULD INCUR COSTS FROM ENVIRONMENTAL PROBLEMS, EVEN IF WE DID NOT CAUSE OR 
CONTRIBUTE TO THEM.

        Under various federal, state and local laws, ordinances and 
regulations, an owner or operator of real estate is liable for the costs of 
removal or remediation of certain hazardous or toxic substances on or in such 
property. These laws often impose liability without regard to whether the 
owner or operator knew of, or was responsible for, the presence of the 
hazardous or toxic substances. The presence of those substances, or the 
failure to properly remediate them, may impair the owner's or operator's 
ability to sell or rent the property or to borrow using the property as 
collateral. A person who arranges for the disposal or treatment of hazardous 
or toxic substances may also be liable for the costs of removing or 
remediating the substances at a disposal or treatment facility, whether or 
not that person owns or operates the facility. Since we own (directly and 
indirectly), operate, manage and develop real properties, for liability 
purposes we may be considered an owner or operator of those properties or as 
having arranged for the disposal or treatment of hazardous or toxic 
substances. As a result, we could have to pay removal or remediation costs. 
Furthermore, certain environmental laws impose liability for release of 
asbestos-containing materials into the air, and third parties may seek 
recovery from owners or operators of real properties for personal injuries 
associated with asbestos-containing materials. Thus, we might have to pay 
other costs, including governmental fines and costs related to injuries to 
persons and property, resulting from the environmental condition of our 
properties, regardless of whether we actually contributed to such conditions.

WE ARE SUBJECT TO RISKS FROM DEBT FINANCED ACQUISITIONS.

        Like many owners of real estate, we borrow money to finance the 
acquisition, development and operation of properties. We currently have a 
line of credit facility (the "Credit Facility") that has both secured and 
unsecured portions. We have pledged some of our properties as collateral to 
secure loans made by various lenders, including loans made under our Credit 
Facility. Neither our charter nor our bylaws limit the amount of indebtedness 
that we may incur. Although provisions contained in the Credit Facility limit 
the amount of additional indebtedness we may incur, those covenants permit us 
to incur substantial indebtedness beyond our current level. Currently, we may 
borrow up to $205 million under our Credit Facility. We have utilized the 
Credit Facility to finance certain recent acquisitions and may use it to fund 
the acquisition of additional properties and for other general corporate 
purposes. The Credit Facility requires that we comply with a number of 
financial covenants. We are also obligated by other indebtedness secured by 
individual properties. We may not be able to meet our debt service 
obligations or to comply with the financial covenants in our debt 
instruments. If this occurred, certain lenders might be entitled to demand 
immediate repayment of the related indebtedness and to commence foreclosure 
proceedings against the property securing the indebtedness, which could cause 
us to lose some or all of our assets. Furthermore, a downturn in the economy 
could make it difficult for us to borrow money on favorable terms. If this 
occurred, we might need to sell certain assets at unfavorable prices to 
enable us to repay some of our loans. We would be subject to the risks 
normally associated with debt financing, including:

  -  the risk that our cash flow will be insufficient to meet required 
     payments of principal and interest;

  -  the risk that interest rates on indebtedness (such as borrowings
     under the Credit Facility) bearing interest at floating rates
     will increase; and


                                       10

<PAGE>


  -  the risk that existing indebtedness cannot be refinanced or that
     the terms of refinancing will be less favorable than the terms of
     existing indebtedness.

Our mortgage indebtedness (other than indebtedness under the Credit Facility) 
is generally nonrecourse to us. However, even with respect to nonrecourse 
mortgage indebtedness, we could be obligated to pay our lenders for certain 
deficiencies resulting, among other things, from fraud, misapplication of 
funds and environmental liabilities.

WE OWN PROPERTIES JOINTLY WITH OTHER ENTITIES AND ARE COMMITTED TO EXPAND OUR 
JOINT VENTURE ACTIVITIES.

        We may from time to time acquire interests in joint ventures (which 
may be organized as limited liability companies, limited or general 
partnerships, joint ventures or other enterprises) formed to own or develop 
real property or interests in real property, including the CalPERS and the 
CUIP joint ventures described below. We may acquire minority interests in 
joint ventures and also may acquire interests as a passive investor without 
rights to actively participate in management of the joint ventures. 
Investments in joint ventures involve additional risks, including the 
possibility that the other participants may become bankrupt or have economic 
or other business interests or goals which are inconsistent with our 
interests, that we will be unable to direct the management and policies of 
the joint ventures and that other participants may take action contrary to 
our instructions or requests or our policies and objectives or which could 
jeopardize our ability to maintain qualification as a REIT. These investments 
may also have the potential risk of impasse on decisions, such as a sale, 
because no single entity has full control over the joint ventures. We will, 
however, seek to maintain sufficient control of these joint ventures to 
achieve our business objectives and to preserve our status as a REIT, 
although we may not be successful in doing so. If we are not successful, our 
business and operations will be impaired and we may not be able to make 
distributions to our stockholders. There is no limitation under our 
organizational documents as to the amount of available funds that we may 
invest in joint ventures.

        CALPERS. On August 31, 1998 we entered into an agreement with the 
State of California Public Employees' Retirement System ("CalPERS") pursuant 
to which CalPERS has an 80% interest and the Operating Partnership a 20% 
interest in a joint venture. The purpose of the joint venture is to serve as 
the vehicle through which we and CalPERS expect to invest in neighborhood, 
community, promotional and specialty retail centers in the western region of 
the United States. Although the Operating Partnership is the manager of the 
joint venture, CalPERS is entitled to certain rights which may be 
inconsistent with our interests. CalPERS is entitled to a priority return on 
its investment in the joint venture before any return is paid to the 
Operating Partnership. The priority return is equal to a 5.00% annual rate of 
return (adjusted for inflation) plus a premium which could raise the priority 
return substantially. Also, subject to certain limitations, CalPERS may elect 
to convert its joint venture interest in one or more properties held by the 
joint venture into shares of our Common Stock (up to an aggregate of 9.8% of 
the number of outstanding shares of our Common Stock). In addition, under the 
joint venture agreement, the Operating Partnership is obligated to:

  -  observe a number of policies established by CalPERS with respect to its 
     investments generally;

  -  consult regularly with CalPERS relative to its policies for real estate 
     investments;

  -  establish an annual business plan for the joint venture that is subject 
     to CalPERS' approval;

  -  advise CalPERS concerning major developments; and

  -  obtain CalPERS' approval before taking specified major activities
     with respect to the properties owned by the joint venture.


                                       11

<PAGE>


        As of October 1, 1998, CalPERS made an initial contribution to this 
new joint venture of five retail properties in Colorado, Texas and Oregon, of 
which it had previously been the sole owner under arrangements with previous 
advisors, valued at approximately $80,000,000. On October 2, 1998, the joint 
venture purchased a retail shopping center for approximately $13,310,000. We 
intend to contribute properties owned directly by the Operating Partnership 
as our initial contribution. The joint venture agreement contemplates an 
aggregate $400 million investment by CalPERS and $100 million investment by 
us through the period ending December 31, 1999, and provides for up to $165 
million of leverage through mortgage or line of credit borrowings by the 
joint venture. Subject to certain qualifications, in making future 
acquisitions, we are committed to offer qualifying retail property investment 
opportunities to the joint venture until the parties' respective investment 
obligations are satisfied, before making such acquisitions solely for our own 
direct account. We can give no assurance that the investment goals of the 
joint venture will be satisfied or that CalPERS and we may not agree to 
expand such goals or to vary our respective 80/20% participation in the joint 
venture.

        CUIP. In addition, we have agreements with an institutional investor, 
California Urban Investment Partners ("CUIP"), relating to our joint 
ownership of two shopping center properties, Margarita Plaza and Ladera 
Center, each acquired in 1996. Each property is owned by a separate limited 
liability company, of which both CUIP and the Operating Partnership are 
managing members. We own a 25% interest and CUIP owns a 75% interest in each 
joint venture. The principal investor in CUIP is CalPERS.

OUR INSURANCE COVERAGE IS LIMITED.

        We carry comprehensive general liability coverage and umbrella 
liability coverage on all of our properties. We believe that our properties 
are adequately insured against liability claims and the cost of defending 
those claims (subject to deductibles and subject to the limitations described 
below on insurance for losses caused by earthquake or flood). Similarly, we 
believe that our properties are adequately insured on a replacement cost 
basis (subject to deductibles) against the risk of direct physical damage for 
costs incurred to repair or rebuild each property, including loss of rental 
income during the reconstruction period. Certain types of extraordinary 
losses, however, either are not insurable or are not economically insurable. 
Should any uninsured loss occur, we could lose our investment in, and 
anticipated revenues from, a property. An uninsured loss could have a 
material adverse effect on our business and operations and our ability to 
make distributions to our stockholders. Currently we also insure certain 
properties for loss caused by earthquake in the aggregate amount of $50 
million (subject to deductibles) and six of our properties for loss caused by 
flood. Because of the high cost of this type of insurance coverage and the 
wide fluctuations in price and availability, we have determined that the risk 
of loss due to earthquake and flood does not justify the cost to increase 
this coverage any further under current market conditions. However, we could 
suffer material harm if an earthquake, flood or other natural disaster occurs.

                                       12

<PAGE>

RISK FACTORS RELATING TO THE REDEMPTION OF UNITS AND THE PURCHASE OF SHARES

PROVISIONS OF OUR ORGANIZATIONAL DOCUMENTS MAY DISCOURAGE ACQUISITION 
PROPOSALS.

        Charter and Bylaws. Certain provisions contained in our charter and
bylaws may discourage third parties from making proposals to acquire us,
regardless of whether some of the stockholders may consider the proposal to be
in their best interest. These provisions include the following:

  -  Our bylaws provide that a special meeting of stockholders may be
     called by stockholders only when called by stockholders who hold
     shares representing a majority of votes entitled to be cast at
     the meeting. This provision could make it difficult for a
     stockholder to call a meeting for the purposes of approving a
     change of control without the support of the Board of Directors.

  -  Our charter authorizes the Board of Directors to reclassify the
     Company's authorized capital stock without approval of the
     stockholders generally, which could result in a substantial
     increase above the 5,000,000 shares of Preferred Stock presently
     authorized. The ability of our Board of Directors to issue
     Preferred Stock without stockholder approval, and to establish
     the preferences and rights of any class or series issued, could
     allow the Board of Directors to issue a class or series of
     Preferred Stock that would discourage or delay a tender offer or
     change in control.

  -  Our charter generally limits any holder from acquiring more than
     9.8% of the value of our capital stock or number of shares of our
     outstanding Common Stock. The ownership limits in the charter may
     also limit the opportunity for stockholders to receive a premium
     for their shares of Common Stock that might otherwise exist if an
     investor were attempting to assemble a block of shares in excess
     of 9.8% of the outstanding shares of Common Stock or otherwise
     effect a change in control.

  -  Pursuant to the terms of the Preferred Stock set forth in the
     Articles Supplementary, except in limited circumstances, the
     Company may not take certain actions, including the merger or
     consolidation of the Company or the Operating Partnership with
     any person in or as a result of which the valuation of the Common
     Stock is not in excess of $15.375.

        OPERATING PARTNERSHIP AGREEMENT. We conduct substantially all of our 
business through the Operating Partnership. We are the sole general partner 
of the Operating Partnership and, except in limited circumstances, have 
exclusive management power over the business and affairs of the Operating 
Partnership. Furthermore, we may not be removed as general partner of the 
Operating Partnership, with or without cause, by the holders of limited 
partnership units. As a result of this structure, a third party may be 
deterred from making an acquisition proposal that it might otherwise make.

                                       13

<PAGE>

REDEEMING UNITS WILL CHANGE YOUR INVESTMENT.

        If you hold Units and exercise your right to require that we redeem 
all or a portion of your Units, you may receive cash or, at our option, 
Common Stock, in the case of Common Units, and Preferred Stock, in the case 
of Preferred Units. If you receive cash, you will no longer have any interest 
in the Operating Partnership (except to the extent that you retain Units) and 
you will not benefit from any subsequent increases in our share price and you 
will not receive any future distributions from us (unless you retain or 
acquire Units or additional shares of capital stock in the future). If you 
receive capital stock, you will become a stockholder of Burnham Pacific 
Properties, Inc. rather than a holder of Units in Burnham Pacific Operating 
Partnership, L.P. and as such will have different economic and corporate 
governance rights from those you had as a holder of Units.

REDEEMING UNITS WILL CREATE TAX LIABILITIES.

        If we acquire your Units in exchange for cash or capital stock, the 
redemption of your Units will be treated for tax purposes as a sale of your 
Units. The redemption will be fully taxable to you, and you will be treated 
as realizing for tax purposes an amount equal to the sum of (a) the cash you 
receive or the value of the capital stock you receive plus (b) the amount of 
any liabilities of the Operating Partnership allocable to the exchanged Units 
at the time of the redemption or exchange. It is possible that the amount of 
gain recognized or even the tax liability resulting from such gain could 
exceed the amount of cash and the value of capital stock you would receive in 
the redemption. In addition, your ability to sell a substantial number of 
shares of capital stock in order to raise cash to pay your tax liabilities 
associated with the redemption of Units may be limited as a result of 
fluctuations in the market price of our Common Stock or the value of our 
Preferred Stock or as a result of there being no organized public market for 
Preferred Stock, and the price you receive for those shares may not equal the 
value of your Units at the time of the redemption or exchange.

        If we do not acquire the Units you tender for redemption in exchange 
for our capital stock, and the Operating Partnership redeems the Units for 
cash, the tax consequences may differ. See "Description of Units and 
Redemption of Units of Operating Partnership -- Tax Consequences of 
Redemption."

IF A UNITHOLDER REDEEMS UNITS, THE ORIGINAL RECEIPT OF THE UNITS MAY BE 
SUBJECT TO TAX.

        Your original receipt of the Units may be treated as a taxable sale 
under the "disguised sale" rules of the Code if you redeem your Units. 
Subject to several exceptions, the tax law generally provides that a 
partner's contribution of property to a partnership and a simultaneous or 
subsequent transfer of money or other consideration from the partnership to 
the partner will be presumed to be a taxable sale if the two transactions 
happen within a two-year time period. The presumption may be overcome if the 
facts and circumstances clearly establish that the transfers are not a sale. 
On the other hand, if two years have passed between the original contribution 
of property and the transfer of money or other consideration, the 
transactions will not be presumed to be a taxable sale unless the facts and 
circumstances clearly establish that they should be. You should consult your 
own tax advisor regarding your personal situation prior to tendering Units 
for redemption.

THERE IS NO PUBLIC MARKET FOR PREFERRED STOCK.

        At the present time, there is no trading market for the Preferred 
Stock, and the limited number of shares of Preferred Stock, even if all of 
such shares were issued, would likely inhibit the development of an organized 
public market. A stockholder's ability to sell Preferred Stock will depend 
upon a variety of factors including the amount available for sale, the terms 
under which they are available to purchasers and the objectives of potential 
investors in the Company.

THE PRICE OF OUR CAPITAL STOCK IS SUBJECT TO GENERAL MARKET FORCES.

        A variety of factors may influence the price of our capital stock. 
The price of our capital stock, including shares of our Common Stock which 
are listed on the New York Stock Exchange, could drop based on such factors 
as:

                                       14

<PAGE>

  -  an increase in market interest rates;

  -  public perception that companies dependent on retail tenants are
     doing poorly in comparison to other companies owning other types of
     properties and catering to different types of tenants;

  -  the announcement of new acquisitions or development projects by us or
     our competitors;

  -  quarterly variations in our operating results or the operating results
     of our competitors; and

  -  changes in earnings (losses) or other estimates by analysts or
     reported results that vary from those estimates.

        In addition, the stock market may experience significant price 
fluctuations which, although unrelated to our performance, could cause the 
market value of our capital stock to drop. If the market value of our capital 
stock experiences periods of volatility, securities litigation could be 
initiated against us. This litigation could cost us substantial financial and 
management resources and could have a material adverse effect on our business 
and operations and our ability to make distributions to our stockholders.

        A stockholder's ability to sell Preferred Stock will depend upon a 
variety of factors including the amount available for sale, the terms under 
which they are available to purchasers and the objectives of potential 
investors in the Company.

THE COMPANY'S ABILITY TO PAY DIVIDENDS DEPENDS UPON DISTRIBUTIONS RECEIVED 
FROM THE OPERATING PARTNERSHIP.

        The Operating Partnership owns our properties and conducts our 
business. Accordingly, the sole source of the Company's funds to pay 
dividends is distributions that the Operating Partnership pays to its 
partners, including the Company in its capacity as both general partner and a 
limited partner owning Preferred Units and Common Units of the Operating 
Partnership. Although the Company, as sole general partner of the Operating 
Partnership, intends to cause the Operating Partnership to make distributions 
to it (and to the other partners of the Operating Partnership) sufficient to 
enable the Company to pay dividends to the holders of its capital stock, the 
inability or failure of the Operating Partnership to make such distributions 
at any time would directly affect the Company's ability to pay dividends.

THE REGISTRATION AND OTHER RIGHTS OF THE CAPITAL STOCK MAY HAVE AN ADVERSE 
EFFECT ON THE MARKET PRICE OF THE SHARES.

        We have given holders of (i) the Preferred Shares, (ii) Preferred 
Units and (iii) Common Units registration rights which include "demand" and 
"piggyback" registration rights with respect to the following shares of 
capital stock that are the subject of this Prospectus:

  -  2,800,000 Preferred Shares which the Selling Stockholders may issue for 
     sale,

  -  up to 2,000,000 shares of Preferred Stock which we may issue upon 
     redemption of Preferred Units,

  -  up to 7,804,878 shares of Common Stock which we may issue upon 
     conversion of the Preferred Stock, and

  -  up to 574,472 shares of Common Stock which we may issue upon
     redemption of currently outstanding Common Units that were issued
     in connection with an acquisition, plus an additional undetermined 
     number of additional Common Units that may be issuable pursuant to 
     an "earn-out" provision of another acquisition but which are not being
     registered for sale under this Prospectus.


                                       15

<PAGE>

        The Operating Partnership has also invested in certain other real 
estate partnerships and limited liability companies and has issued Common 
Units to contributors of other properties, which Common Units are not being 
registered for sale under this Prospectus. Certain partners in those other 
limited partnerships and limited liability companies and the holders of such 
Common Units have the right to have their interests in the partnerships and 
limited liability companies redeemed for cash or, at our option, for shares 
of our Common Stock. These partners also have certain "demand" and 
"piggyback" registration rights with respect to the shares of our Common 
Stock that may be issued in exchange for their limited partnership, limited 
liability company or Operating Partnership interests. All of the registration 
rights discussed above could materially adversely affect the market price for 
our capital stock.

        In addition, holders of Preferred Stock have rights of first offer to 
purchase a pro rata share of shares of our capital stock which we may offer 
in the future. These rights of first offer could have a material adverse 
effect on the market price for our capital stock.

SEPARATE RISKS RELATING TO TWO CLASSES OF STOCK

ANTI-DILUTION PROVISIONS OF THE PREFERRED STOCK MAY LEAD TO SUBSTANTIAL 
DILUTION OF THE HOLDERS OF COMMON STOCK.

