SPIEKER PROPERTIES INC
S-3, 1999-04-08
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>   1
      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 8, 1999

                                                           REGISTRATION NO. 333-

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  -------------
                                    FORM S-3
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                              --------------------
                            SPIEKER PROPERTIES, INC.
             (Exact Name of Registrant As Specified in its Charter)

            MARYLAND                               94-3185802
(State or Other Jurisdiction of                  (I.R.S. Employer 
Incorporation or Organization)                Identification Number)

                               2180 SAND HILL ROAD
                          MENLO PARK, CALIFORNIA 94025
                                 (650) 854-5600
 (Address, including zip code, and telephone number, including area code, of 
                   registrant's principal executive offices)
                            ------------------------
                                 CRAIG G. VOUGHT
              EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
                            SPIEKER PROPERTIES, INC.
                         2180 SAND HILL ROAD, SUITE 200
                          MENLO PARK, CALIFORNIA 94025
                                 (650) 854-5600
 (Name, address, including zip code, and telephone number, including area code,
                              of agent for service)
                            ------------------------
                                 WITH A COPY TO:

                             ALISON S. RESSLER, ESQ.
                               SULLIVAN & CROMWELL
                             1888 CENTURY PARK EAST
                          LOS ANGELES, CALIFORNIA 90067
                                 (310) 712-6600
                            ------------------------
        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
   From time to time after the effective date of this Registration Statement.

                            ------------------------
        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 of 1933, 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. [ ]
                           -------------------------
<TABLE>
<CAPTION>

                                         CALCULATION OF REGISTRATION FEE
================================================================================================================================
                                                          PROPOSED MAXIMUM         
                                     AMOUNT TO BE         AGGREGATE PRICE        PROPOSED MAXIMUM                AMOUNT OF
TITLE OF SHARES TO BE REGISTERED     REGISTERED(1)          PER SHARE(2)       AGGREGATE OFFERING PRICE      REGISTRATION FEE(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                   <C>                  <C>                           <C>
Common Stock                        335,509 shares           $35.375                 $11,868,631                   $3,300
- --------------------------------------------------------------------------------------------------------------------------------
Stock Purchase Rights                  335,509                  N/A                      N/A                         N/A
================================================================================================================================
</TABLE>

(1)     3,685,254 shares previously registered with the Commission pursuant to
        registration statements Nos. 333-346 (1,341,914 shares, filed February
        28, 1996), 333-9425 (50,000 shares, filed August 2, 1996), 333-14325
        (87,315 shares, filed October 17, 1996), 333-21709 (503,500 shares,
        filed February 13, 1997) and 333-43707 (1,702,525 shares, filed January
        21, 1998), are being carried forward in the Prospectus included in this
        Registration Statement. Registration fees of $11,424, $486, $782, $5,397
        and $21,110 were previously paid on such shares.

(2)     Estimated solely for the purpose of calculating the registration fee in
        accordance with Rule 457(c) based on the average of the high and low
        reported sales prices on the New York Stock Exchange on April 6, 1999.

        PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS
INCLUDED IN THIS REGISTRATION STATEMENT IS A COMBINED PROSPECTUS AND RELATES TO
REGISTRATION STATEMENT NOS. 333-346 (1,341,914 SHARES, FILED FEBRUARY 28, 1996),
333-9425 (50,000 SHARES, FILED AUGUST 2, 1996), 333-14325 (87,315 SHARES, FILED
OCTOBER 17, 1996), 333-21709 (503,500 SHARES, FILED FEBRUARY 13, 1997) AND
333-43707 (1,702,525 SHARES, FILED JANUARY 21, 1998), PREVIOUSLY FILED BY THE
REGISTRANT ON FORM S-3 WITH THE COMMISSION. 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 AN AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREINAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

================================================================================


<PAGE>   2





                                4,020,763 Shares

                            SPIEKER PROPERTIES, INC.


                                  Common Stock


        This is an offering of shares of common stock of Spieker Properties,
Inc. from time to time by selling stockholders.

        Our common stock is listed on the New York Stock Exchange under the
symbol "SPK." The last reported sales price of the common stock on April 6, 1999
was $35.375 per share.