        Each share of Preferred Stock is convertible, at the option of the 
holder, into the number of shares of Common Stock determined by dividing the 
$25 stated value of the Preferred Stock by the Conversion Price. The 
"Conversion Price" is initially $15.375 per share but is subject to 
adjustment pursuant to certain antidilution provisions. Such conversion right 
is exercisable by a holder of Preferred Stock with respect to 25% of the 
shares held of record by such holder on and after each of December 31, 1998, 
March 31, 1999, June 30, 1999 and September 30, 1999 (or earlier in the event 
of a Change of Control or certain other defined events). As of December 1, 
1998, subject to anti-dilution adjustments contained in the Articles 
Supplementary, each share of Preferred Stock was convertible into 
approximately 1.626 shares of Common Stock. In order to protect the holders 
of Preferred Stock, the Conversion Price may be reduced in certain 
circumstances to prevent dilution of their ownership. For instance, in the 
event (i) the Company issues or sells Common Stock, or securities exercisable 
for or convertible into Common Stock, at a purchase or exercise price (as 
applicable) of less than $14.375 per share and (ii) such issuance would 
trigger a reduction in the Conversion Price of at least 1.0% under the 
formula set forth in the Articles Supplementary, then the Conversion Price 
will be reduced pursuant to a formula based upon the proportion of the value 
of Common Stock issuable at less than the Conversion Price to the value of 
all Common Stock to be outstanding following such issuance. If, however, any 
shares of Common Stock are issued or issuable at or less than $11.00 per 
share, then the Conversion Price will be fully reduced to such lower price. 
Any such reduction in the Conversion Price would likely have a significant 
dilutive effect on the holders of Common Stock both as a result of the 
initial dilutive transaction as well as the impact of the antidilution 
provisions of the Preferred Stock triggered by such transaction. See 
"Description of Securities--Preferred Stock--Conversion Right." The 
proportionate ownership, voting power and earnings per share of the holders 
of Common Stock could be substantially diluted in the event that we engage in 
a dilutive transaction and consequently issue a substantial number of 
additional shares of Common Stock and/or Preferred Stock. This, in turn, 
could adversely affect the market price of the shares offered by this 
Prospectus.

CONCENTRATION OF VOTING AND CONSENT POWER OF THE HOLDERS OF THE PREFERRED 
STOCK MAY BE DETRIMENTAL TO THE HOLDERS OF COMMON STOCK.

        The holders of shares of Preferred Stock have the right to vote on 
all matters on which the holders of Common Stock are entitled to vote on an 
"as converted" basis with holders of shares of the Common Stock, as though 
part of the same class as holders of Common Stock.

        While any shares of Preferred Stock are outstanding, the Company may 
not, without approval of holders of at least a majority of the outstanding 
shares of Preferred Stock voting separately as a class, take any of several 
actions described in the Articles Supplementary that would diminish the right 
of the holders of


                                       16

<PAGE>

Preferred Stock (including the authorization or issuance of any class or 
series of stock that would rank prior to or on a parity with the Preferred 
Stock) or that would result in the Company's transfer of its general 
partnership interest in the Operating Partnership or a merger or 
consolidation of assets which would result in the Common Stock having a value 
of less than $15.375 per share, or the termination (as defined in the 
Articles Supplementary) of the Company's qualification as a real estate 
investment trust, or a Change of Control (as defined in the Articles 
Supplementary) or certain other actions. See "Description of 
Securities--Preferred Stock--Conversion Right."

        The holders of the Preferred Stock have the contractual right to 
submit a recommendation to the Nominating Committee of the Board of Directors 
for the election of a director at each annual meeting of stockholders (until 
the number of outstanding shares of Preferred Stock is reduced to a specified 
number). In addition, under the Company's Articles Supplementary, upon the 
failure of the Company to pay the full amount of the Preferred Stock 
preferential dividend for four consecutive quarters or upon certain Voting 
Rights Defaults (as defined in the Articles Supplementary) of the Company in 
its obligations with respect to the holders of Preferred Stock, the holders 
of the Preferred Stock will have the right, as a class, to elect two 
additional directors of the Company, until such defaults are cured. The 
interests of the holders of the Preferred Stock, and indirectly the director 
or directors elected by the holders of the Preferred Stock, may differ from 
or conflict with the interests of the holders of Common Stock. See 
"Description of Securities--Preferred Stock--Other Provisions" for a 
description of certain other rights of the holders of Preferred Stock and of 
holders of Preferred Units, and of certain obligations of the Company in 
connection therewith.

        The holders of the Preferred Stock have certain consent rights to 
actions we may take. We may not, among other things, make certain revisions 
to our corporate structure and operations, without the approval of holders of 
at least a majority of the outstanding shares of Preferred Stock, voting as a 
separate class. This includes (i) revisions that would affect the rights, 
priority and preferences of the Preferred Stock, (ii) the merger or 
consolidation of us or the Operating Partnership with another entity, (iii) 
the sale of all or substantially all of our assets, and (iv) undergoing a 
change in control of either us or the Operating Partnership. See "Description 
of Securities--Preferred Stock--Voting Rights." As of the date of this 
Prospectus, Westbrook holds the substantial majority of all outstanding 
shares of the Preferred Stock.

        In addition, upon conversion of the Preferred Stock (including the 
shares of Preferred Stock that may be issued upon redemption of the Preferred 
Units) into shares of Common Stock, the holders of Preferred Stock would hold 
approximately 18.8% of all outstanding shares of Common Stock (assuming 
exchange of all partnership interests in the Operating Partnership into 
shares of Common Stock, and assuming that all 4,800,000 shares of Preferred 
Stock were fully convertible and were converted on the date of this 
Prospectus). Consequently, upon such conversion, the holders of Preferred 
Stock would, as a class, be the largest stockholder in the Company and could 
have considerable influence with respect to the election of directors and the 
approval or disapproval of significant corporate actions. See "Description of 
Securities--Preferred Stock--Conversion Right."

        In view of the substantial influence of the holders of the Preferred 
Stock over our affairs, you should note that interests of the holders of the 
Preferred Stock do not necessarily coincide with those of the holders of the 
Common Stock. Therefore, actions by the holders of the Preferred Stock will 
not necessarily be in the best interests of the holders of Common Stock.

                                       17

<PAGE>

                                    THE COMPANY

        We are a fully-integrated real estate operating company which 
acquires, rehabilitates, develops and manages retail properties in the 
western region of the United States. The Company began operations through a 
predecessor in 1963, became a real estate investment trust ("REIT") in 1987 
and today is one of the largest public owners and operators of non-mall 
retail properties on the West Coast. Our properties are primarily 
neighborhood and community shopping centers located in major metropolitan 
areas. We focus on shopping centers in mature trade areas with a limited 
supply of vacant land and with established consumer shopping patterns. These 
characteristics help limit potential future competition in a trade area. We 
also own four office and industrial properties which we consider 
non-strategic and which we may sell as suitable opportunities arise. Title to 
our properties is held by or for the benefit of the Operating Partnership or 
various subsidiaries of the Operating Partnership.

        We own our properties and conduct substantially all of our business 
through the Operating Partnership, of which the Company is the sole general 
partner and, as the holder of preferred and common limited partnership units, 
the owner of a substantial majority of the economic interests. Other limited 
partners of the Operating Partnership are persons who have contributed 
interests in properties to the Operating Partnership in exchange for limited 
partnership units of the Operating Partnership. Such transactions have 
enabled us to reduce the amount of cash consideration paid for the acquired 
properties while also providing the contributors the opportunity to defer 
recognition of federal income taxes on their disposition of such properties. 
Holders (other than the Company) of Units issued on such acquisitions 
generally have the right, after a specified period of time, to cause the 
Operating Partnership to redeem such Units for cash. In lieu of redemption 
for cash, the Company has the right to exchange a like number of shares of 
its capital stock for the Units being redeemed.

        Among the properties that we have acquired where Units of the 
Operating Partnership were issued as part of the acquisition price are the 
following:

  -  On December 31, 1997, we acquired Simi Valley Plaza shopping
     center in Simi Valley, California from Simi Valley Plaza LLC. The
     Operating Partnership issued 574,483 Common Units as a part of
     the consideration for such acquisition.

  -  Also on December 31, 1997, we acquired a portfolio of 20 California
     shopping centers (the "Golden State Properties Portfolio") from 
     investment funds affiliated with Blackacre Capital Group, L.P. and 
     individuals affiliated with Highridge Partners (collectively "Blackacre")
     pursuant to a Contribution Agreement.  The Operating Partnership issued
     2,000,000 Preferred Units to members of Blackacre, and undertook to issue
     additional Common Units and/or cash as a part of an "earn-out" provision
     in the Golden State Properties Portfolio Contribution Agreement.  The
     Company contributed additional funds to enable the Operating Partnership 
     to acquire these  properties, which funds included the proceeds from 
     the Company's issuance to Westbrook Burnham Holdings, L.L.C. and 
     Westbrook Burnham Co-Holdings, L.L.C. (collectively "Westbrook") of 
     2,800,000 shares of Preferred Stock.  Concurrently with the Company's 
     issuance of these Shares of Preferred Stock, the Operating Partnership 
     issued to the Company 2,800,000 Preferred Units whose distribution and 
     other economic terms mirror the distribution and other economic terms of 
     the Preferred Shares. (As a matter of convenience among themselves, 
     Westbrook and Blackacre requested us to issue 10 of the 2,800,000 
     Preferred Shares in the name of Blackacre and 10 of the 2,000,000 
     Preferred Units in the name of Westbrook.)

See "Description of Units and Redemption of Units of Operating Partnership" 
for a description of the Common Units and Preferred Units that were issued in 
such transactions.

        In August 1998, the Operating Partnership and the State of California 
Public Employees' Retirement system ("CalPERS") entered into a joint venture 
agreement for the acquisition of neighborhood, community, promotional and 
specialty retail centers in the western region of the United States. The 
joint venture agreement contemplates an aggregate $400 million investment by 
CalPERS and $100 million investment by us through the


                                       18

<PAGE>

period ending December 31, 1999, and provides for up to $165 million of 
leverage through mortgage or line of credit borrowings by the joint venture. 
Subject to certain qualifications, in making future acquisitions, we are 
committed to offer qualifying retail property investment opportunities to the 
joint venture until CalPERS' and our respective investment obligations are 
satisfied, before making such acquisitions solely for our own direct account. 
We can give no assurance that the investment goals of the joint venture will 
be satisfied or that CalPERS and we may not agree to expand such goals or to 
vary our respective 80/20% participation in the joint venture. See "Risk 
Factors--We Own Certain Properties Jointly with Other Entities and are 
Committed to Expand Our Joint Venture Activities."

        Our Company is incorporated under the laws of the State of Maryland. 
Our offices are located at 610 West Ash Street, 16th Floor, San Diego, 
California 92101. Our telephone number is (619) 652-4700.













                                       19

<PAGE>

                           DESCRIPTION OF SECURITIES

        THE DESCRIPTION OF THE COMPANY'S CAPITAL STOCK SET FORTH BELOW DOES 
NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO 
THE COMPANY'S CHARTER AND BYLAWS, EACH AS AMENDED AND RESTATED, COPIES OF 
WHICH ARE EXHIBITS TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS 
A PART. SEE "AVAILABLE INFORMATION."

GENERAL

        Under its charter, the Company has authority to issue up to 100 
million shares of stock, consisting of 75 million shares of Common Stock, 
five million shares of Preferred Stock and 20 million shares of "Excess 
Stock" (as described below), each with a par value of $.01 per share. As of 
December 1, 1998, the Company has 31,948,008 shares of Common Stock issued 
and outstanding and 2,800,000 million shares of Preferred Stock issued and 
outstanding and held by the Selling Stockholders. In addition, at such date 
the Operating Partnership has 2,800,000 Preferred Units and 1,785,477 Common 
Units outstanding (other than those held by the Company). If tendered to the 
Operating Partnership for redemption, the Units held by persons other than 
the Company may be exchanged for shares of Preferred Stock or Common Stock, 
as the case may be, on a one-for-one basis at the option of the Company, 
subject to the expiration of certain "lock-out" periods specified in 
agreements relating to the issuance of such Units and subject to certain 
adjustments to prevent dilution and certain limitations imposed to protect 
the Company's status as a REIT.

PREFERRED STOCK

        As part of the financing for the Company's acquisition of a portfolio 
of the Golden State Properties Portfolio, which was completed on December 31, 
1997, the Company issued 2,800,000 shares of its Preferred Stock to Westbrook 
Burnham Holdings, L.L.C. and Westbrook Burnham Co-Holdings, L.L.C. in a 
privately negotiated sale. The Preferred Stock is the only series of 
preferred stock of the Company that is outstanding as of the date of this 
Prospectus. The Preferred Stock ranks senior to the Common Stock with respect 
to dividend rights and distributions upon liquidation, dissolution and 
winding up of the Company. The principal terms of the Preferred Stock are 
summarized below. This summary does not purport to be complete and is subject 
to, and qualified in entirety by, the complete text of the Articles 
Supplementary to the Company's charter filed as an exhibit to the Company's 
Report on Form 8-K dated January 14, 1998 (the "Articles Supplementary"), 
which is incorporated by reference herein.

        STATED VALUE AND LIQUIDATION PREFERENCE

        The Preferred Stock has a stated value of $25 per share (the "Stated 
Value"), and upon the distribution of assets on the liquidation, dissolution 
or winding up of the Company each share of Preferred Stock is entitled to a 
preferential payment (the "Liquidation Preference") of the Stated Value plus 
any accrued and unpaid dividends prior to the payment of any amount with 
respect to shares of the Common Stock.

        Until the holders of the Preferred Stock have been paid the 
Liquidation Preference in full, no payment will be made to any holder of 
Common Stock upon the liquidation, dissolution or winding up of the Company. 
If, upon such liquidation, dissolution or winding up, the assets of the 
Company, or the proceeds thereof, distributable among the holders of the 
shares of the Preferred Stock are insufficient to pay in full the Liquidation 
Preference, then such assets, or the proceeds thereof, will be distributed 
pro rata to the holders of shares of the Preferred Stock (and any shares of 
stock which are on parity with the Preferred Stock as to distributions on 
liquidation) in accordance with their respective holdings thereof.

     Neither a consolidation or merger of the Company with another 
corporation, nor a sale or transfer of all or any part of the Company's 
assets for cash or securities, will be considered a liquidation, dissolution 
or winding up of the Company.

                                       20

<PAGE>

        DIVIDENDS AND DISTRIBUTIONS

        Each share of Preferred Stock is entitled to receive cumulative 
quarterly cash dividends equal to the greater of (i) 2.00% (per quarter) of 
the per share Stated Value, and (ii) the amount of dividends payable on the 
number of shares of Common Stock into which the shares of Preferred Stock are 
then convertible. The cumulative quarterly cash dividends will accrue daily 
and will, to the extent not paid in full on the applicable dividend payment 
date, together with accruals thereon, accrue at the compounded quarterly rate 
of 2.00% from that date until payment is made, whether or not the Company has 
earnings or surplus.

        Unless and until all accrued dividends on the Preferred Stock through 
the last preceding dividend payment date have been paid, the Company may not 
(i) declare or pay any dividend, make any distribution (other than a 
distribution payable solely in shares of Common Stock), or set aside any 
funds or assets for payment or distribution with regard to any Common Stock 
(or any other stock junior to the Preferred Stock, together with Common Stock 
("Junior Shares")), (ii) redeem or purchase (directly or through 
subsidiaries), or set aside any funds or other assets for the redemption or 
purchase of, any Junior Shares or (iii) authorize, take or cause to be taken 
any action as general partner of the Operating Partnership that will result 
in (A) the declaration or payment by the Operating Partnership of any 
distribution to its partners (other than distributions made concurrently with 
distributions payable to the Company in respect of its partnership interest 
or Preferred Units in each case that will be used by the Company to fund the 
payment of dividends (such distributions to the Company being referred to as 
"Authorized Distributions")), or set aside any funds or assets for payment of 
any distributions (other than Authorized Distributions) or (B) the redemption 
or purchase (directly or through subsidiaries), or the setting aside of any 
funds or other assets for the redemption or purchase of, any partnership 
interests in the Operating Partnership.

        While any shares of Preferred Stock are outstanding, the Company may 
not pay any dividend on any shares of any class or series of stock of the 
Company which ranks on a parity with the Preferred Stock as to payment of 
dividends unless at least a proportionate payment is made with regard to all 
accrued dividends on the Preferred Stock (except, as to any shares of the 
Preferred Stock as to which a notice of conversion has been furnished by the 
holder thereof, at the effective time of conversion) through the most recent 
preceding dividend payment date.

        CONVERSION RIGHT

        Each share of Preferred Stock is convertible into the number of 
shares of Common Stock obtained by dividing the Stated Value per share by the 
Conversion Price. As of December 1, 1998, each share of Preferred Stock was 
convertible into approximately 1.626 shares of Common Stock. The Conversion 
Price will be adjusted if the Company (i) pays a dividend or makes a 
distribution on its Common Stock in shares of its Common Stock, (ii) 
subdivides its outstanding Common Stock into a greater number of shares, 
(iii) combines its outstanding Common Stock into a smaller number of shares, 
(iv) issues rights or warrants to the holders of its Common Stock as a class 
entitling them to purchase Common Stock at a price per share less than the 
then Conversion Price, or (v) distributes to the holders of its Common Stock 
as a class any shares of stock of the Company (other than Common Stock) or 
evidences of indebtedness or assets (other than those referred to in the 
previous clause) to purchase any of its securities. Furthermore, in the event 
(i) the Company issues or sells Common Stock, or securities exercisable for 
or convertible into Common Stock, at a purchase or exercise price (as 
applicable) of less than $14.375 per share and (ii) such issuance would 
trigger a reduction in the Conversion Price of at least 1.0% under the 
formula set forth in the Articles Supplementary, then the Conversion Price 
will be reduced pursuant to a formula based upon the proportion of the value 
of Common Stock issuable at less than the Conversion Price to the value of 
all Common Stock to be outstanding following such issuance. If, however, any 
shares of Common Stock are issued or issuable at or less than $11.00 per 
share, then the Conversion Price will be fully reduced to such lower price. 
Any such reduction in the Conversion Price would likely have a significant 
dilutive effect on the holders of Common Stock both as a result of the 
initial dilutive transaction as well as the impact of the antidilutive 
provisions of the Preferred Stock triggered by such transaction. Such 
conversion right is exercisable by a holder of Preferred Stock with respect 
to 25% of the


                                       21

<PAGE>

shares held of record by such holder on and after each of December 31, 1998, 
March 31, 1999, June 30, 1999 and September 30, 1999 (or earlier in the event 
of a Change of Control or certain other defined events).

        On and after January 1, 2003, the Company may give notice of 
mandatory conversion of all of the outstanding Preferred Stock if the average 
of the volume weighted average price (the "VWAP") of the Common Stock on each 
of the twenty trading days immediately prior to the notice of mandatory 
conversion (the "Current Market Price") and the VWAP on the trading day 
immediately prior to the notice of mandatory conversion and the trading day 
immediately prior to the date of the intended conversion is greater than the 
Conversion Price, and after such notice all such outstanding shares shall be 
mandatorily converted into Common Stock; except that each holder of Preferred 
Stock shall have the right, prior to the date established for such mandatory 
conversion, instead to cause the Company to redeem such holder's Preferred 
Stock at its Stated Value plus accrued dividends to the redemption date 
multiplied by a percentage equal to 105% if the redemption date is prior to 
December 31, 2003, decreasing by 1% each year thereafter (but not less than 
100% after December 31, 2007).

        VOTING RIGHTS

        The holders of shares of Preferred Stock have the right to vote on 
all matters on which the holders of Common Stock are entitled to vote on an 
"as converted" basis with holders of shares of the Common Stock, as though 
part of the same class as holders of Common Stock.

        While any shares of Preferred Stock are outstanding, the Company may 
not, without approval of holders of at least a majority of the outstanding 
shares of Preferred Stock voting separately as a class, take any of several 
actions described in the Articles Supplementary that would diminish the right 
of the holders of Preferred Stock (including the authorization or issuance of 
any class or series of stock that would rank prior to or on a parity with the 
Preferred Stock) or that would result in the Company's transfer of its 
general partnership interest in the Operating Partnership or a merger or 
consolidation of assets which would result in the Common Stock having a value 
of less than $15.375 per share, or the termination of the Company's 
qualification as a real estate investment trust, or a Change of Control (as 
defined in the Company's Articles Supplementary) or certain other actions.

        The holders of the Preferred Stock have the right to submit a 
recommendation to the Nominating Committee of the Board of Directors for the 
election of a director at each annual meeting of stockholders (until the 
number of outstanding shares of Preferred Stock is significantly reduced). In 
addition, upon the failure of the Company to pay the full amount of the 
Preferred Stock preferential dividend for four consecutive quarters or upon 
certain other defaults of the Company in its obligations with respect to the 
Preferred Stock, the holders of the Preferred Stock will have the right, as a 
class, to elect two additional directors of the Company, until such defaults 
are cured. See "--Other Provisions" for a description of certain other rights 
of the holders of Preferred Stock and of holders of Preferred Units, and of 
certain obligations of the Company in connection therewith. See "Risk Factors 
- --Separate Risk Relating to Two Classes of Stock."

        The Company shall act on or with respect to any matter as to which it 
is entitled or requested to act in its capacity as a holder of Preferred 
Units of the Operating Partnership by voting or otherwise acting with respect 
to all such Preferred Units solely in accordance with instructions received 
from a majority of the holders of Preferred Stock.

        REGISTRATION RIGHTS

        The Company has entered into registration rights agreements with the 
holders of Preferred Stock and Preferred Units which require it, under 
certain circumstances, to register under the Securities Act shares of 
Preferred Stock which are (i) currently issued and outstanding and (ii) 
issuable upon redemption of Preferred Units and shares of Common Stock 
issuable upon conversion of Preferred Stock. These registration rights 
agreements give the holders of the applicable securities both "demand" and 
"piggyback" registration rights.

                                       22

<PAGE>

COMMON STOCK

        DISTRIBUTION RIGHTS

        Holders of Common Stock are entitled to receive distributions on 
their shares if, as and when the Board of Directors authorizes and declares 
such distributions, subject to the provisions of the Company's charter 
regarding Excess Stock. A more detailed description of Excess Stock may be 
found below under the heading "--Excess Stock."

        LIQUIDATION/DISSOLUTION RIGHTS

        In a liquidation or dissolution of the Company, each share of Common 
Stock entitles its holder to share (based on the percentage of shares held) 
in any assets that remain after the Company pays its liabilities and any 
preferential distributions owed to the holders of Preferred Stock and any 
other series of preferred stock issued in the future.

        VOTING RIGHTS

        Subject to the provisions of the Company's charter regarding Excess 
Stock, each outstanding share of Common Stock entitles the holder to one vote 
on all matters submitted to a vote of stockholders, including the election of 
directors. Except as otherwise required by law or except as provided with 
respect to any other class or series of preferred stock issued in the future, 
the holders of Common Stock and the holders of Preferred Stock possess 
exclusive voting power. The holders of Preferred Stock have the right to vote 
on all matters submitted to a vote of the holders of Common Stock on an 
"as-converted" basis. There is no cumulative voting in the election of 
directors, which means that the holders of a majority of the votes cast for 
directors can, subject to certain rights of holders of preferred stock, elect 
all of the directors then standing for election.

        RESTRICTIONS ON TRANSFER

        See "--Excess Stock" below for a description of certain provisions of 
the Company's charter designed to preserve the Company's status as a 
qualified REIT that limit the transfer of, and provide the Company with a 
right to redeem, shares of capital stock (including shares of Common Stock) 
and that also provide for the conversion of such stock into Excess Stock, in 
certain circumstances.

        OTHER TERMS

        Subject to the provisions of the Company's charter regarding Excess 
Stock, all shares of Common Stock have equal dividend, distribution, 
liquidation and other rights, which rights are, however, subject to 
preferential rights of shares of Preferred Stock and any other series of 
preferred stock that may be outstanding. Holders of shares of Common Stock 
have no preference, conversion, sinking fund, redemption or exchange rights 
or preemptive rights. A conversion feature is one where a stockholder has the 
option to convert his shares to a different security, such as debt or 
preferred stock. A sinking fund or redemption right is one where a 
stockholder will have the right to redeem his shares (for cash or other 
securities) at some point in the future. Sometimes a redemption right is 
paired with an obligation of the company to create an account into which the 
company must deposit money to fund redemption (i.e., a sinking fund). 
Preemptive rights are rights granted to stockholders to subscribe for a 
percentage of any other securities we offer in the future based on the 
percentage of shares owned.

        REGISTRATION RIGHTS

        The Company has entered into registration rights agreements with 
certain holders of Common Units which require it, under certain 
circumstances, to register under the Securities Act certain shares of Common 
Stock issuable upon redemption of the Common Units and upon conversion of 
Preferred Stock.  These

                                       23

<PAGE>

registration rights agreements give the holders of the applicable securities 
both "demand" and "piggyback" registration rights.

        INFORMATION

        The Company furnishes its stockholders with annual reports containing 
audited consolidated financial statements and an opinion thereon expressed by 
an independent public accounting firm and quarterly reports for the first 
three quarters of each fiscal year containing unaudited financial information.

        EXTRAORDINARY TRANSACTIONS

        Pursuant to Maryland law and the Company's charter, the Company 
generally cannot dissolve, amend its charter, merge, sell all or 
substantially all of its assets, engage in a share exchange or engage in 
similar transactions outside the ordinary course of business unless approved 
by the affirmative vote of holders of shares entitled to cast a majority of 
all the votes entitled to be cast. In addition, a number of other provisions 
of Maryland law could significantly affect the shares of Common Stock and the 
rights and obligations of its holders. See "--Certain Provisions of Maryland 
Law."

TRANSFER AGENT AND REGISTRAR

        The transfer agent and registrar for the Common Stock is EquiServe 
Limited Partnership, 525 Washington Boulevard, Jersey City, New Jersey 07303.

POWER TO ISSUE ADDITIONAL SHARES OF STOCK

        The charter grants the Board of Directors the power to authorize the 
issuance of additional authorized but unissued shares of Common Stock and 
preferred stock (including any unissued shares of any series of preferred 
stock, to the extent permitted by the terms of these series). The Board of 
Directors may also classify or reclassify unissued shares of Common Stock or 
preferred stock or Excess Stock and authorize the issuance of these 
classified or reclassified shares of stock. Under Maryland law and the 
charter, the Board of Directors is required to fix the terms and conditions 
for each class or series, subject to the provisions of the charter regarding 
Excess Stock, prior to the issuance of the shares of each class or series of 
stock. These terms and conditions include preferences, conversion and other 
rights, voting powers, restrictions, limitations as to dividends or other 
distributions, qualifications and terms or conditions of redemption.

        This power provides the Board of Directors with increased flexibility 
in structuring possible future financings and acquisitions and in meeting 
other needs which might arise. Unless stockholder action is required by 
applicable law or the rules of any stock exchange or automated quotation 
system on which the Company's securities may be listed or traded, the 
additional classes or series, as well as the Common Stock, will generally be 
available for issuance without further action by stockholders. However, the 
issuance of additional series of preferred stock with rights senior to the 
Preferred Stock must be approved by the holders of Preferred Stock. Although 
the Board of Directors does not intend to do so at the present time, it could 
authorize the issuance of a class or series that could delay, defer or 
prevent a change of control or other transaction that holders of Common Stock 
might believe to be in their best interests or in which holders of some, or a 
majority of, the Common Stock might receive a premium for their shares over 
the then-current market price.

EXCESS STOCK

        GENERAL. As a protective measure, the Company's charter provides for 
the issuance of a separate class of capital stock, referred to as "Excess 
Stock," to attempted transferees of capital stock in transactions that may 
endanger the Company's REIT qualification. The specific terms of Excess Stock 
and the conditions giving rise to its issuance are described in more detail 
below.

                                       24
<PAGE>

        OWNERSHIP LIMIT. As a REIT, the Company is required to comply with a 
number of complicated rules under the Code. Among other things, the Code 
requires that, with certain limited exceptions, REITs satisfy the following 
ownership limitations:

        -      not more than 50% in value of the REIT's outstanding capital
               stock may be owned, directly or indirectly after applying complex
               attribution rules, by five or fewer "individuals" (which is
               defined to include a variety of types of tax-exempt entities or
               relationships) during the last half of its taxable year, and

       -       such capital stock must be beneficially owned by 100 or more 
               persons during at least 335 days of each taxable year.

        In order to protect its status as a qualified REIT, the Company's 
charter contains limitations on the amount of its capital stock that any one 
party may hold. The Company's "Ownership Limit" and "Common Stock Ownership 
Limit" (collectively, "Ownership Limit") prohibits any holder from owning, or 
being deemed to own by virtue of the attribution provisions of the Code:

        -      more than 9.8% in value of the Company's outstanding capital 
               stock; or

        -      more than 9.8% (in value or in number of shares, whichever is
               more restrictive) of the aggregate of the outstanding shares of
               Common Stock, including shares of Common Stock issuable upon
               conversion of any other outstanding shares of capital stock of
               the Company.

        The charter deems holders to own all stock that they (1) actually 
own, (2) constructively own after applying the attribution rules specified in 
the Code, and (3) have the right to acquire upon exercise of any rights, 
options or warrants or conversion of any convertible securities. Holders may 
include natural persons, corporations, estates, trusts, partnerships or other 
entities. The fact that certain affiliated entities, such as separate mutual 
funds advised by the same investment adviser, may own more than 9.8% of the 
value of all outstanding capital stock in the aggregate will not of itself 
result in the Ownership Limit being exceeded, even though that investment 
advisor may be considered to be the "beneficial owner" of such stock for 
purposes of Section 13(g) of the Exchange Act.

        VIOLATION OF OWNERSHIP LIMIT. The charter provides that any attempted 
transfer of capital stock is null and void if it would result in a violation 
of the Ownership Limit or the disqualification of the Company as a REIT. 
These provisions include any transfer that results in the Company being 
"closely held" within the meaning of Section 856(h) of the Code. In the event 
of such an attempted transfer, the intended transferee will acquire no rights 
to the capital stock attempted to be transferred. Instead, the shares of 
capital stock will automatically be exchanged for shares of Excess Stock and 
these shares of Excess Stock will automatically be transferred, by operation 
of law, to a trustee for the exclusive benefit of one or more charitable 
beneficiaries designated from time to time by the Company (except to the 
extent described below). The trustee will be named by the Board of Directors 
of the Company, but must be unaffiliated with the Company and the purported 
transferee of the Excess Stock (the "Prohibited Owners").

        RIGHTS OF EXCESS STOCK. The Excess Stock held in trust (a) will be 
considered to be issued and outstanding shares of stock of the Company, (b) 
will be entitled to receive distributions declared by the Company and (c) may 
be voted by the trustee for the exclusive benefit of the charitable 
beneficiary. The charter requires a Prohibited Owner to repay to the Company 
any dividend or distribution which it receives prior to the discovery that 
capital stock was transferred in violation of the Ownership Limit. The 
Company is then required to turn over the amount of the repayment to the 
trustee. The charter also retroactively nullifies any votes cast by the 
Prohibited Owner prior to the discovery that a transfer violated the 
Ownership Limit. The charter does provide, however, that the retroactive 
nullification of the vote cast with respect to the relevant shares of capital 
stock will not adversely affect the rights of any third party who relied in 
good faith upon the effectiveness of the matter that was the subject of the 
stockholder action as to which such votes were cast.

                               25
<PAGE>

        TRANSFERABILITY OF EXCESS STOCK. As a general rule, holders may not 
transfer Excess Stock. Subject to the Company's redemption right described 
below, the trustee may transfer the shares of Excess Stock to a purchaser who 
could own such shares without violating the Ownership Limit. Upon such sale, 
the shares of Excess Stock automatically convert back into shares of the 
class or series of capital stock or convertible security from which they were 
originally converted.

        After Excess Stock is transferred in this way, the Prohibited Owner 
shall receive from the proceeds of the sale the lesser of (i) the price paid 
by the Prohibited Owner for the shares and (ii) the price per share received 
by the trustee from the sale of the shares. If the Prohibited Owner received 
the Excess Stock by gift, devise or otherwise without giving value for such 
stock, then it shall receive the lesser of the market price of the shares on 
the day of the event causing the shares to be held in trust, as determined in 
the manner set forth in the charter, and (ii) the price per share received by 
the trustee from the sale of the shares. Any remaining sales proceeds in 
excess of the amount payable to the Prohibited Owner shall be immediately 
paid to the charitable beneficiary.

        REDEMPTION RIGHT. In addition to the transfer restrictions described 
above, the Company or its designee has the right to purchase all or any 
portion of the Excess Stock from the trustee for a period of 90 days from the 
time the Company receives written notice of the prohibited transfer or other 
event resulting in the exchange of capital stock for Excess Stock. Under the 
charter, the purchase price will be the lesser of (a) the price paid for the 
stock by the Prohibited Owner or (b) the market price of the stock on the 
date the Company exercises its option to purchase. If the Prohibited Owner 
received such stock by gift, devise or otherwise without giving value for 
such stock, the market price of the stock at the time of the prohibited 
transfer will be used in lieu of the price paid. Upon any such purchase by 
the Company, the trustee must distribute the purchase price to the Prohibited 
Owner.

        ADDITIONAL CHARTER PROVISIONS REGARDING THE OWNERSHIP LIMIT. The 
Ownership Limit will not preclude settlement of transactions on the New York 
Stock Exchange or any other stock exchange on which capital stock of the 
Company is listed but the provisions of the charter shall remain applicable 
to the transferee and to any shares transferred. If the Board of Directors 
determines that it is no longer in the best interests of the Company to 
continue to qualify as a REIT, then these restrictions on transferability and 
ownership will not apply.

        Upon demand by the Company, each stockholder and each proposed 
transferee of capital stock must disclose to the Company in writing any 
information with respect to the direct, indirect and constructive ownership 
of shares of stock as the Board of Directors deems necessary to comply with, 
or determine compliance with, the provisions of the Code applicable to REITs 
or the requirements of any taxing authority or governmental agency.

        CERTAIN EXCEPTIONS TO OWNERSHIP LIMIT. The Board of Directors may 
waive the Ownership Limit if it obtains such representations and undertakings 
as are reasonably necessary for it to ascertain that the changes in ownership 
will not then or in the future jeopardize the Company's status as a REIT and 
if the Board of Directors decides that such waiver is in the best interests 
of the Company. Based upon representations of Blackacre under the 
Contribution Agreement and of Westbrook under the Stock Purchase Agreement 
that no individual would, after applying applicable attribution rules of the 
Code, own more than 9.8% of the Common Stock or of the value of all of the 
capital stock of the Company, and on certain other representations and 
agreements, the Board of Directors has partially waived the Ownership Limits 
that would otherwise limit the amount of capital stock of the Company that 
Westbrook could own and that would otherwise limit the number of shares of 
Preferred Stock and of Common Stock that Blackacre may acquire upon the 
exchange of their Operating Partnership Units for capital stock of the 
Company.

        The Ownership Limit does not apply to shares of capital stock 
acquired pursuant to an all cash tender offer for all outstanding shares of 
capital stock in conformity with applicable laws if both of the following 
conditions are met:

                                  26

<PAGE>

        -      At least two-thirds of the outstanding shares of capital stock
               are tendered and accepted pursuant to such tender offer. The
               securities held by the tender offeror and/or its affiliates and
               associates are not included in determining whether the two-thirds
               threshold has been met.

        -      The tender offeror commits in such tender offer, if the offer is
               accepted by the holders of two-thirds of the outstanding stock,
               to give any non-tendering stockholders a reasonable opportunity
               to put their capital stock to the tender offeror at a price not
               less than that paid pursuant to the tender offer.

CERTAIN PROVISIONS OF MARYLAND LAW

        MARYLAND BUSINESS COMBINATION STATUTE

        Maryland law prohibits certain "business combinations," including 
mergers, consolidations, share exchanges, certain asset transfers and certain 
issuances of equity securities, between a Maryland corporation and any person 
or entity that owns 10% or more of the voting power of the corporation's 
shares (an "Interested Stockholder"). This prohibition exists for five years 
after the most recent date on which the Interested Stockholder became an 
Interested Stockholder. Thereafter, any such business combination must be 
approved by the affirmative vote of at least 80% of the votes entitled to be 
cast by holders of outstanding voting shares of the corporation other than 
shares held by the Interested Stockholder with whom the business combination 
is to be effected. There is an exception to this rule when, among other 
things, the holders of the corporation's shares receive a minimum price (as 
defined in Maryland law) for their shares and the consideration is received 
in cash or in the same form as previously paid by the Interested Stockholder 
for the shares that it owns. However, these provisions of Maryland law do not 
apply to "business combinations" with an Interested Stockholder that are 
approved or exempted by the board of directors of the corporation before that 
Interested Stockholder becomes an Interested Stockholder.

        Our Board of Directors has adopted a resolution rendering these 
"business combinations" provisions inapplicable to the Company. However, the 
Board of Directors has reserved the right to revoke their resolution if doing 
so is in the best interest of the Company and our stockholders.

        MARYLAND CONTROL SHARE ACQUISITION STATUTE

        Maryland law provides that "control shares" of a Maryland corporation 
acquired in a "control share acquisition" have no voting rights except to the 
extent approved by a vote of two-thirds of the votes eligible under the 
statute to be cast on that matter by stockholders. "Control Shares" are 
voting shares that, if aggregated with all other such shares of stock 
previously acquired by the acquiror, would entitle the acquiror to exercise 
voting power in electing directors within one of the following ranges of 
voting power:

               (1) one-fifth or more but less than one-third;

               (2) one-third or more but less than a majority; or

               (3) a majority of all voting power.

        Control Shares do not include shares the acquiring person is then 
entitled to vote as a result of having previously obtained stockholder 
approval. A "control share acquisition" means the acquisition of Control 
Shares, subject to certain expenses.

        If voting rights are not approved at a stockholder meeting or if the 
acquiring person does not deliver an acquiring person statement as required 
by the statute, then, subject to certain conditions and limitations, the 
corporation may redeem any or all of the Control Shares (except those for 
which voting rights have previously been approved) for fair value. If voting 
rights for Control Shares are approved at a stockholder meeting and


                                 27

<PAGE>

the acquiror becomes entitled to vote a majority of the shares entitled to 
vote, all other stockholders may exercise appraisal rights.

        The Company's bylaws contain a provision which exempts the 
acquisition of the Company's capital stock from these restrictions. However, 
the Board of Directors, by two-thirds majority vote, may repeal this 
exemption either before or after an acquisition of control shares if it 
determines that doing so is in the best interest of our stockholders. The 
Board of Directors may do this without stockholder approval.

     DESCRIPTION OF UNITS AND REDEMPTION OF UNITS OF OPERATING PARTNERSHIP

        THE FOLLOWING DESCRIPTION OF CERTAIN PROVISIONS OF THE OPERATING
PARTNERSHIP AGREEMENT, AND OF THE FIRST AMENDMENT THERETO THAT WAS ENTERED INTO
CONCURRENTLY WITH THE CLOSING OF THE ACQUISITION OF THE GOLDEN STATE PROPERTIES
PORTFOLIO ON DECEMBER 31, 1997, IS QUALIFIED IN ALL RESPECTS BY THE PROVISIONS
OF THE OPERATING PARTNERSHIP AND OF THE FIRST AMENDMENT FILED AS EXHIBITS TO THE
COMPANY'S REPORTS ON FORM 8-K DATED DECEMBER 16, 1997 AND JANUARY 14, 1998,
RESPECTIVELY, AND OF SCHEDULE C TO SUCH FIRST AMENDMENT FILED AS AN EXHIBIT TO
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997,
WHICH EXHIBITS ARE HEREBY INCORPORATED BY REFERENCE HEREIN.

        COMMON UNITS.

        The Operating Partnership Agreement provides that, subject to the 
preferences of any class or series of partnership interest established by the 
general partner, the Operating Partnership shall make distributions pro rata 
to partners holding Common Units and to the general partner as such in 
proportion to their respective partnership interests. The Company will hold 
as many Common Units (including for this purpose all Units held by it as 
general partner and as limited partner) as there are shares of Common Stock 
of the Company outstanding from time to time, and contemplates making 
quarterly distributions to the holders of Common Units concurrently with and 
in the same amounts as dividends paid by the Company on its Common Stock 
(which amount is currently at the quarterly rate of $0.2625).