        YOU SHOULD READ THE SPECIAL CONSIDERATIONS BEGINNING ON PAGE 2 IN THE
PROSPECTUS BEFORE PURCHASING THE SHARES OF COMMON STOCK.

        The selling stockholders from time to time may offer and sell the shares
held by them directly or through agents or broker-dealers at market prices and
on other sale terms. To the extent required, we will disclose in a prospectus
supplement the names of any agent or broker-dealer, applicable commissions or
discounts and any other required information with respect to any particular
offer. See "Plan of Distribution."

        NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

        Our principal executive offices are located at 2180 Sand Hill Road,
Suite 200, Menlo Park, California 94025 and, and our telephone number is (650)
854-5600.



                  The date of this prospectus is April 7, 1999.



<PAGE>   3

<TABLE>
<CAPTION>

                                       TABLE OF CONTENTS


                                                                                          PAGE

<S>                                                                                         <C>
THE COMPANY AND THE OPERATING PARTNERSHIP....................................................2

SECURITIES TO BE OFFERED.....................................................................2

USE OF PROCEEDS..............................................................................2

SPECIAL CONSIDERATIONS.......................................................................2
        Our Properties May Not Generate Sufficient Income to Meet All of our Obligations.....3
        Adverse California Economic Conditions Could Hurt our Performance....................3
        Our Acquisition and Development Activities Present Risks Which May Adversely 
               Affect our Performance........................................................3
        We Cannot Reinvest our Earnings and Must Rely on Debt and Equity Financing for
               Acquisitions..................................................................3
        We May be Responsible for Environmental Hazards We Did Not Cause.....................4
        Earthquakes and Other Extraordinary Events May Cause Losses..........................4

DESCRIPTION OF CAPITAL STOCK.................................................................4
        General..............................................................................4
        Common Stock.........................................................................5
        Preferred Stock......................................................................6
        Shareholder Protection Rights........................................................6
        Participating Preferred Stock........................................................8
        Restrictions on Ownership............................................................8

DESCRIPTION OF PARTNERSHIP UNITS.............................................................9
        General..............................................................................9
        Exchange of Partnership Units.......................................................10

SHARES AVAILABLE FOR FUTURE SALE............................................................10

REGISTRATION RIGHTS.........................................................................11

SELLING STOCKHOLDERS........................................................................11

ANTI-TAKEOVER PROVISIONS OF OUR CHARTER AND BYLAWS..........................................14

FEDERAL INCOME TAX CONSIDERATIONS...........................................................14
        General.............................................................................14
        Taxation of the Company.............................................................15
        Requirements for Qualification......................................................16
               Asset Tests..................................................................17
               Gross Income Tests...........................................................17
               Annual Distribution Requirements.............................................19
               Failure to Qualify...........................................................19
        Tax Aspects of our Investment in the Operating Partnership..........................20
               General......................................................................20
               Tax Allocations with Respect to the Properties...............................20
               Sale of the Properties.......................................................20
        Taxation of Stockholders............................................................21
               Taxation of Taxable U.S. Stockholders........................................21

</TABLE>

                                        i

<PAGE>   4
<TABLE>


                                                                                          PAGE

<S>                                                                                         <C>
               In General...................................................................21
               Information Reporting and Backup Withholding.................................22
        Taxation of Tax-Exempt Stockholders.................................................22
        Taxation of Non-U.S. Stockholders...................................................22
               Distributions from the Company...............................................23
        Other Tax Considerations............................................................24
               Dividend Reinvestment Program................................................24
               Possible Legislative or Other Actions Affecting Tax Considerations...........25
               State and Local Taxes........................................................25

PLAN OF DISTRIBUTION........................................................................25

EXPERTS ....................................................................................26

VALIDITY OF SHARES..........................................................................26

AVAILABLE INFORMATION.......................................................................26

INCORPORATION OF DOCUMENTS BY REFERENCE.....................................................26
</TABLE>




                                       ii

<PAGE>   5



                    THE COMPANY AND THE OPERATING PARTNERSHIP

        We are a self-administered and self-managed equity real estate
investment trust, or "REIT," that specializes in the acquisition, development
and management of suburban office and industrial properties. As of December 31,
1998, we owned income-producing properties aggregating approximately 41 million
rentable square feet. The properties are located primarily in California,
Washington, Oregon and Idaho.