        In addition, the Operating Partnership Agreement provides that on the 
December 31 or June 30 coinciding with or next following the first 
anniversary of the issuance of Common Units (or earlier in the event of 
certain extraordinary transactions), the holder of each Common Unit will have 
the right to require the Operating Partnership to redeem the Unit at a 
redemption price equal to the then market value of a share of Common Stock. 
Such redemption will be in cash, except that the Company may assume the 
redemption obligation and pay the redemption in the form of registered shares 
of its Common Stock.

        PREFERRED UNITS.

        By the First Amendment, the Company, as general partner of the 
Operating Partnership, established a series of 4,800,000 preferred units of 
limited partnership interest designated as "Series 1997-A Preferred Limited 
Partner Units" and issued 2,000,000 Preferred Units to the contributors of 
the Golden State Properties Portfolio and 2,800,000 Preferred Units to the 
Company. The economic rights of holders of Preferred Units, with respect to 
distributions and upon liquidation, are identical to the rights of holders of 
Preferred Stock. Distributions by the Operating Partnership with respect to 
Preferred Units held by the Company will provide the funds to enable the 
Company to make its distributions to the holders of the Preferred Stock. 
Holders of Preferred Units other than the Company have the right to redeem 
their Preferred Units for cash equal to the greater of the $25 per share 
Stated Value of an equivalent number of shares of Preferred Stock or the 
value of the number of shares of Common Stock for which the shares of 
Preferred Stock are exchangeable. In lieu of delivering cash, however, the 
Company may, at its option, choose to acquire any Preferred Units so tendered 
by issuing shares of Preferred Stock in exchange (upon which exchange the 
number of Preferred Units held by the Company will increase so that the 
Company will always hold a number of Preferred Units equal to the number of 
outstanding shares of Preferred Stock).


                                     28

<PAGE>

        In general, the terms of the First Amendment that define the economic 
rights of holders of Preferred Units other than the Company are substantially 
identical to the provisions of the Articles Supplementary that define the 
economic rights of the holders of Preferred Stock. See "Description of 
Securities--Preferred Stock" above.

TAX CONSEQUENCES OF REDEMPTION

        The following discussion summarizes certain federal income tax 
considerations that may be relevant to a Unitholder who redeems its Units.

        TAX TREATMENT OF EXCHANGE OR REDEMPTION OF UNITS

        If the Company elects to purchase Preferred Units or Common Units 
tendered for redemption, the Operating Partnership Agreement provides that 
the transaction will be treated as a sale of Units by the Unitholder to the 
Company at the time of the redemption. The sale will be fully taxable to the 
redeeming Unitholder and the redeeming Unitholder will be treated as 
realizing for tax purposes an amount equal to the sum of the cash value or 
the value of the shares of Preferred Stock or Common Stock received in the 
exchange plus the amount of any Operating Partnership liabilities allocable 
to the redeemed Units at the time of the redemption. The determination of the 
amount and character of gain or loss is discussed more fully below. See 
"--Computation and Character of Gain or Loss" below.

        If the Company does not elect to purchase a Unitholder's Units 
tendered for redemption, and the Operating Partnership redeems the Units for 
cash that the Company contributes to the Operating Partnership to effect the 
redemption, the redemption likely would be treated for tax purposes as a sale 
of the Units to the Company in a fully taxable transaction, although the 
matter is not free from doubt. In that event, the tax consequences would be 
the same as if the Company elected to purchase the Units for cash, as 
described above.

        If the Company does not elect to purchase the Units tendered for 
redemption, and the Operating Partnership redeems all of a Unitholder's Units 
for cash that is not contributed by the Company to effect the redemption, the 
tax consequences would likely be the same as described in the previous 
paragraph, although the matter is not free from doubt. If the Operating 
Partnership redeems less than all of a Unitholder's Units, however, the 
Unitholder would not be permitted to recognize any loss occurring on the 
transaction and would recognize taxable gain only to the extent that the 
cash, plus the amount of any Operating Partnership liabilities allocable to 
the redeemed Units, exceeded the Unitholder's adjusted basis in all of the 
Unitholder's Units immediately before the redemption. This result may differ 
if the redemption were treated as a disguised sale. See "Potential 
Application of the Disguised Sale Regulations to a Redemption of Units" below.

        If the Company contributes cash to the Operating Partnership to 
effect a partial redemption of a Unitholder's Units, and the form of the 
transaction is respected for tax purposes so that the redemption transaction 
is treated as the redemption of the Unitholder's Units by the Operating 
Partnership rather than a sale of Units to the Company, the income tax 
consequences to a Unitholder would be the same as described in the preceding 
paragraph.

        COMPUTATION AND CHARACTER OF GAIN OR LOSS

        If a Unitholder disposes of a Unit in a manner that is treated as a 
sale of the Unit, or a Unitholder otherwise disposes of a Unit, the 
determination of gain or loss from the sale or other disposition will be 
based on the difference between the amount considered realized for tax 
purposes and the tax basis in such Unit. See "--Basis of Units" below. Upon 
the sale of a Unit, the "amount realized" will be measured by the sum of the 
cash and fair market value of the capital stock received plus the amount of 
any Operating Partnership liabilities allocable to the Units sold. To the 
extent that the amount of cash or property received plus the allocable share 
of any Operating Partnership liabilities exceeds the Unitholder's basis for 
the Units disposed of, the Unitholder will recognize gain. It is possible 
that the amount of gain recognized or even the tax liability resulting from 
such gain could exceed the amount of cash and/or the value of any capital 
stock received upon such disposition.

                                   29

<PAGE>

        Except as described below, any gain recognized upon a sale or other 
disposition of Units will be treated as gain attributable to the sale or 
disposition of a capital asset. To the extent, however, that the amount 
realized upon the sale of a Unit attributable to a Unitholder's share of 
"unrealized receivables" of the Operating Partnership (as defined in Section 
751 of the Code) exceeds the basis attributed to those assets, such excess 
will be treated as ordinary income. Unrealized receivables include, to the 
extent not previously included in Operating Partnership income, any rights to 
payment for services rendered or to be rendered. Unrealized receivables also 
include amounts that would be subject to recapture as ordinary income if the 
Operating Partnership had sold its assets at their fair market value at the 
time of the transfer of a Unit.

        BASIS OF UNITS

        In general, a Unitholder who acquired his Units by contribution of 
property and/or money to the Operating Partnership had an initial tax basis 
in his Units ("Initial Basis") equal to the sum of (i) the amount of money 
contributed (or deemed contributed as described below) and (ii) his adjusted 
tax basis in any other property contributed in exchange for such Units, and 
less the amount of any money distributed (or deemed distributed, as described 
below) in connection with the acquisition of the Units. The Initial Basis of 
Units acquired by other means would have been determined under the general 
rules of the Code, including the partnership provisions, governing the 
determination of tax basis. Other rules, including the "disguised sale" rules 
discussed below, also may affect Initial Basis, and Unitholders are urged to 
consult their own tax advisors regarding their Initial Basis. A Unitholder's 
Initial Basis in his Units generally is increased by (i) such Unitholder's 
share of Operating Partnership taxable and tax-exempt income and (ii) 
increases in such Unitholder's allocable share of liabilities of the 
Operating Partnership (including any increase in his share of liabilities 
occurring in connection with the acquisition of his Units). Generally, a 
Unitholder's basis in his Units is decreased (but not below zero) by (i) the 
Unitholder's share of Operating Partnership distributions, (ii) decreases in 
the Unitholder's allocable share of liabilities of the Operating Partnership 
(including any decrease in his share of liabilities of the Operating 
Partnership occurring in connection with the acquisition of his Units), (iii) 
the Unitholder's share of losses of the Operating Partnership and (iv) the 
Unitholder's share of nondeductible expenditures of the Operating Partnership 
that are not chargeable to his capital account.

        POTENTIAL APPLICATION OF THE DISGUISED SALE REGULATIONS TO A 
        REDEMPTION OF UNITS

        There is a risk that a redemption by the Operating Partnership of 
Units issued in exchange for a contribution of property to the Operating 
Partnership may cause the original transfer of property to the Operating 
Partnership in exchange for Units to be treated as a "disguised sale" of 
property. Section 707 of the Code and the Treasury Regulations thereunder 
(the "Disguised Sale Regulations") generally provide that, unless one of the 
prescribed exceptions is applicable, a partner's contribution of property to 
a partnership and a simultaneous or subsequent transfer of money or other 
consideration (which may include the assumption of or taking subject to a 
liability) from the partnership to the partner will be presumed to be a sale, 
in whole or in part, of such property by the partner to the partnership if 
the two transactions happen within a two-year time period. This presumption 
may be overcome if the facts and circumstances clearly establish that the 
transfers do not constitute a sale. Nonetheless, if the transactions occur 
within a two-year period, the partner may be obliged to report them to the 
IRS. The Disguised Sale Regulations also provide that if two years have 
passed between the transfer of money or other consideration and the 
contribution of property, the transactions will be presumed not to be a sale 
unless the facts and circumstances clearly establish that the transfers 
constitute a sale.

        Accordingly, if a Unit is redeemed by the Operating Partnership from 
a Unitholder who holds Units that were issued in exchange for a contribution 
of property to the Operating Partnership, the IRS could contend that the 
Disguised Sale Regulations apply because the Unitholder will thus receive 
cash subsequent to a previous contribution of property to the Operating 
Partnership. In that event, the IRS could contend that the contribution was 
taxable as a disguised sale under the Disguised Sale Regulations. Any gain 
recognized thereby may be eligible for installment reporting under Section 
453 of the Code, subject to certain limitations. In addition, in such event, 
the Disguised Sale Regulations might apply to cause a portion of the proceeds 
received by a redeeming Unitholder to be characterized as original issue 
discount on a deferred obligation which would be taxable as interest income 
in accordance with the provisions of Section 1272 of the Code. Each 
Unitholder is advised to consult its own tax advisors to determine whether 
redemption of its Units could be subject to the Disguised Sale Regulations.

                                  30

<PAGE>

COMPARISON OF OWNERSHIP OF UNITS AND COMMON STOCK

        The nature of any investment in the Company's Preferred Stock or 
Common Stock is generally economically equivalent to an investment in 
Preferred Units or Common Units (as the case may be) in the Operating 
Partnership. A holder of a share of capital stock receives the same 
distribution that a holder of the equivalent class of Units receives and 
stockholders and Unitholders generally share in the risks and rewards of 
ownership in the same enterprise. There are, however, differences between 
ownership of Units and ownership of capital stock, some of which may be 
material to investors.

        The information below highlights a number of significant differences 
between the Operating Partnership and the Company relating to, among other 
things, form of organization, permitted investments, policies and 
restrictions, management structure, compensation and fees, investor rights 
and federal income taxation and compares certain legal rights associated with 
being a partner in the Operating Partnership and being a stockholder of the 
Company, respectively. These comparisons are intended to assist Unitholders 
in understanding how their investment will be changed if their Units are 
acquired for capital stock. This discussion is summary in nature and does not 
constitute a complete discussion of these matters. Holders of Units should 
carefully review the balance of this Prospectus and the Registration 
Statement of which this Prospectus is a part for additional important 
information about the Company.

                   FORM OF ORGANIZATION AND ASSETS OWNED

    THE OPERATING PARTNERSHIP    

The Operating Partnership is 
organized as a Delaware limited 
partnership and is the entity through 
which the Company conducts 
substantially all of its business and 
owns (either directly or indirectly 
through subsidiaries) substantially 
all of its assets. The Board of 
Directors of the Company manages the 
affairs of the Operating Partnership 
by directing the affairs of the 
Company.

    THE COMPANY

The Company is a Maryland corporation 
which has elected to be taxed as a 
REIT under the Code and intends to 
maintain its qualifications as a 
REIT. The Company maintains interests 
as the sole general partner in the 
Operating Partnership, and as the 
holder of both Preferred and Common 
limited partner Units in the 
Operating Partnership, which gives 
the Company an indirect investment in 
those properties and other assets 
owned by the Operating Partnership.

                            LENGTH OF INVESTMENT

    THE OPERATING PARTNERSHIP 

The Operating Partnership has a 
stated termination date of December 
31, 2095, although it may be 
terminated earlier under certain 
circumstances.

    THE COMPANY

The Company has a perpetual term and 
intends to continue its operations 
for an indefinite time period.

                               31

<PAGE>

       NATURE OF INVESTMENT IN PREFERRED EQUITY AND DISTRIBUTION RIGHTS

     THE OPERATING PARTNERSHIP

The Preferred Units constitute equity 
interests entitling each Preferred 
Unitholder to his pro rata share of 
cash distributions made to the 
Preferred Unitholders of the 
Operating Partnership. In general, 
the Operating Partnership is 
structured so that Preferred 
Unitholders receive distributions on 
their Preferred Units equal to the 
dividend for the same period on a 
share of Preferred Stock of the 
Company.

As a partnership, the Operating 
Partnership is not subject to federal 
income taxation. In determining their 
federal income tax, partners of the 
Operating Partnership, including 
Preferred Unitholders, must take into 
account their allocable share of 
partnership income, gain, deduction 
and loss (regardless of whether 
distributed), and otherwise are 
subject to the rules governing the 
taxation of partnerships and 
partners. By contrast, Preferred 
Unitholders who receive Preferred 
Stock upon exercise of their 
redemption rights will be taxed on 
such investment in accordance with 
the rules governing REITs. See 
"Federal Income Tax Considerations."

     THE COMPANY

The Preferred Stock constitutes an 
equity interest in the Company. The 
Company is entitled to receive any 
operating cash flow and capital cash 
flow remaining after a distribution 
to the holders of Preferred Units and 
Common Units has been effected. Each 
stockholder will be entitled to his 
pro rata share of any dividends or 
distributions paid with respect to 
Preferred Stock. The dividends 
payable to the holders of Preferred 
Stock are cumulative and not fixed in 
amount, but are only paid if, when 
and as declared by the Board of 
Directors. In order to qualify as a 
REIT, the Company must distribute at 
least 95% of its taxable income 
(excluding capital gains), and any 
taxable income (including capital 
gains) not distributed will be 
subject to corporate income tax.

                                32

<PAGE>

         NATURE OF INVESTMENT IN COMMON EQUITY AND DISTRIBUTION RIGHTS

     THE OPERATING PARTNERSHIP 

The Common Units constitute equity 
interests entitling each Common 
Unitholder to his pro rata share of 
cash distributions made to the Common 
Unitholders of the Operating 
Partnership. In general, the 
Operating Partnership is structured 
so that Common Unitholders receive 
distributions on their Common Units 
equal in amount to the dividend for 
the same period on a share of Common 
Stock of the Company.

As a partnership, the Operating 
Partnership is not subject to federal 
income taxation. In determining their 
federal income tax, partners of the 
Operating Partnership, including 
Common Unitholders, must take into 
account their allocable share of 
partnership income, gain, deduction 
and loss (regardless of whether 
distributed), and otherwise are 
subject to the rules governing the 
taxation of partnerships and 
partners. By contrast, Common 
Unitholders who receive Common Stock 
upon exercise of their redemption 
rights will be taxed on such 
investment in accordance with the 
rules governing REITs. See "Federal 
Income Tax Considerations."

     THE COMPANY

The Common Stock constitutes an 
equity interest in the Company. The 
Company is entitled to receive any 
operating cash flow and capital cash 
flow remaining after a distribution 
to the holders of Preferred Units and 
Common Units has been effected. Each 
stockholder will be entitled to his 
pro rata share of any dividends or 
distributions paid with respect to 
Common Stock after the payment of 
dividends on outstanding Preferred 
Stock. The dividends payable on 
Common Stock are not fixed in amount 
and are only paid if, when and as 
declared by the Board of Directors. 
In order to qualify as a REIT, the 
Company must distribute at least 95% 
of its taxable income (excluding 
capital gains), and any taxable 
income (including capital gains) not 
distributed will be subject to 
corporate income tax.

                             33

<PAGE>

                 ISSUANCE OF ADDITIONAL EQUITY

     THE OPERATING PARTNERSHIP     

The Operating Partnership is 
authorized to issue additional Units 
and such other partnership interests 
(including partnership interests of 
different series or classes that may 
be senior to Common Units) as the 
Company may determine in its sole 
discretion as general partner; 
provided, however, that the Operating 
Partnership may not issue partnership 
interests senior or on parity with 
the Preferred Units without consent 
of holders of at least a majority of 
the Preferred Units. Subject to 
certain limitations with respect to 
the rights of Preferred Units, the 
relative rights, powers and duties of 
such additional Units or other 
interests will be determined by the 
Company in its sole discretion. The 
Operating Partnership may issue Units 
and other partnership interests to 
the Company, as long as such 
interests are issued in connection 
with a comparable issuance of its 
capital stock and proceeds raised in 
connection with the issuance of such 
capital stock are contributed to the 
Operating Partnership. The issuance 
of additional Units or other similar 
partnership interests may result in 
the dilution of the interests of the 
existing Unitholders.

     THE COMPANY

The Board of Directors of the Company 
may issue, in its discretion, 
additional equity securities 
consisting of Common Stock or any 
other series of capital stock (which 
may be classified and issued as a 
variety of equity securities, 
including one or more classes of 
Common or Preferred Stock, in the 
discretion of the Board of Directors) 
so long as the total number of shares 
issued does not exceed the authorized 
number of shares of capital stock set 
forth in the Company's charter. The 
Company may not issue additional 
equity securities which would 
adversely affect the rights of the 
Preferred Stock without consent of 
holders of at least a majority of the 
Preferred Stock. The issuance of 
additional shares of Common Stock, 
Preferred Stock or other similar 
equity securities may result in the 
dilution of the interests of the 
existing stockholders. The Operating 
Partnership Agreement contemplates 
that the Company will contribute the 
proceeds of any additional equity 
securities to the Operating 
Partnership. Each time the Company 
issues additional shares of Common 
Stock, the number of Common Units 
held by the Company will increase so 
that the Company will always hold the 
same number of Common Units as there 
are shares of Common Stock 
outstanding. Similarly, there will be 
an increase in the number of 
Preferred Units held by the Company 
to correspond with an increase in the 
number of outstanding shares of 
Preferred Stock.

                                    34

<PAGE>

                     LIQUIDITY OF COMMON EQUITY

     THE OPERATING PARTNERSHIP  

Subject to certain limitations, a 
Common Unitholder may transfer the 
economic interest to all or any 
portion of his Common Units without 
the consent of the general partner. 
However, the general partner's 
consent is required in circumstances 
where a transfer (i) would affect the 
treatment of the Company or Operating 
Partnership under state or federal 
law, particularly with respect to 
tax, partnership, and securities 
laws, or (ii) would impose legal 
obligations on the Company or 
Operating Partnership.

Subject to certain conditions, 
including the expiration of one or 
more specified "lock-out" periods, 
each Common Unitholder has the right 
to elect to have his Common Units 
redeemed by the Operating 
Partnership. Upon redemption, the 
Unitholder will receive, at the 
Company's election, either shares of 
Common Stock or the cash equivalent 
in exchange for Common Units.

     THE COMPANY

The Company's Common Stock is freely 
transferable subject to the 
requirements of the Securities Act. 
The Common Stock is listed on the New 
York Stock Exchange. The breadth and 
strength of this market will depend, 
among other things, upon the number 
of shares outstanding, the Company's 
financial results and prospects, the 
general interest in the Company's and 
other real estate investments and the 
Company's dividend yield compared to 
that of other debt and equity 
securities.

                         LIQUIDITY OF PREFERRED EQUITY

     THE OPERATING PARTNERSHIP

Subject to certain limitations, a 
Preferred Unitholder may transfer the 
economic interest to all or any 
portion of his Preferred Units 
without the consent of the general 
partner. However, the general 
partner's consent is required in 
circumstances where a transfer (i) 
would affect the treatment of the 
Company or Operating Partnership 
under state or federal law, 
particularly with respect to tax, 
partnership, and securities laws, or 
(ii) would impose legal obligations 
on the Company or Operating 
Partnership.

Subject to certain conditions, 
including the expiration of one or 
more specified "lock-out" periods, 
each Preferred Unitholder has the 
right to elect to have his Preferred 
Units redeemed by the Operating 
Partnership. Upon redemption, the 
Unitholder will receive, at the 
Company's election, either shares of 
Preferred Stock or cash equal to the 
greater of the Stated Value plus 
accrued and due dividends or the 
value of shares of Common Stock into 
which the Preferred Stock is 
convertible.

     THE COMPANY

The Company's Preferred Stock is 
freely transferable subject to the 
requirements of the Securities Act. 
The Preferred Stock is not listed on 
an exchange and is not publicly 
traded.

On and after December 31, 1998, March 
31, 1999, June 30, 1999, and 
September 30, 1999, each holder of 
shares of Preferred Stock may convert 
25% of its Preferred Stock into 
shares of Common Stock. Upon 
conversion, each holder of Preferred 
Stock will be entitled to receive for 
each of its shares of Preferred Stock 
a number of shares of Common Stock 
equal to Stated Value plus accrued 
and due dividends, divided by a 
conversion price of $15.375 (subject 
to antidilution adjustments).

                                 35

<PAGE>


                           PURPOSE AND PERMITTED INVESTMENTS

     THE OPERATING PARTNERSHIP

The Operating Partnership's purpose 
is to conduct any business that may 
be lawfully conducted by a Delaware 
limited partnership, except that the 
Operating Partnership Agreement 
requires the business of the 
Operating Partnership to be conducted 
in a manner that permits the Company 
to be classified as a REIT for 
Federal income tax purposes and 
avoids any Federal income or excise 
tax liability. Subject to the 
foregoing limitation, the Operating 
Partnership may invest or enter into 
partnerships, joint ventures or 
similar arrangements, own interests 
in any other entity, lend Operating 
Partnership funds, or reinvest the 
Operating Partnership's cash flow and 
net sale or refinancing proceeds.

     THE COMPANY

Under its charter, the Company may 
engage in any lawful activity 
permitted under Maryland law.

Neither the Company's charter nor its 
bylaws impose any restrictions upon 
the types of investments made by the 
Company.                              

                   BORROWING POLICIES

     THE OPERATING PARTNERSHIP

The Operating Partnership has no 
restrictions on borrowings, except 
that it may not enter into a 
financing relationship with the 
Company or an affiliate of the 
Company.

     THE COMPANY

The Company is not restricted under 
its organizational documents from 
incurring borrowings.

                      MANAGEMENT CONTROL

      THE OPERATING PARTNERSHIP

Generally, all management powers over 
the business and affairs of the 
Operating Partnership are vested in 
the Company as general partner and no 
other Unitholder of the Operating 
Partnership has any right to 
participate in or exercise control or 
management power over the business 
and affairs of the Operating 
Partnership. The Operating 
Partnership Agreement provides that 
the Company shall be reimbursed for 
all expenses incurred by it relating 
to the management and business of the 
Operating Partnership.

     THE COMPANY

The Board of Directors has exclusive 
control over the Company's business 
and affairs subject only to the 
restrictions in its charter and 
bylaws. The stockholders of the 
Company will elect the Board of 
Directors at each annual meeting of 
stockholders. The policies adopted by 
the Board of Directors may be altered 
or eliminated without advice of the 
stockholders. Accordingly, except for 
their vote in the elections of 
Directors, stockholders have no 
control over the ordinary business 
policies of the Company.

                                36

<PAGE>

                        MANAGEMENT LIABILITY AND INDEMNIFICATION

     THE OPERATING PARTNERSHIP

The Operating Partnership Agreement 
generally provides that the general 
partner and any person acting on its 
behalf will incur no liability to the 
Operating Partnership or any 
Unitholder for any act or omission 
within the scope of the general 
partner's authorities unless the 
general partner acted in bad faith 
and the act or omission was material 
to the matter giving rise to the 
liability.

The Operating Partnership Agreement 
also provides for the indemnification 
of the general partner and its 
affiliates and any individual acting 
on their behalf from any loss, 
damage, claim or liability, 
including, but not limited to, 
reasonable attorneys' fees and 
expenses, incurred by them by reason 
of any act performed by them unless 
(i) the act or omission was committed 
in bad faith or with deliberate 
dishonesty, (ii) the person 
committing the act or omission 
received improper benefit from the 
conduct, or (iii) in the context of a 
criminal proceeding, the person had 
reason to believe the conduct was 
unlawful in accordance with the 
standards set forth above or in 
enforcing the provisions of this 
indemnity.

     THE COMPANY

Maryland law requires the Company 
(unless the Company's charter 
provides otherwise, which it does 
not) to indemnify a director or 
officer who has been successful in 
the defense of any proceeding to 
which he or she is made a party by 
reason of service as an officer or 
director. Maryland law permits us to 
indemnify present and former 
directors and officers against 
judgments, penalties, fines, 
settlements and reasonable expenses 
incurred by them in connection with 
any proceeding to which they are made 
a party by reason of their service, 
among other things, as an officer or 
director, unless it is established 
that (i) the act or omission of the 
director or officer was material to 
the matter giving rise to the 
proceeding and (a) was committed in 
bad faith or (b) was the result of 
active and deliberate dishonesty, 
(ii) the director or officer actually 
received an improper personal benefit 
in money, property or services or, 
(iii) in the case of any criminal 
proceeding, the director or officer 
had reasonable cause to believe that 
the act or omission was unlawful. The 
Company's charter and bylaws 
eliminate, to the fullest extent 
permitted under Maryland law, the 
personal liability of a director or 
officer of the Company for monetary 
damages for breaches of that person's 
duty of care or other duties as a 
director or officer. Furthermore, 
each of the Company and the Operating 
Partnership have entered into 
individual indemnification agreements 
with all of our officers and 
directors providing the maximum 
indemnification permitted under 
Maryland law. The effect of these 
agreements and the relevant 
provisions of our charter and bylaws 
is generally to eliminate the rights 
of the Company and its stockholders 
(through stockholders' derivative 
suits on behalf of the Company) to 
recover monetary damages against a 
director or officer for breach of the 
fiduciary duty of care (including 
breaches resulting from negligent or 
grossly negligent behavior). This 
does not limit or eliminate the 
rights of the Company or any 
stockholder to seek non-monetary 
relief such as an injunction or 
recision in the event of a breach of 
a director's or officer's duty of 
care nor does it alter the liability 
of a director or officer under 
federal securities laws.

                                   37

<PAGE>


                           ANTITAKEOVER PROVISIONS

     THE OPERATING PARTNERSHIP

Except in limited circumstances, the 
general partner has exclusive 
management power over the business 
and affairs of the Operating 
Partnership. The general partner may 
not be removed by the Unitholders 
with or without cause.

      THE COMPANY

The Company's charter and bylaws and 
Maryland law contain a number of 
provisions that may have the effect 
of delaying or discouraging an 
unsolicited proposal to acquire the 
Company or remove incumbent 
management. See "Risk 
Factors--Certain Provisions in 
Organizational Documents May 
Discourage Acquisition Proposals."    
                                      
                            VOTING RIGHTS

     THE OPERATING PARTNERSHIP

Holders of Common Units have no right 
to elect or remove the Company as the 
general partner of the Operating 
Partnership. Under the Operating 
Partnership Agreement, the Company as 
general partner may take any action 
in a manner that it reasonably 
believes to be in the best interests 
of its stockholders or complies with 
the REIT requirements for the 
Company. The Company's ability to 
make amendments to the Operating 
Partnership Agreement is limited to 
the extent described below.

      THE COMPANY

The Board of Directors directs the 
Company's business and affairs. 
Stockholders elect the Board of 
Directors at annual meetings. All 
shares of Common Stock have one vote 
per share. The charter permits the 
Board of Directors to classify and 
issue preferred stock in one or more 
series having voting power which may 
differ from that of the Common Stock; 
and holders of Preferred Stock have 
the right to vote on a fully 
converted basis with the holders of 
Common Stock, as well as to vote as a 
separate class on certain specified 
matters.

Stockholders of the Company have the 
right to vote, among other things, on 
a merger or sale of all or 
substantially all of the assets of 
the Company, certain amendments to 
the charter and dissolution of the 
Company. Under Maryland law and the 
charter, the sale of all or 
substantially all of the assets of 
the Company or any merger or 
consolidation of the Company requires 
the approval of the Board of 
Directors and holders of a majority 
of the outstanding shares of stock 
entitled to vote on the matter. No 
approval of the stockholders is 
required for the sale of less than 
substantially all of the Company's 
assets. Under Maryland law and the 
Company's charter and bylaws the 
Board of Directors must obtain 
approval of holders of a majority of 
the votes entitled to be cast at a 
meeting of stockholders in order to 
dissolve the Company.

                                        38

<PAGE>


     AMENDMENT OF THE PARTNERSHIP AGREEMENT OR THE COMPANY'S CHARTER

     THE OPERATING PARTNERSHIP

Generally, the Operating Partnership 
Agreement may be amended by the 
general partner without the consent 
of the other holders of limited 
partnership Units. Certain amendments 
affecting the rights, obligations, 
authority and outside activities of 
the general partner, the transfer of 
partnership interests, transactions 
with affiliates of the partnership 
and dissolution of the partnership, 
among other things set forth in the 
Operating Partnership Agreement, 
require consent of the Unitholders 
holding a majority-in-interest of the 
outstanding limited partnership units 
(excluding limited partnership Units 
which may be voted by the general 
partner). Furthermore, the general 
partner may not amend the Operating 
Partnership Agreement in any manner 
affecting the terms and conditions 
of, or the rights or preferences of 
the Preferred Units without approval 
of (i) holders of at least a majority 
of outstanding shares of Preferred 
Stock, voting separately as a class, 
and (ii) holders of at least a 
majority of the outstanding Preferred 
Units.

      THE COMPANY

Amendments to the charter must be 
approved by the Board of Directors 
and generally by the vote of a 
majority of the votes entitled to be 
cast at a meeting of stockholders 
except as otherwise provided by law. 
The Company may not amend the charter 
in such a manner as would affect 
adversely the preferences, conversion 
and other rights, voting powers, 
restrictions, limitations as to 
dividends and other distributions, 
qualifications and terms and 
conditions of redemption of the 
Preferred Stock without approval of 
holders of at least a majority of 
outstanding shares of Preferred 
Stock, voting separately as a class.  
                                      
                       COMPENSATION, FEES AND DISTRIBUTIONS

     THE OPERATING PARTNERSHIP

The general partner is not entitled 
to receive any compensation for its 
services as general partner of the 
Operating Partnership. As a partner 
in the Operating Partnership, 
however, the general partner has the 
same right to allocations and 
distributions as other partners of 
the Operating Partnership. In 
addition, the Operating Partnership 
will reimburse the general partner 
for administrative expenses incurred 
relating to the ongoing operation of 
the Company and certain other 
expenses arising in connection with 
its role as general partner. All 
officers of the Company are employees 
of the Operating Partnership.

      THE COMPANY

The Directors receive compensation 
for their services in the form of 
capital stock of the Company. The 
Operating Partnership pays the 
compensation of the officers of the 
Company.                              

                              LIABILITY OF INVESTORS

     THE OPERATING PARTNERSHIP

Under the Operating Partnership 
Agreement and applicable Delaware 
law, the liability of the limited 
partners for the Operating 
Partnership's debts and obligations 
is generally limited to the amount of 
their investment in the Operating 
Partnership, together with any 
interest in any undistributed income.

      THE COMPANY

Under Maryland law, stockholders 
generally are not personally liable 
for the debts or obligations of the 
Company.

                                    39

<PAGE>

                             FEDERAL INCOME TAX CONSIDERATIONS

        As a REIT, the Company must comply with highly technical and complex 
requirements under the Code. The following discussion summarizes these 
requirements and their effect on the Company and its stockholders. The 
summary discussion is for general information only and is not an exhaustive 
list of all tax considerations that may be material. For example, this 
discussion does not address any state, local or foreign tax considerations. 
Also, this discussion does not address issues that arise as a result of your, 
or any other investor's, special circumstances or special status under the 
Code. The summary is qualified in its entirety by, and you should refer to, 
Sections 856 through 860 of the Code and the regulations thereunder, which 
set forth the particular provisions applicable to REITs.

        This discussion is not intended to be, nor should you construe it as, 
tax advice. You are urged to consult your own tax advisor to determine the 
impact of owning the Company's stock on your own personal situation, 
including tax consequences arising under the laws of any state, municipality 
or other taxing jurisdiction. In particular, foreign investors should consult 
their own tax advisors concerning the tax consequences of an investment in 
the Company, including the possibility of United States income tax 
withholding on Company distributions.

        GENERAL

        Under the Code, if certain requirements are met in a taxable year, 
including the requirement that the REIT distribute to its stockholders at 
least 95% of its real estate investment trust taxable income for the taxable 
year, a REIT generally will not be subject to federal income tax with respect 
to income that it distributes to its stockholders. For these purposes, 
taxable income will be computed without regard to the dividends paid 
deduction and the Company's net capital gain. However, the Company may be 
subject to federal income tax under certain circumstances, including taxes at 
regular corporate rates on any undistributed REIT taxable income or net 
capital gains, the alternative minimum tax on its items of tax preference, 
and taxes imposed on income and gain generated by certain extraordinary 
transactions. As discussed below, however, for taxable years beginning after 
December 31, 1997, stockholders may be credited for all or a portion of the 
taxes paid by the Company on its retained net capital gains. If the Company 
fails to qualify during any taxable year as a REIT, unless certain relief 
provisions are available, it will be subject to tax (including any applicable 
alternative minimum tax) on its taxable income at regular corporate rates, 
which could have a material adverse effect upon its stockholders.

        THE COMPANY BELIEVES BUT CANNOT GUARANTEE THAT IT QUALIFIES AS A REIT

        The Company has elected to qualify as a REIT under the Code. In the 
opinion of Goodwin, Procter & Hoar  LLP, the Company has been organized in 
conformity with the requirements for qualification as a REIT under the Code, 
and its manner of operation has met and will continue to meet the 
requirements for qualification and taxation as a REIT under the Code. This 
opinion is based on various assumptions and is conditioned upon 
representations made by the Company as to factual matters and the 
continuation of such factual matters. You should be aware, moreover, that 
opinions of counsel are not binding upon the IRS or any court. In addition, 
qualification and taxation as a REIT in any tax year depends upon the 
Company's ability to meet the various source of income, ownership of assets, 
distribution and diversity of ownership requirements of the Code for 
qualification as a REIT in its actual results each tax year, which results 
will not be reviewed by Goodwin, Procter & Hoar LLP. Accordingly, no 
assurance can be given that the actual results of the Company for any 
particular tax year will in fact satisfy the requirements for qualification. 
Likewise, although the Company believes that it has operated in a manner 
which satisfies the REIT qualification requirements under the Code since 
1987, no assurance can be given that the Company's qualification as a REIT 
will not be challenged by the IRS for taxable years still subject to audit.

                                40

<PAGE>

        UNDISTRIBUTED LONG-TERM CAPITAL GAINS

        The Company may elect to retain and pay income tax on its net 
long-term capital gains received during the taxable year. For taxable years 
beginning after December 31, 1997, if the Company so elects for a taxable 
year, the stockholders would include in income as long-term capital gains 
their proportionate share of the portion of the Company's undistributed 
long-term capital gains for the taxable year that the Company designates. A 
stockholder would be deemed to have paid his share of the tax paid by the 
Company on the undistributed capital gains, and the tax paid would be 
credited or refunded to the stockholder. The stockholder's basis in his stock 
would be increased by the amount of undistributed long-term capital gains 
included in the stockholder's long-term capital gains, less the stockholder's 
share of the capital gains tax paid by the Company. As discussed below, 
stockholders should note that the IRS has issued Notice 97-64 which provides 
interim guidance on the proper treatment of capital gains dividends and 
undistributed capital gains for individuals, estates and certain trusts.

        ORDINARY DIVIDENDS

        As long as the Company qualifies as a REIT, distributions made to the 
Company's taxable U.S. Stockholders (as defined below) out of current or 
accumulated earnings and profits (and not designated as a capital gain 
dividends) will be taken into account by U.S. Stockholders as ordinary income 
and will not be eligible for the dividends received deduction generally 
available to corporations. For purposes of determining whether distributions 
on the Company's stock are out of current or accumulated earnings and 
profits, the Company's earnings and profits will be allocated first to the 
outstanding Preferred Stock, and then allocated to the Company's Common Stock.

        As used herein, the term "U.S. Stockholder" means a holder of Common 
or Preferred Stock that for United States federal income tax purposes is:

        -      a citizen or resident of the United States, or
        -      a corporation, partnership or other entity created or organized
               in or under the laws of the United States or any political 
               subdivision thereof, or
        -      an estate, the income of which is subject to United States 
               federal income taxation regardless of its source, or
        -      a trust, if a court within the United States is able to exercise
               primary supervision over the administration of the trust and one
               or more United States persons have the authority to control all
               substantial decisions of the trust, AND
        -      is not an entity that has a special status under the Code (such 
               as a tax-exempt organization or dealer in securities).

        CAPITAL GAIN DIVIDENDS

        To the extent that the Company has net capital gain for a taxable 
year, dividends paid during the year (or that are deemed paid as discussed 
above, see "--Undistributed Long-Term Capital Gains") properly designated by 
it as long-term capital gains will be treated as such for the taxable year 
without regard to the period for which the stockholder has held his stock. 
However, corporate stockholders may be required to treat up to 20% of certain 
capital gain dividends as ordinary income. Capital gain dividends are not 
eligible for the dividends-received deduction for corporations.

                                41

<PAGE>

        OTHER DIVIDENDS

        Distributions, other than capital gain dividends, in excess of 
current and accumulated earnings and profits will not be taxable to a 
stockholder to the extent that they do not exceed the adjusted basis of the 
stockholder's stock, but rather will reduce the adjusted basis of the stock. 
To the extent that distributions in excess of current and accumulated 
earnings and profits exceed the adjusted basis of a stockholder's stock, the

distribution will be treated as long-term capital gain or loss if the shares 
of stock have been held for more than 12 months and otherwise as short-term 
capital gain or loss, assuming the stock is a capital asset in the hands of 
the stockholder. In addition, any dividend declared by the Company in 
October, November or December of any year and payable to a stockholder of 
record on a special date in any such month shall be treated as both paid by 
the Company and received by the stockholder on December 31 of such year, 
provided that the distribution is actually paid by the Company during January 
of the following calendar year.

        CONVERSION OF PREFERRED STOCK TO COMMON STOCK

        No gain or loss generally will be recognized upon conversion of 
Preferred Stock into Common Stock except with respect to any cash paid in 
lieu of fractional shares of Common Stock. The tax basis of the Common Stock 
received upon such conversion will be equal to the tax basis of the Preferred 
Stock converted, and, provided the Preferred Stock is held as a capital 
asset, the holding period of the Common Stock will include the holding period 
of the Preferred Stock converted. Additionally, if a conversion takes place 
when there is a dividend arrearage on the Preferred Stock and the fair market 
value of the Common Stock exceeds the issue price of the Preferred Stock, a 
portion of the Common Stock received might be treated as a dividend 
distribution taxable as ordinary income.

        ADJUSTMENT OF CONVERSION PRICE

        When the conversion price of convertible preferred stock is adjusted 
to reflect certain taxable distributions with respect to the stock into which 
it is convertible, regulations under Section 305 of the Code treat the 
adjustment as a constructive distribution by the issuer, taxable as a 
dividend to the extent of the issuer's current or accumulated earnings and 
profits. Accordingly, under certain circumstances, an adjustment to the 
conversion price of the Preferred Stock may give rise to a deemed taxable 
dividend to the holders of such stock, whether or not they exercise their 
conversion privilege. In addition, the failure to fully adjust the conversion 
price of the Preferred Stock under some circumstances may give rise to a 
deemed taxable dividend to the holders of Common Stock.

                                42

<PAGE>

                       NO PROCEEDS TO THE COMPANY

        Neither the Company nor the Operating Partnership will receive any 
cash proceeds from the issuance of any shares of Common Stock or Preferred 
Stock offered under this Prospectus. With each such issuance of shares of 
Common Stock or Preferred Stock as a result of a redemption of Units, 
however, the Company's economic interest in the Operating Partnership will 
increase.

        The Company also will not receive any cash proceeds from the sale of 
the Shares by the Selling Stockholders.

                            SELLING STOCKHOLDERS

        2,800,000 shares of Preferred Stock (the "Preferred Shares") may be 
offered from time to time by or for the account of the Selling Stockholders. 
The following table sets forth the name and number of shares of Preferred 
Stock beneficially owned by the Selling Stockholders as of December 1, 1998 
and the respective percentages of Preferred Stock beneficially owned by each 
Selling Stockholder outstanding as of that date and that would be owned if 
the Company issues all 2,000,000 shares of Preferred Stock upon redemption of 
all outstanding Preferred Units of the Operating Partnership prior to any 
sale (or conversion into Common Stock) of the Preferred Shares owned by the 
Selling Stockholders. The number of shares of Preferred Stock beneficially 
owned by each Selling Stockholder is based upon information furnished by the 
Selling Stockholders which the Company believes to be accurate.

<TABLE>
<CAPTION>

                                                                               Percent of Class
                                                                               -----------------
                                                                                             After Issuance
                                                   Preferred                               of 2,000,000 Shares
                                                    Shares                                 of Preferred Stock
                                                  Beneficially            Outstanding       Upon Redemption
Selling Stockholder                                  Owned                at 12/31/98     of Preferred Units
- -------------------                             --------------            -----------     --------------------
<S>                                             <C>                       <C>             <C>
Westbrook Burnham Holdings, L.L.C. ..........      2,495,538                  89.1%              52.0%
Westbrook Burnham Co-Holdings, L.L.C. .......        304,462                  10.9%               6.3%
                                                  -----------                ------             -------
                                                   2,800,000*                  100%              58.3%
</TABLE>

- ------------------
*       Blackacre SMC Master Holdings, L.L.C. is the record holder 
        of 10 of these Shares.

        At the current exchange rate of 1.626 shares of Common Stock for each 
share of Preferred Stock, the conversion of all of the Preferred Shares held 
by the Selling Stockholders would result in Westbrook Burnham Holdings L.L.C. 
owning 4,057,745 shares of Common Stock and Westbrook Burnham Co-Holdings 
L.L.C. owning 495,055 shares of Common Stock for an aggregate of 4,552,800 
shares of Common Stock.

        Any Prospectus Supplement which may be circulated relating to the 
sale or sales from time to time of a number of Preferred Shares (or, if the 
Preferred Shares have been converted into Common Stock, of shares of Common 
Stock) that is less than all of the Preferred Shares (or shares of Common 
Stock) owned by any Selling Stockholder will set forth the number and the 
percentage of the outstanding shares of Preferred Stock (or Common Stock) 
continuing to be held by the Selling Stockholder after completion of the 
sales described in the Prospectus Supplement.

                                  43
<PAGE>

                        PLAN OF DISTRIBUTION

        This Prospectus relates to the offer and sale from time to time of 
(i) up to 2,800,000 Preferred Shares by the holders thereof, (ii) up to an 
additional 2,000,000 shares of our Preferred Stock which we may issue upon 
redemption of Preferred Units of the Operating Partnership, (iii) up to 
7,804,878 shares of our Common Stock which we may issue upon conversion of 
the above referenced Preferred Stock at the initial conversion ratio of 
approximately 1.626 shares of Common Stock for each share of Preferred Stock, 
(iv) up to an additional 574,483 shares of our Common Stock which we may 
issue upon redemption of Common Units of the Operating Partnership, and (v) 
an indeterminate number of additional shares of our Common Stock which we may 
issue as a result of the anti-dilution provisions of the Preferred Stock. We 
are filing the registration statement of which this Prospectus is a part to 
fulfill our contractual obligations to the Selling Stockholders and to the 
holders of the Preferred Units and Common Units and to provide them with 
freely tradable securities.

        The Selling Stockholders from time to time may offer and sell the 
Preferred Shares or shares of Common Stock into which the Preferred Shares 
are convertible (collectively, the "Shares") held by them directly or through 
agents or broker-dealers on terms to be determined at the time of sale. To 
the extent required, the names of any agent or broker-dealer and applicable 
commissions or discounts and any other required information with respect to 
any particular offer will be set forth in an accompanying Prospectus 
Supplement. Each of the Selling Stockholders reserves the sole right to 
accept or reject, in whole or in part, any proposed purchase of the Shares to 
be made directly or through agents.

        We will not receive any proceeds from the sale of the Shares by the 
Selling Shareholders or the issuance of the other securities offered hereby. 
We have agreed to bear certain expenses of registration of the Shares and 
other securities offered under this Prospectus under federal and state 
securities laws.

        The Selling Stockholders and any agents or broker-dealers that 
participate with the Selling Stockholders in the distribution of Shares may 
be deemed to be "underwriters" within the meaning of the Securities Act, and 
any commissions received by them and any profit on the resale of the Shares 
may be deemed to be underwriting commissions or discounts under the 
Securities Act. See "Registration Rights" for indemnification arrangements 
between the Company and the Selling Stockholders. Alternatively, the Selling 
Stockholders may from time to time offer the Shares through dealers or 
agents, who may receive compensation in the form of commissions from the 
Selling Stockholders and/or the purchasers of Shares for whom they may act as 
agent. The Selling Stockholders and any dealers or agents that participate in 
the distribution of Shares may be deemed to be "underwriters" within the 
meaning of the Securities Act and any profit on the sale of Shares by them 
and any commissions received by any such dealers or agents might be deemed to 
be underwriting commissions under the Securities Act.

        The distribution of the Shares by or for the account of the Selling 
Stockholders also may be effected from time to time in one or more 
underwritten transactions at a fixed price or prices, which may be changed, 
or at market prices prevailing at the time of sale, at prices related to such 
prevailing market prices or at negotiated prices. Any such underwritten 
offering may be on a "best efforts" or a "firm commitment" basis. In 
connection with any such underwritten offering, underwriters or agents may 
receive compensation in the form of discounts, concessions or commissions 
from the Selling Stockholders or from purchasers of Shares for whom they may 
act as agents. Underwriters may sell Shares to or through dealers, and such 
dealers may receive compensation in the form of discounts, concessions or 
commissions from the underwriters and/or commissions from the purchasers for 
whom they may act as agents. The Company has agreed to indemnify the 
underwriters, if any, against certain liabilities, including liabilities 
under the Securities Act.

        At a time a particular offer of Shares is made by or for the account 
of the Selling Stockholders, a Prospectus Supplement, may, if required, be 
distributed that will set forth the name and names of any dealers or agents 
and any commissions and other terms constituting compensation from the 
Selling Stockholders and any other required information. The Shares may be 
sold from time to time at varying prices determined at the time of sale or at 
negotiated prices.

                                    44

<PAGE>

        In order to comply with the securities laws of certain states, if 
applicable, the Shares to be sold by or for the account of the Selling 
Stockholders may be sold only through registered or licensed brokers or 
dealers. In addition, in certain states, the Shares may not be sold unless 
they have been registered or qualified for sale in such state or an exemption 
from such registration or qualification requirement is available and is 
complied with.

        The Shares may also be sold by or for the account of the Selling 
Stockholders in one or more of the following transactions: (a) block 
transactions (which may involve crosses) in which a broker-dealer may sell 
all or a portion of such stock as agent but may position and resell all or a 
portion of the block as principal to facilitate the transaction; (b) 
purchases by any such broker-dealer as principal and resale by such 
broker-dealer for its own account pursuant to a Prospectus Supplement; (c) a 
special offering, an exchange distribution or a secondary distribution in 
accordance with applicable New York Stock Exchange or other stock exchange 
rules; (d) ordinary brokerage transactions and transactions in which any such 
broker-dealer solicits purchasers; (e) sales "at the market" to or through a 
market maker or into an existing trading market, on an exchange or otherwise, 
for such shares; and (f) sales in other ways not involving market makers or 
established trading markets, including direct sales to purchasers. In 
effecting sales, broker-dealers engaged by the Selling Stockholders may 
arrange for other broker-dealers to participate.

                                  LEGAL MATTERS

        Certain legal matters, including the legality of the shares of 
Preferred Stock and Common Stock offered hereby, will be passed upon for the 
Company by Goodwin, Procter & Hoar LLP, Boston, Massachusetts.

                                      EXPERTS

        The consolidated financial statements and the related financial 
statement schedule incorporated in this Prospectus and in the Registration 
Statement by reference from the Company's Annual Report on Form 10-K for the 
year ended December 31, 1997, have been audited by Deloitte & Touche, 
independent auditors, as stated in their reports, which are incorporated 
herein and in the Registration Statement by reference, and have been so 
incorporated in reliance upon the reports of such firm given upon their 
authority as experts in accounting and auditing.

                                      45

<PAGE>

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

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

        You should rely only on the 
information contained in this 
Prospectus, incorporated herein by 
reference or contained in a 
Prospectus Supplement. We have not 
authorized anyone else to provide you 
with different or additional 
information. Neither we nor the 
Selling Stockholders named herein are 
making an offer of these securities 
in any state where the offer is not 
permitted. You should not assume that 
the information in this Prospectus or 
information incorporated in this 
Prospectus by reference or contained 
or incorporated by reference in any 
Prospectus Supplement is accurate as 
of any date other than the date on 
the front of the documents containing 
such information.

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


               TABLE OF CONTENTS

                                                  Page

Available Information............................   2

Incorporation of Certain Documents by
   Reference.....................................   2

Prospectus Summary...............................   4

Risk Factors.....................................   6

The Company......................................  18

Description of Securities........................  20

Description of Units and Redemption of
   Units of Operating Partnership ...............  28


Federal Income Tax Considerations ...............  40

No Proceeds to the Company.......................  43

Selling Stockholders.............................  43

Plan of Distribution.............................  44

Legal Matters....................................  45

Experts..........................................  45

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


                     4,800,000 SHARES
                SERIES 1997-A CONVERTIBLE
                     PREFERRED STOCK
                          AND
                    7,804,878 SHARES
              COMMON STOCK ISSUABLE UPON 
                    CONVERSION THEREOF

                          AND

                  574,483 OTHER SHARES
                        COMMON STOCK



            BURNHAM PACIFIC PROPERTIES, INC.





                   ---------------------
                        Prospectus
                   ---------------------





                       January __, 1999


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

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


<PAGE>

                PART II.  INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

        Set forth below is an estimate of the approximate amount of the fees 
and expenses (other than underwriting commissions and discounts) anticipated 
to be paid by the Company in connection with the issuance and distribution of 
the Securities.

        SEC Registration fee                               $35,127
        Legal fees and expenses                             50,000
        Accounting fees and expenses                         5,000
        Printing fees and expenses                           5,000
        Transfer and Agency fees                             1,000
        Miscellaneous                                        3,873
                                                           -------
        TOTAL                                        $     100,000
                                                           =======

ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

        The Maryland General Corporation Law ("MGCL") permits a Maryland 
corporation to include in its charter a provision limiting the liability of 
its directors and officers to the corporation and its stockholders for money 
damages except for liability resulting from (i) actual receipt of an improper 
benefit or profit in money, property or services or (ii) active and 
deliberate dishonesty established by a final judgment as being material to 
the cause of action. The charter of Burnham Pacific Properties, Inc. (the 
"Company") contains such a provision which eliminates such liability to the 
maximum extent permitted by Maryland law.

        The charter of the Company authorizes it, to the maximum extent 
permitted by Maryland law, to obligate itself to indemnify and to pay or 
reimburse reasonable expenses in advance of final disposition of a proceeding 
to (i) any individual who is a present or former director, officer, employee 
or agent of the Company or of its predecessor, Burnham Pacific Properties, 
Inc., a California corporation (the "Predecessor Corporation") or (ii) any 
individual who, while a director of the Company or Predecessor Corporation 
and at the request of the Company or Predecessor Corporation, serves or has 
served as a director, officer, partner or trustee of another corporation, 
partnership, joint venture, trust, employee benefit plan or any other 
enterprise. The bylaws of the Company obligate it, to the maximum extent 
permitted by Maryland law, to indemnify (a) any individual who is a present 
or former director, officer, employee or agent of the Company or Predecessor 
Corporation or (b) any individual who, while a director of the Company or 
Predecessor Corporation and at the request of the Company or Predecessor 
Corporation, serves or has served another corporation, partnership, joint 
venture, trust, employee benefit plan or any other enterprise as a director, 
officer, partner or trustee.

        The MGCL requires a corporation (unless its charter provides 
otherwise, which the Company's charter does not) to indemnify a director or 
officer who has been successful, on the merits or otherwise, in the defense 
of any proceeding to which he is made a party by reason of his service in 
that capacity. The MGCL permits a corporation to indemnify its present and 
former directors and officers, among others, against judgments, penalties, 
fines, settlements and reasonable expenses actually incurred by them in 
connection with any proceeding to which they may be made a party by reason of 
their service in those or other capacities unless it is established that (i) 
the act or omission of the director or officer was material to the matter 
giving rise to the proceeding and (a) was committed in bad faith or (b) was 
the result of active and deliberate dishonesty, (ii) the director or officer 
actually received an improper personal benefit in money, property or services 
or (iii) in the case of any criminal proceeding, the director or officer had 
reasonable cause to believe that the act or omission was unlawful. However, a 
Maryland corporation may not indemnify for an adverse judgment in a suit by 
or in the right of the corporation. In addition, the MGCL allows a 
corporation to advance expenses to a director or officer, provided that, as a 
condition to advancing expenses, the corporation obtains (x) a written 
affirmation by the director or officer of his good faith belief that he has 
met the standard of conduct necessary for indemnification by the corporation 
as authorized by the bylaws and (y) a written statement by or on his behalf 
to repay the amount paid or reimbursed by the corporation if it shall 
ultimately be determined that the standard of conduct was not met.

                                  II-1

<PAGE>



ITEM 16.  EXHIBITS.

Exhibit No.                  Description

    4.1    Charter of the Company, as Amended and Restated May 6, 1997,
           incorporated by reference to pages B-1 through B-13 of the Company's
           Proxy Statement for its 1997 Annual Meeting, filed March 31, 1997.
    4.2    Articles Supplementary Designating 4,800,000 shares of Preferred
           Stock as 4,800,000 shares of Series 1997-A Convertible Preferred
           Stock, incorporated by reference to Exhibit 3.1.2 to the Company's
           Current Report on Form 8-K dated December 31, 1997.
    4.3    Bylaws of the Company, as amended November 19, 1997, incorporated by
           reference to Exhibit 3.2 of the Company's Current Report on Form 8-K,
           filed December 16, 1997.
  4.4.1    Form of Common Stock Certificate of the Company, incorporated by
           reference to Exhibit 4.0 of the Company's Registration Statement No.
           33-20489 and subsequently overprinted to state "THE CORPORATION IS
           NOW INCORPORATED IN THE STATE OF MARYLAND WITH $0.01 PAR VALUE PER
           SHARE."
 *4.4.2    Form of Series 1997-A Convertible Preferred Stock Certificate of the 
           Company.
    4.5    Agreement of Limited Partnership of Burnham Pacific Operating 
           Partnership, L.P. dated as of November 14, 1997, incorporated by 
           reference to Exhibit 10.1.1 of the Company's Current Report on 
           Form 8-K dated November 7, 1997.
    4.6    First Amendment to Agreement of Limited Partnership of Burnham
           Pacific Operating Partnership, L.P. dated as of December 31, 1997,
           incorporated by reference to Exhibit 10.1 of the Company's Report on
           Form 8-K dated December 31, 1997, and, with respect to Exhibit C
           thereto ("Rights of Preferred Units and Common Units"), to Exhibit
           10.1.3 of the Company's 1997 Annual Report on Form 10-K filed March
           20, 1998.
    4.7    Third Amendment to the Agreement of Limited Partnership of Burnham
           Pacific Operating Partnership, L.P. incorporated by reference to
           Exhibit 10.1 of the Company's Current Report on Form 8-K dated June
           1, 1998.
   *5.1    Opinion of Goodwin, Procter & Hoar LLP as to the legality of the 
           securities being registered.
   *8.1    Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.
   10.1    Operating Agreement of BPP Retail, LLC between State of California 
           Public Employees' Retirement System and Burnham Pacific Operating 
           Partnership, L.P., dated August 31, 1998 (being the joint venture 
           agreement with CalPERS), incorporated by reference to Exhibit 10.1 
           of the Company's Quarterly Report on Form 10-Q for the quarter 
           ended September 30, 1998.
   10.2    Agreement to Contribute among Burnham Pacific Properties, Inc.,
           Burnham Pacific Operating Partnership, L.P. and the Contributors and
           Existing Partners Listed on Exhibit A-1 thereto, incorporated by
           reference to Exhibit 10.2 to the Company's Current Report on Form 8-K
           dated November 7, 1997.
   10.3    Stock Purchase Agreement dated as of December 5, 1997 by and among
           Burnham Pacific Properties, Inc., Burnham Pacific Operating
           Partnership, L.P., Westbrook Burnham Holdings, L.L.C. and Westbrook
           Burnham Co-Holdings, L.L.C. incorporated by reference to Exhibit 4.1
           of the Company's Current Report on Form 8-K dated December 31, 1997.
  *10.4    Form of Indemnification Agreement between Burnham Pacific Properties,
           Inc. and Burnham Pacific Operating Partnership, L.P. as 
           indemnitors and their Directors and Officers as indemnitees.
  *23.1    Consent of Deloitte & Touche LLP.
   23.2    Consent of Goodwin, Procter & Hoar LLP (included in Exhibits 5.1 and
           8.1 hereto). 24.1 Powers of Attorney (included on the signature page
           hereof).
   99.1    Registration Rights Agreement dated as of December 31, 1997 by and 
           among the Company, Westbrook Burnham Holdings, L.L.C. and Westbrook 
           Burnham Co-Holdings, L.L.C., incorporated by reference to 
           Exhibit 4.2.1 of the Company's Current Report on Form 8-K dated 
           December 31, 1997.
   99.2    Registration Rights Agreement dated as of December 31, 1997 by and 
           among the Company, Westbrook Burnham Holdings, L.L.C. and each of 
           the Existing Partners Listed on Exhibit A-1 thereto, incorporated 
           by reference to Exhibit 4.2.2 of the Company's Current Report on 
           Form 8-K dated December 31, 1997.

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

*          Filed herewith.

                                               II-2

<PAGE>

ITEM 17.  UNDERTAKINGS.

        (a)    The undersigned registrant hereby undertakes:

                      (1) To file, during any period in which offers or sales
               are being made, a post-effective amendment to this registration
               statement:

                             (i) To include any Prospectus required by Section
                      10(a)(3) of the Securities Act of 1933, as amended (the
                      "Securities Act")

                             (ii) To reflect in the Prospectus any facts or
                      events arising after the effective date of the
                      registration statement (or the most recent post-effective
                      amendment thereof) which, individually or in the
                      aggregate, represent a fundamental change in the
                      information set forth in the registration statement.
                      Notwithstanding the foregoing, any increase or decrease in
                      volume of securities offered (if the total dollar value of
                      securities offered would not exceed that which was
                      registered) and any deviation from the low or high and of
                      the estimated maximum offering range may be reflected in
                      the form of Prospectus filed with the Commission pursuant
                      to Rule 424(b) if, in the aggregate, the changes in volume
                      and price represent no more than 20 percent change in the
                      maximum aggregate offering price set forth in the
                      "Calculation of Registration Fee" table in the effective
                      registration statement; and

                             (iii) To include any material information with
                      respect to the plan of distribution not previously
                      disclosed in the registration statement or any material
                      change to such information in the registration statement;

               PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do
               not apply if the information required to be included in a
               post-effective amendment by those paragraphs is contained in
               periodic reports filed by the undersigned registrant pursuant to
               Section 13 or Section 15(d) of the Securities Exchange Act of
               1934, as amended (the "Exchange Act"), that are incorporated by
               reference in the registration statement;

                      (2) That, for the purpose of determining any liability
               under the Securities Act, each such post-effective amendment
               shall be deemed to be a new registration statement relating to
               the securities offered therein, and the offering of such
               securities at that time shall be deemed to be the initial BONA
               FIDE offering thereof; and

                      (3) To remove from registration by means of a
               post-effective amendment any of the securities being registered
               which remain unsold at the termination of the offering.

        (b)    The registrant hereby undertakes that, for purposes of
               determining any liability under the Securities Act each filing of
               the registrant's annual report pursuant to Section 13(a) or 15(d)
               of the Exchange Act that is incorporated by reference in the
               Registration Statement shall be deemed to be a new registration
               statement relating to the securities offered therein, and the
               offering of such securities at that time shall be deemed to be
               the initial bona fide offering thereof.

        (c)    Insofar as indemnification for liabilities arising under the 
               Securities Act may be permitted to directors, officers and 
               controlling persons of the registrant pursuant to the provisions
               described under Item 15 above, or otherwise, the registrant has 
               been advised that in the opinion of the Securities and Exchange 
               Commission (the "Commission") such indemnification is against  
               public policy as expressed in the Securities Act and is, 
               therefore, unenforceable.  In the event that a claim for 
               indemnification against such liabilities (other than the payment
               by the registrant of expenses incurred or paid by a director, 
               officer, or controlling person of the registrant in the 
               successful defense of any action, suit or proceeding) is asserted
               by such director, officer or controlling person in connection 
               with the securities being registered, the  registrant will, 
               unless in the opinion of its counsel the matter has been settled 
               by controlling precedent, submit to a court of appropriate
               jurisdiction the question whether such indemnification by it is 
               against public policy as expressed in the Securities Act and will
               be governed by the final adjudication of such issue.

                                          II-3

<PAGE>

                              SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, as 
amended, the Registrant certifies that it has reasonable grounds to believe 
that it meets all of the requirements for filing on Form S-3 and has duly 
caused this Registration Statement to be signed on its behalf by the 
undersigned, thereunto duly authorized, in the City of San Diego, State of 
California on December 29, 1998.

                                   BURNHAM PACIFIC PROPERTIES, INC.


                                   By:   /s/ J. David Martin
                                      ------------------------------------
                                      J. David Martin, President

        Pursuant to the requirements of the Securities Act of 1933, as 
amended, this Registration Statement has been signed by the following persons 
in the capacities and on the dates indicated, each of whom also constitutes 
and appoints J. David Martin and Daniel B. Platt, and each of them singly, 
his true and lawful attorney-in-fact and agent, for him, with full power of 
substitution and resubstitution, for him and in his name, place and stead, in 
any and all capacities, to sign any and all amendments to this Registration 
Statement, and a further registration statement filed conforming to Rule 
462(b) under the Securities Act of 1933, as amended, relating to securities 
of the same class(es) registered under this Registration Statement and to 
file the same and all exhibits thereto and any other documents in connection 
therewith with the Securities and Exchange Commission, granting unto each 
attorney-in-fact and agent full power and authority to do and perform each 
and every act and thing requisite and necessary to be done, as fully to all 
intents and purposes as he might or could do in person, hereby ratifying and 
confirming all that each attorney-in-fact and agent or his substitute or 
substitutes may lawfully do or cause to be done by virtue hereof.

<TABLE>
<CAPTION>

         Name                                               Title                                      Date
         ----                                               -----                                      ----
<S>                                              <C>                                                   <C>
/s/ J. David Martin                              President, Chief Executive                              December 29, 1998
- -------------------                              Officer (Principal Executive Officer)
   J. David Martin                               and Director
                                                 
/s/ Daniel B. Platt                              Chief Financial Officer (Principal                      December 29, 1998
- -------------------                              Financial Officer)
   Daniel B. Platt                               

/s/ Marc A. Artino                               Vice President Finance and Treasurer                    December 29, 1998
- -------------------                              (Principal Accounting Officer)
   Marc A. Artino                                

/s/ Malin Burnham                                Director                                                 December 29, 1998
- -------------------
   Malin Burnham

/s/ James D. Harper, Jr.                         Director                                                 December 29, 1998
- -------------------
   James D. Harper, Jr.

/s/ James D. Klingbeil                           Director                                                 December 29, 1998
- ----------------------
   James D. Klingbeil

/s/ Nina B. Matis                                Director                                                 December 29, 1998
- -----------------
   Nina B. Matis

/s/ Donne P. Moen                                Director                                                 December 29, 1998
- -----------------
   Donne P. Moen

/s/ Thomas A. Page                               Director                                                 December 29, 1998
- ------------------
   Thomas A. Page

/s/ Philip S. Schlein                            Director                                                 December 29, 1998
- ---------------------
   Philip S. Schlein


                                                 Director                                                December __, 1998
- -------------------
Robin Wolaner

</TABLE>

                                                       II-4

<PAGE>

                                 EXHIBIT INDEX

Exhibit No.                  Description

    4.1    Charter of the Company, as Amended and Restated May 6, 1997,
           incorporated by reference to pages B-1 through B-13 of the Company's
           Proxy Statement for its 1997 Annual Meeting, filed March 31, 1997.
    4.2    Articles Supplementary Designating 4,800,000 shares of Preferred
           Stock as 4,800,000 shares of Series 1997-A Convertible Preferred
           Stock, incorporated by reference to Exhibit 3.1.2 to the Company's
           Current Report on Form 8-K dated December 31, 1997.
    4.3    Bylaws of the Company, as amended November 19, 1997, incorporated by
           reference to Exhibit 3.2 of the Company's Current Report on Form 8-K,
           filed December 16, 1997.
  4.4.1    Form of Common Stock Certificate of the Company, incorporated by
           reference to Exhibit 4.0 of the Company's Registration Statement No.
           33-20489 and subsequently overprinted to state "THE CORPORATION IS
           NOW INCORPORATED IN THE STATE OF MARYLAND WITH $0.01 PAR VALUE PER
           SHARE."
 *4.4.2    Form of Series 1997-A Convertible Preferred Stock Certificate of 
           the Company.
    4.5    Agreement of Limited Partnership of Burnham Pacific Operating 
           Partnership, L.P. dated as of November 14, 1997, incorporated by 
           reference to Exhibit 10.1.1 of the Company's Current Report on 
           Form 8-K dated November 7, 1997.
    4.6    First Amendment to Agreement of Limited Partnership of Burnham
           Pacific Operating Partnership, L.P. dated as of December 31, 1997,
           incorporated by reference to Exhibit 10.1 of the Company's Report on
           Form 8-K dated December 31, 1997, and, with respect to Exhibit C
           thereto ("Rights of Preferred Units and Common Units"), to Exhibit
           10.1.3 of the Company's 1997 Annual Report on Form 10-K filed March
           20, 1998.
    4.7    Third Amendment to the Agreement of Limited Partnership of Burnham
           Pacific Operating Partnership, L.P. incorporated by reference to
           Exhibit 10.1 of the Company's Current Report on Form 8-K dated June
           1, 1998.
   *5.1    Opinion of Goodwin, Procter & Hoar  LLP as to the legality of the 
           securities being registered.
   *8.1    Opinion of Goodwin, Procter & Hoar  LLP as to certain tax matters.
   10.1    Operating Agreement of BPP Retail, LLC between State of California 
           Public Employees' Retirement System and Burnham Pacific Operating 
           Partnership, L.P., dated August 31, 1998 (being the joint venture 
           agreement with CalPERS), incorporated by reference to Exhibit 10.1
           of the Company's Quarterly Report on Form 10-Q for the quarter 
           ended September 30, 1998.
   10.2    Agreement to Contribute among Burnham Pacific Properties, Inc.,
           Burnham Pacific Operating Partnership, L.P. and the Contributors and
           Existing Partners Listed on Exhibit A-1 thereto, incorporated by
           reference to Exhibit 10.2 to the Company's Current Report on Form 8-K
           dated November 7, 1997.
   10.3    Stock Purchase Agreement dated as of December 5, 1997 by and among
           Burnham Pacific Properties, Inc., Burnham Pacific Operating
           Partnership, L.P., Westbrook Burnham Holdings, L.L.C. and Westbrook
           Burnham Co-Holdings, L.L.C. incorporated by reference to Exhibit 4.1
           of the Company's Current Report on Form 8-K dated December 31, 1997.
  *10.4    Form of Indemnification Agreement between Burnham Pacific Properties,
           Inc. and Burnham Pacific Operating Partnership, L.P. as 
           indemnitors and their Officers and Directors as indemnitees.
  *23.1    Consent of Deloitte & Touche LLP.
   23.2    Consent of Goodwin, Procter & Hoar LLP (included in Exhibits 5.1 
           and 8.1 hereto). 24.1 Powers of Attorney (included on the signature
           page hereof).
   99.1    Registration Rights Agreement dated as of December 31, 1997 by and 
           among the Company, Westbrook Burnham Holdings, L.L.C. and Westbrook 
           Burnham Co-Holdings, L.L.C., incorporated by reference to Exhibit 
           4.2.1 of the Company's Current Report on Form 8-K dated December 31,
           1997.
   99.2    Registration Rights Agreement dated as of December 31, 1997 by and 
           among the Company, Westbrook Burnham Holdings, L.L.C. and each of 
           the Existing Partners Listed on Exhibit A-1 thereto, incorporated by
           reference to Exhibit 4.2.2 of the Company's Current Report on 
           Form 8-K dated December 31, 1997.
- ----------------------

*          Filed herewith.



<PAGE>

                                                                   Exhibit 4.4.2

                     SEE PAGES 2 AND 3 FOR IMPORTANT NOTICE
                    REGARDING RESTRICTIONS ON TRANSFERABILITY
                              AND OTHER INFORMATION

Number                                                                 Shares of
       ---                                              ---------------
                                                     Convertible Preferred Stock
                                                                   Series 1997-A


                        BURNHAM PACIFIC PROPERTIES, INC.
                             a Maryland corporation


         THIS CERTIFIES that _______________________________ is the record
holder of _________________________shares of Series 1997-A Convertible Preferred
Stock, par value $0.01 per share (the "Preferred Stock"), of Burnham Pacific
Properties, Inc., a Maryland corporation (the "Corporation"), transferable only
on the share register of the Corporation, in person or by duly authorized
attorney, upon surrender of this certificate properly endorsed or assigned.

         The shares represented by this certificate are convertible into shares
of Common Stock, par value $0.01 per share, of the Corporation and redeemable,
both as set forth in the Articles Supplementary of the Corporation relating to
the Preferred Stock (the "Articles Supplementary").

         IN WITNESS WHEREOF, the Corporation has caused this certificate to be
executed on its behalf by its duly authorized officer this ___ day of
___________, 19___.



                                      SEAL
- ----------------------------------        --------------------------------------
Secretary                                    Vice President


                                        1

<PAGE>



NOTICE:  THE SIGNATURE OF THE TRANSFEROR MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATSOEVER.

                          NOTICE OF ELECTION TO CONVERT

         THE UNDERSIGNED HEREBY IRREVOCABLY ELECTS TO CONVERT _____________
SHARES OF PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE INTO SUCH NUMBER OF
SHARES OF COMMON STOCK OF THE CORPORATION AS DETERMINED IN ACCORDANCE WITH AND
SUBJECT TO THE TERMS OF SECTION 5 OF THE ARTICLES SUPPLEMENTARY RELATING TO THE
PREFERRED STOCK.

         [NOTICE TO HOLDER:  INCLUDE ANY OTHER INFORMATION REQUIRED
BY THE ARTICLES OF AMENDMENT AND RESTATEMENT OF THE
CORPORATION, AS AMENDED, AND THE ARTICLES SUPPLEMENTARY.]


DATED                              , (19)(20)
       ----------------------------          -----------------------------------
                                             SIGNATURE


                                IMPORTANT NOTICE

         The securities represented by this certificate has not been registered
under the Securities Act of 1933, as amended (the "Act"), and have been issued
pursuant to exemptions under the Act and under applicable state securities laws.
Such securities may not be sold, offered for sale, pledged or hypothecated
except (i) pursuant to an effective registration statement with respect to such
securities under the Act, (ii) to a "Qualified Institutional Buyer" within the
meaning of Rule 144A under the Act, (iii) pursuant to and in compliance with
Rule 144 under the Act, or (iv) pursuant to an exemption from or in a
transaction not subject to the registration requirements of the Act and any
applicable state securities laws provided that the Corporation shall have been
provided an opinion of counsel satisfactory to the Corporation that such
registration is not required under the Act and such securities laws.

         The Corporation will furnish to any stockholder, on request and without
charge, a full statement of the information required by Section 2-211(b) of the
Corporation and Associations Articles of the Annotated Code of Maryland with
respect to the designations, preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of the stock of each class which the Corporation has
authority to issue and (i) the differences in the relative rights and
preferences between the shares of each series to the extent they have been set,
and (ii) the authority of the Board of Directors to set the relative rights and
preferences or subsequent series. Any such

                                       2

<PAGE>


summary does not purport to be complete and is subject to and qualified in its
entirety by reference to the Charter of the Corporation, as amended and
supplemented to the date of this certificate (including the Articles
Supplementary), and as the same may be further amended or supplemented from time
to time, a copy of which will be sent without charge to each stockholder who so
requests. Such request must be made to the Secretary of Corporation as its
principal office.

The shares of Preferred Stock represented by this certificate are subject to
restrictions on transfer for the purpose of maintenance of the Corporation's
status as a real estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"). No Person, other than Excepted Holder, shall (i)
Beneficially Own or Constructively Own shares of Capital Stock in excess of the
Ownership Limit, or (ii) Beneficially Own or Constructively Own shares of Common
Stock in excess of the Common Stock Ownership Limit. No Excepted Holder shall
Beneficially Own or Constructively Own shares of Capital Stock in excess of the
Excepted holder Limit for such Excepted Holder. No Person shall (i) Beneficially
Own or Constructively Own shares of Capital Stock to the extent that such
Beneficial or Constructive Ownership of Capital Stock would result in the
Corporation being "closely held" within the meaning of Section 856(n) of the
Code (without regard to whether the ownership interest is held during the last
half of a taxable year), or otherwise [failing] to qualify as a REIT (including,
but not limited to, Beneficial or Constructive Ownership that would result in
the Corporation owning (actually or constructively) an interest in a tenant that
is described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code), or (ii)
Beneficially Own shares of Capital Stock that would result in Beneficial
Ownership of Capital Stock by fewer than 100 Persons (as determined under
Section 856(a)(5) of the Code). All capitalized terms in this legend have the
meanings defined in the Corporation's Articles of Amendment and Restatement, as
amended and supplemented to the date of this certificate and as the same may be
further amended or supplemented from time to time, a copy of which, including
the restrictions on transfer, will be sent without charge to each stockholder
who so requests. Such request must be made to the Secretary of the Corporation
at its principal office. If the restrictions on transfer are violated, the
shares of Preferred Stock represented hereby will be automatically exchanged for
Excess Shares which will be held in trust by the Trustee of a Trust for the
exclusive benefit of the Charitable Beneficiary designated by the Corporation.
The foregoing summary of the restrictions on transfer of shares of Preferred
Stock is qualified in its entirety by references to the Corporation's Articles
of Amendment and Restatement, as amended to the date of this certificate and as
the same may be further amended from time to time.




                                        3

<PAGE>

                                                                     Exhibit 5.1

                           GOODWIN, PROCTER & HOAR LLP
                               COUNSELLORS AT LAW
                                 EXCHANGE PLACE
                        BOSTON, MASSACHUSETTS 02109-2881

                                                        TELEPHONE (617) 570-1000
                                                       TELECOPIER (617) 523-1231



                                                 December 29, 1998



Burnham Pacific Properties, Inc.
610 West Ash Street, 16th Floor
San Diego, California 92101

Ladies and Gentlemen:

         This opinion is furnished in connection with the registration on Form
S-3 (the "Registration Statement") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), of (i) up to 2,800,000 shares of Series 1997-A
Convertible Preferred Stock, $.01 par value per share ("Preferred Stock"), of
Burnham Pacific Properties, Inc. (the "Company") by holders thereof, (ii) up to
an additional 2,000,000 shares of the Company's Preferred Stock that may be
issued if, and to the extent that, certain holders of preferred units of limited
partnership interest ("Preferred Units") of Burnham Pacific Operating
Partnership, L.P. (the "Operating Partnership") tender such Preferred Units to
the Operating Partnership for redemption and the Company exercises its
contractual right to acquire such tendered Preferred Units for Preferred Stock,
(iii) up to 7,804,878 shares of the Company's common stock, $.01 par value per
share (the "Common Stock"), which may be issued upon conversion of the above
referenced 4,800,000 shares of Preferred Stock at the initial conversion ratio
of approximately 1.626 shares of Common Stock for each share of Preferred Stock,
(iv) up to an additional 574,482 shares of Common Stock which may be issued if,
and to the extent that, certain holders of common units of limited partnership
interest ("Common Units") of the Operating Partnership tender such Common Units
to the Operating Partnership for redemption and the Company exercises its
contractual right to acquire such tendered Common Units for Common Stock, and
(v) an indeterminate number of additional shares of Common Stock which may be
issued as a result of the anti-dilution provisions of the Preferred Stock.

         In connection with rendering this opinion, we have examined the
Charter, Articles Supplementary Designating 4,800,000 Shares of Series 1997-A
Convertible Preferred Stock, and Bylaws of the Company, each as amended to date;
such records of the corporate proceedings of the Company as we deemed material;
the Agreement of Limited Partnership of


<PAGE>

Burnham Pacific Properties, Inc.
December 29, 1998
Page 2

Burnham Pacific Operating Partnership, L.P., as amended to date; and such other
certificates, receipts, records and documents as we considered necessary for the
purposes of this opinion. In our examination, we have assumed the genuineness of
all signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as certified, photostatic or facsimile copies, the
authenticity of the originals of such copies and the authenticity of telephonic
confirmations of public officials and others. As to facts material to our
opinion, we have relied upon certificates or telephonic confirmations of public
officials and certificates, documents, statements and other information of the
Company or representatives or officers thereof.

         We are attorneys admitted to practice in The Commonwealth of
Massachusetts. We express no opinion concerning the laws of any jurisdictions
other than the laws of the United States of America and the General Corporation
Law of the State of Maryland as in effect on the date hereof, and also express
no opinion with respect to the blue sky or securitites laws of any state,
including Maryland.

         Based upon the foregoing, we are of the opinion that (i) the 2,800,000
shares of Preferred Stock being registered for resale by the Registration
Statement are duly authorized, legally issued, fully paid and nonassessable by
the Company under the General Corporation Law of the State of Maryland, and (ii)
when and to the extent that (A) shares of Preferred Stock or Common Stock have
been issued in exchange for Preferred Units or Common Units, respectively,
tendered to the Operating Partnership for redemption as contemplated by the
limited partnership agreement of the Operating Partnership, and (B) shares of
Common Stock are issued upon conversion of the above referenced shares of
Preferred Stock or as a result of the anti-dilution provisions of such Preferred
Stock, such issued shares will be validly issued, fully paid and nonassessable
under the General Corporation Law of the State of Maryland.

         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us with respect to this opinion
under the heading "Legal Matters" in the Prospectus which is a part of such
Registration Statement.


                                             Very truly yours,

                                             /s/ Goodwin, Procter & Hoar LLP

                                             GOODWIN, PROCTER & HOAR LLP










<PAGE>

                                                                     Exhibit 8.1

                           GOODWIN, PROCTER & HOAR LLP
                               COUNSELLORS AT LAW
                                 EXCHANGE PLACE
                        BOSTON, MASSACHUSETTS 02109-2881

                                                        TELEPHONE (617) 570-1000
                                                       TELECOPIER (617) 523-1231



                                                 December 29, 1998


Burnham Pacific Properties, Inc.
610 West Ash Street
Suite 1600
San Diego, California 92101

         Re:      Certain Federal Income Tax Matters

Ladies and Gentlemen:

         This opinion is furnished to you in our capacity as counsel to Burnham
Pacific Properties, Inc. (the "Company") in connection with the Company's
Registration Statement on Form S-3 (the "Registration Statement") filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
relating to up to 4,800,000 Shares of the Company's Series 1997-A Convertible
Preferred Stock, 7,804,878 Shares of the Company's Common Stock issuable upon
conversion thereof and 574,482 other Shares of Common Stock. This opinion
relates to the Company's qualification for federal income tax purposes as a real
estate investment trust ("REIT") under the Internal Revenue Code of 1986, as
amended (the "Code") and the accuracy of certain statements in the Registration
Statement.

         In rendering the following opinions, we have made such legal and
factual examinations and inquiries as we have deemed necessary or appropriate
for purposes of rendering the opinions set forth herein, including an
examination of the Articles of Incorporation of the Company and of all documents
constituting amendments thereto (as so amended, the "Charter"); the Bylaws of
the Company as amended to date (the "Bylaws"); the Articles of Incorporation and
amendments thereto of the Company's predecessor corporation (the "Predecessor"),
a California corporation that merged with and into the Company as of May 6, 1997
(which merger is referred to herein as the "Reincorporation"); the Agreement and
Plan of Merger dated as of May 6, 1997 between the Predecessor and the Company
regarding the Reincorporation; the Agreement of Limited Partnership of Burnham
Pacific Operating


<PAGE>

Burnham Pacific Properties, Inc.
December 29, 1998
Page 2


Partnership, L.P. (the "Operating Partnership") as amended to date; the
Registration Statement; and such other records, certificates and documents as we
have deemed necessary or appropriate for purposes of rendering the opinion set
forth herein. We also have relied upon the representations of the Company
regarding the manner in which the Company has been and will continue to be owned
and operated. We have neither independently investigated nor verified such
representations, and we assume that such representations are true, correct and
complete and that all representations made "to the best of the knowledge and
belief" of any person(s) or party(ies) or with similar qualification are and
will be true, correct and complete as if made without such qualification. We
assume that the Company has been and will be operated in accordance with
applicable laws and the terms and conditions of applicable documents. In
addition, we have relied on certain additional facts and assumptions described
below.

         In rendering the opinions set forth herein, we have assumed (i) the
genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the conformity
to the original documents of all documents submitted to us as copies, (iv) the
conformity of final documents to all documents submitted to us as drafts, (v)
the authority and capacity of the individual or individuals who executed any
such documents on behalf of any person other than the Company, (vi) the accuracy
and completeness of all records made available to us, and (vii) the factual
accuracy of all representations, warranties and other statements made by all
persons. In addition, we have assumed that (i) the Reincorporation was
consummated in accordance with the Merger Agreement, (ii) each of the
Predecessor and the Company complied and will comply with all reporting
obligations with respect to the Reincorporation required under the Code and the
Treasury Regulations thereunder, and (iii) the Merger Agreement was valid and
binding in accordance with its terms. We also have assumed, without
investigation, that all documents, certificates, warranties and covenants on
which we have relied in rendering the opinion set forth below and that were
given or dated earlier than the date of this letter continue to remain accurate,
insofar as relevant to the opinion set forth herein, from such earlier date
through and including the date of this letter.

         The discussion and conclusions set forth below are based upon the Code,
the Income Tax Regulations and Procedure and Administration Regulations
promulgated thereunder and existing administrative and judicial interpretations
thereof, all of which are subject to change. No assurance can therefore be given
that the federal income tax consequences described below will not be altered in
the future. As used below, the "Company" includes the Predecessor for all
taxable periods of the Predecessor beginning with its taxable year ended
December 31, 1987 through and including the Reincorporation.



<PAGE>

Burnham Pacific Properties, Inc.
December 29, 1998
Page 3


         Based upon and subject to the foregoing, we are of the opinion that:

         1.       Commencing with the Company's taxable year ending December 31,
                  1987, the Company has been organized in conformity with the
                  requirements for qualification as a "real estate investment
                  trust" under the Code, and the Company's manner of operation
                  has met and will continue to meet the requirements for
                  qualification and taxation as a "real estate investment trust"
                  under the Code.

                  The Company's qualification and taxation as a REIT in any tax
                  year depends upon the Company's ability to meet in its actual
                  results for the tax year the various source of income,
                  ownership of assets, distribution and diversity of ownership
                  requirements of the Code for qualification as a REIT, which
                  results will not be reviewed by us. Accordingly, no assurance
                  can be given that the actual results of the Company for any
                  particular tax year will in fact satisfy the requirements for
                  qualification as a REIT.

         2.       The statements in the Registration Statement set forth under
                  the captions "DESCRIPTION OF UNITS AND REDEMPTION OF UNITS OF
                  OPERATING PARTNERSHIP--Tax Consequences of Redemption" and
                  "FEDERAL INCOME TAX CONSIDERATIONS," to the extent such
                  information constitutes matters of law, summaries of legal
                  matters or legal conclusions, have been reviewed by us and are
                  accurate in all material respects.

         We express no opinion with respect to the matters described in the
Registration Statement other than those expressly set forth herein. You should
recognize that our opinions are not binding on the Internal Revenue Service and
that the Internal Revenue Service may disagree with the opinions contained
herein. Although we believe that our opinions will be sustained if challenged,
there can be no assurance that this will be the case.



<PAGE>



Burnham Pacific Properties, Inc.
December 29, 1998
Page 4

         We consent to being named as counsel to the Company in the Registration
Statement, to the references in the Registration Statement to our firm and to
the inclusion of a copy of this opinion letter as an exhibit to the Registration
Statement.

                                               Very truly yours,

                                               /s/ Goodwin, Procter & Hoar LLP

                                               GOODWIN, PROCTER & HOAR  LLP










<PAGE>

                                                                    Exhibit 10.4

                            INDEMNIFICATION AGREEMENT


         This INDEMNIFICATION AGREEMENT is made this _____ day of ___________,
199_ ("Agreement"), by and among BURNHAM PACIFIC PROPERTIES, INC., a Maryland
corporation (the "Company"), BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership (the "Operating Partnership") and
________________________ ("Indemnitee").

         WHEREAS, at the request of the Company, Indemnitee currently serves as
director and/or officer of the Company and may, therefore, be subjected to
claims, suits or proceedings arising as a result of Indemnitee's service in such
capacity; and

         WHEREAS, as an inducement to Indemnitee to continue to serve as such
director and/or an officer, the Company has agreed to indemnify Indemnitee
against expenses and costs incurred by Indemnitee in connection with any such
claims, suits or proceedings, to the fullest extent that is lawful; and

         WHEREAS, as recited in Section 15 hereof, it is in the interests of the
parties that the Operating Partnership have the same indemnification obligations
to the Indemnitee as the indemnification obligations of the Company to the
Indemnitee; and

         WHEREAS, the parties by this Agreement desire to set forth their
agreement regarding indemnification;

         NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the parties hereto covenant and agree as follows:

         Section 1. Definitions. For purposes of this Agreement:

                  (a) "Board of Directors" means the Board of Directors of the
Company.

                  (b) "Change in Control" means a change in control of the
Company occurring after the date of this Agreement of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A (or in response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934 (the "Act"), whether or
not the Company is then subject to such reporting requirement; provided,
however, that, without limitation, such a Change in Control shall be deemed to
have occurred if after the date of this Agreement (i) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of
either (A) 30% or more of the outstanding shares of Common Stock of the Company
or (B) 30% (by right to vote or to grant or withhold approval) of any other
class or classes which individually or together have the power to elect a
majority of the Company's Board of Directors without the prior approval of at
least two-thirds of the members of the Board of Directors in office 


<PAGE>

immediately prior to such person attaining such percentage interest; (ii) there
occurs a proxy contest, or the Company is a party to a merger, consolidation,
sale of assets, plan of liquidation or other reorganization not approved by at
least two-thirds of the members of the Board of Directors then in office, as a
consequence of which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors thereafter; or (iii) during any period of two consecutive years,
other than as a result of an event described in clause (b)(ii) of this Section
1, individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.

                  (c) "Corporate Status" means the status of a person as a
director, officer, employee or agent of the Company or of any other corporation,
partnership, limited liability company, joint venture, trust, employee benefit
plan or other enterprise which such person is or was serving at the request of
the Company.

                  (d) "Disinterested Director" means a director of the Company
who is not and was not a party to the Proceeding in respect of which
indemnification or advance of Expenses is sought by Indemnitee.

                  (e) "Expenses"shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness in
a Proceeding.

                  (f) "Independent Counsel" means a law firm, or a member of a
law firm, selected by the Board of Directors by vote as set forth in Section
8(b), that is experienced in matters of corporation law and neither presently
is, nor in the past five years has been, retained to represent: (i) the Company
or the Operating Partnership or Indemnitee in any matter material to any such
party, or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company, the Operating Partnership or Indemnitee in an
action to determine Indemnitee's rights under this Agreement.

                  (g) "MGCL" mean the Maryland General Corporation Law.

                  (h) "Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing or
any other proceeding, whether civil, criminal, administrative or investigative,
except one (i) initiated by an Indemnitee pursuant to Section 10 of this
Agreement to enforce his rights under this Agreement or (ii) currently pending
as of the date of this Agreement.


                                        2

<PAGE>

         Section 2. Services by Indemnitee. Indemnitee agrees to serve as a
director and/or an officer of the Company and may at any time and for any reason
resign from such position (subject to any other contractual obligation or any
obligation imposed by operation of law), in which event the Company shall have
no obligation under this Agreement to continue Indemnitee in such position.

         Section 3. Indemnification - General. The Company shall indemnify, and
advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) to the
fullest extent permitted by Maryland law in effect on the date hereof and as
amended from time to time; provided, however, that no change in Maryland law
shall have the effect of reducing the benefits available to Indemnitee hereunder
based on Maryland law as in effect on the date hereof. The rights of Indemnitee
provided in this Section shall include, but shall not be limited to, the rights
set forth in the other Sections of this Agreement.

         Section 4. Proceedings Other Than Proceedings by or in the Right of the
Company or Operating Partnership. Indemnitee shall be entitled to the rights of
indemnification provided in this Section 4 if, by reason of his Corporate
Status, he is, or is threatened to be, made a party to any threatened, pending,
or completed Proceeding, other than a Proceeding by or in the right of the
Company or Operating Partnership. Pursuant to this Section 4, Indemnitee shall
be indemnified against all Expenses, judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with a Proceeding by reason of his Corporate Status.

         Section 5. Proceedings by or in the Right of the Company or Operating
Partnership. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 5, if, by reason of his Corporate Status, he is made a
party to any threatened, pending or completed Proceeding brought by or in the
right of the Company or Operating Partnership to procure a judgment in its
favor. Pursuant to this Section 5, Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred by him or on his behalf in connection
with such Proceeding.

         Section 6. Indemnification for Expenses of a Party Who is Wholly or
Partly Successful. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Status, made a party to
and is successful, on the merits or otherwise, in the defense of any Proceeding,
he shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with each successfully
resolved claim, issue or matter. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.


                                        3

<PAGE>

         Section 7. Advance of Expenses. The Company shall advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding to which Indemnitee is, or is threatened to be, made a party,
within ten days after the receipt by the Company of a statement or statements
from Indemnitee requesting such advance or advances from time to time, whether
prior to or after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by Indemnitee and
shall include or be preceded or accompanies by


                  (a) a written affirmation by the Indemnitee of the
Indemnitee's good faith belief that the standard of conduct necessary for
indemnification by the Company is authorized by law and by this Agreement has
been met and (b) a written undertaking by or on behalf of Indemnitee to repay
any Expenses advanced if it shall ultimately be determined that such standard of
conduct has not been met or as required by Section 6 if Indemnitee is not wholly
successful.

         Section 8. Procedure for Determination of Entitlement to
Indemnification.

                  (a) To obtain indemnification under this Agreement, Indemnitee
shall submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to Indemnitee and
is reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.

                  (b) Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 8(a) hereof, a determination, if
required by applicable law, with respect to Indemnitee's entitlement thereto
shall promptly be made in the specific case: (i) if a Change in Control shall
have occurred, by Independent Counsel in a written opinion to the Board of
Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change
in Control shall not have occurred, (A) by the Board of Directors by a majority
vote of a quorum consisting of Disinterested Directors, or (B) if a quorum of
the Board of Directors consisting of Disinterested Directors is not obtainable
or, even if obtainable, such quorum of Disinterested Directors so direct, by
Independent Counsel in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee or (C) if so directed by a majority of
the members of the Board of Directors, by the stockholders of the Company. If it
is determined that Indemnitee is entitled to indemnification, payment to
Indemnitee shall be made within ten days after such determination. Indemnitee
shall cooperate with the person making such determination with respect to
Indemnitee's entitlement to indemnification, including providing to such person
upon reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including reasonable attorneys' fees and disbursements)
incurred by Indemnitee in so cooperating with the person making such
determination, in response to a request by such person, shall be borne by the
Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification).



                                       4
<PAGE>

         Section 9. Presumptions and Effect of Certain Proceedings.

                  (a) If a Change in Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, (i) the
person making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a request for
indemnification in accordance with Section 8(a) of this Agreement, and (ii) the
Company shall have the burden of proof to overcome that presumption in
connection with the making of any determination contrary to that presumption.

                  (b) The termination of any proceeding by judgment, order,
settlement, conviction, a plea of nolo contendere or its equivalent, or an entry
of an order of probation prior to judgment, does not create a presumption that
Indemnitee did not meet the requisite standard of conduct described herein for
indemnification.

         Section 10. Remedies of Indemnitee.

                  (a) In the event that (i) a determination is made pursuant to
Section 8 that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section
8, (iii) no determination of entitlement to indemnification shall have been made
pursuant to Section 8(b) within 90 days after receipt by the Company of the
request for indemnification, (iv) payment of indemnification is not made
pursuant to Section 6 within ten days after receipt by the Company of a written
request therefor, or (v) payment of indemnification is not made within ten days
after a determination has been made that Indemnitee is entitled to
indemnification, Indemnitee shall be entitled to an adjudication in an
appropriate court of the State of Maryland, or in any other court of competent
jurisdiction, of his entitlement to such indemnification or advancement of
Expenses. Alternatively, Indemnitee, at his option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the commercial
Arbitration Rules of the American Arbitration Association. Indemnitee shall
commence such proceeding seeking an adjudication or an award in arbitration
within 180 days after the date on which Indemnitee first has the right to
commence such proceeding pursuant to his Section 10(a).

                  (b) If a Change in Control shall have occurred, in any
judicial proceeding or arbitration commenced pursuant to this Section 10 the
Company shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.

                  (c) If a determination shall have been made pursuant to
Section 8(b) of this Agreement that Indemnitee is entitled to indemnification,
the Company shall be bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Section 10, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification under
applicable law.



                                       5
<PAGE>

                  (d) In the event that Indemnitee, pursuant to this Section 10,
seeks a judicial adjudication of or an award in arbitration to enforce his
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all expenses (of the types described in the definition
of Expenses in Section 1) actually and reasonably incurred by him in such
judicial adjudication or arbitration, but only if he prevails therein. If it
shall be determined in said judicial adjudication or arbitration that Indemnitee
is entitled to receive part but not all of the indemnification or advancement of
expenses sought, the expenses incurred by Indemnitee in connection with such
judicial adjudication or arbitration shall be appropriately prorated.

         Section 11. Non-Exclusivity; Insurance; Subrogation; Exclusions.

                  (a) The rights of indemnification and advance of Expenses as
provided by this Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may at any time be entitled under applicable law, the charter
of Bylaws of the Company, any agreement, a vote of stockholders or a resolution
of directors, or otherwise. No amendment, alteration or repeal of this Agreement
or of any provision hereof shall limit or restrict any right of Indemnitee under
this Agreement in respect of any action taken or omitted by such Indemnitee in
his Corporate Status prior to such amendment, alteration or repeal.

                  (b) To the extent that the Company maintains liability
insurance for directors, officers, employees, or agents of the Company or of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which such person serves at the request of the Company,
Indemnitee shall be covered by such policy or policies in accordance with its or
their terms to the maximum extent of the coverage available for any such
director, officer, employee or agent under such policy or policies.

                  (c) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.

                  (d) The Company shall not be liable under this Agreement to
make any payment or amounts otherwise indemnifiable hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.

                  (e) Notwithstanding any other provision of this Agreement to
the Contrary, the Company shall not be liable for indemnification or advance of
Expenses in connection with any settlement or judgment for insider trading or
for disgorgement of profits pursuant to Section 16(b) of the Securities Exchange
Act of 1934.

         Section 12. Duration of Agreement. This Agreement shall continue until
and terminate ten years after the date that Indemnitee shall have ceased to
serve as a director, officer, employee, or agent of the Company or of any other
corporation, partnership, limited liability company, joint 



                                       6
<PAGE>

venture, trust, employee benefit plan or other enterprise which Indemnitee
served at the request of the Company; provided, that the rights of Indemnitee
hereunder shall continue until the final termination of any proceeding then
pending in respect of which Indemnitee is granted rights of indemnification or
advancement of expenses hereunder and of any proceeding commenced by Indemnitee
pursuant to Section 10 relating thereto. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and his heirs, executors and administrators.

         Section 13. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

         Section 14. Exception to Right of Indemnification or Advancement of
Expenses. Notwithstanding any other provision of this Agreement, Indemnitee
shall not be entitled to indemnification or advance of Expenses under this
Agreement with respect to any Proceeding brought by Indemnitee, unless the
bringing of such Proceeding or making of such claim shall have been approved by
the Board of Directors.

         Section 15. Obligations of Operating Partnership. The Operating
Partnership shall have the same obligations to the Indemnitee as the obligations
of the Company hereunder, the Operating Partnership hereby acknowledging and
confirming to the Indemnitee (a) that the services of the Indemnitee as a
director and/or an officer of the Company are important and valuable to the
Operating Partnership because of the Company's status as general partner of the
Operating Partnership, and (b) that the business and affairs of the Company are
conducted primarily through, and the assets of the Company are owned primarily
by, the Operating Partnership. Without limiting the other provisions of this
Agreement, and subject only to any limitations in the Partnership Agreement of
the Operating Partnership as restated and amended through the date of this
Agreement, the Indemnitee shall be entitled to indemnification and to his other
rights hereunder with respect to matters arising in the conduct of the affairs
of the Operating Company to the same extent as with respect to matters arising
in the conduct of the affairs of the Company.

         Section 16. Identical Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.


                                       7
<PAGE>


         Section 17. Headings. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.

         Section 18. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by all
of the parties signatory hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.

         Section 19. Notice by Indemnitee. Indemnitee shall promptly notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advance of Expenses covered
hereunder.

         Section 20. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed: (a) if to Indemnitee, at the principal
residence of the Indemnitee on the most recent personnel records of the Company
or of the Operating Partnership provided by the Indemnitee; (b) if to the
Company or to the Operating Partnership, to the Corporate Secretary of the
Company at the Company's corporate headquarters in San Diego, California; or in
either case to such other address as may have been furnished to Indemnitee by
the Company or the Operating Partnership or to the Company and the Operating
Partnership by Indemnitee, as the case may be. In any event, notice to either
the Company or to the Operating Partnership shall constitute notice to the other
of them.

         Section 21. Governing Law. The parties agree that this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the
State of Maryland.

         Section 22. Miscellaneous. Use of the masculine pronoun shall be deemed
to include usage of the feminine pronoun where appropriate.


                                       8
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.


ATTEST:                                 BURNHAM PACIFIC PROPERTIES, INC.
                                        BURNHAM PACIFIC OPERATING
                                            PARTNERSHIP, L.P.



                                        Each by:
- -------------------------                       ------------------------------
Secretary                                          President



                                       9


<PAGE>

                                                                    Exhibit 23.1



Consent of Independent Auditors

         We consent to the incorporation by reference in this Registration
Statement of Burnham Pacific Properties, Inc. on Form S-3 of our reports dated
February 12, 1998 appearing in the Annual Report on Form 10-K of Burnham Pacific
Properties, Inc. for the year ended December 31, 1997 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this 
registration statement.

/s/ Deloitte & Touche LLP

San Diego, California
December 28, 1998











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