        We conduct substantially all of our activities through Spieker
Properties, L.P., referred to as the "operating partnership." We are the sole
general partner, as well as a limited partner, of the operating partnership and
owned approximately 88% of its partnership interests as of December 31, 1998.
Members of our senior management and outside investors own the remaining limited
partnership interest. As the sole general partner of the operating partnership,
we have control over the management of the operating partnership and over each
of its properties.

        We are a Maryland corporation and the operating partnership is a
California limited partnership. We and the operating partnership were formed in
1993.

        We have elected to be taxed as a REIT under Sections 856 through 860 of
the Internal Revenue Code of 1986. As a REIT, we generally are not subject to
federal income tax on net income that we distribute to our stockholders. REITs
are subject to a number of organizational and operational requirements,
including a requirement that they currently distribute at least 95% of their
taxable income. See "Federal Income Tax Considerations."

                            SECURITIES TO BE OFFERED

        This prospectus relates to the offer and sale from time to time by the
holders of:

        (1)     1,219,512 shares of our common stock that may be issued to the
                holder of 1,000,000 shares of our Series A preferred stock and

        (2)     2,801,251 shares of our common stock that may be issued to the
                holders of 2,801,251 units of limited partnership interests in
                the operating partnership.

        The common stock will be issued to these holders only if they exchange
their shares of Series A preferred stock or partnership units for shares of
common stock. We are registering the shares pursuant to the terms of investor
rights agreements we entered into with these holders. Even though these shares
of common stock will be registered, we may never issue them and the holders may
never offer to sell them.

                                 USE OF PROCEEDS

        We will not receive any cash proceeds from the issuance of the shares of
common stock or the sale of such shares by the selling stockholders. We have
agreed to bear the expenses of registration under Federal and state securities
laws. We will acquire one additional partnership unit in the operating
partnership in exchange for each share of common stock that we issue to holders
of partnership units.

                             SPECIAL CONSIDERATIONS

        Prospective investors should carefully consider the following
information before purchasing the shares of common stock offered by this
prospectus.



                                        2

<PAGE>   6



OUR PROPERTIES MAY NOT GENERATE SUFFICIENT INCOME TO MEET ALL OF OUR OBLIGATIONS

        Real property investments are subject to varying degrees of risk. The
yields available from investments in real estate depend on the amount of income
and capital appreciation generated by the related properties. If our properties
do not generate sufficient income to meet operating expenses, including debt
service, ground lease payments, tenant improvements, third-party leasing
commissions and other capital expenditures, our income and ability to make
distributions to stockholders will be adversely affected.

        There is also the risk that as leases on our properties expire, tenants
will enter into new leases on terms that are less favorable. In addition, real
estate investments are relatively illiquid and, therefore, will tend to limit
our ability to vary our portfolio promptly in response to changes in economic or
other conditions.

ADVERSE CALIFORNIA ECONOMIC CONDITIONS COULD HURT OUR PERFORMANCE

        The performance of the economy in each of the regions in which our
properties are located affects occupancy, market rental rates and expenses and,
consequently, has an impact on the income generated from our properties and
their underlying values. The financial results of major local employers also may
have an impact on the cash flow and value of our properties. In terms of
rentable square feet, approximately 78% of our properties as of December 31,
1998, are located in California. As a result of this geographic concentration,
the performance of the California commercial real estate market will affect the
value of our properties in that area and, in turn, our value as a company.

OUR ACQUISITION AND DEVELOPMENT ACTIVITIES PRESENT RISKS WHICH MAY ADVERSELY
AFFECT OUR PERFORMANCE

        We intend to acquire existing commercial properties to the extent that
they can be acquired on advantageous terms and meet our investment criteria.
Acquisitions of commercial properties entail general investment risks associated
with any real estate investment, including the risk that investments will fail
to perform as expected or that estimates of the cost of improvements to bring an
acquired property up to standards may prove inaccurate.

        We also intend to pursue commercial property development projects. These
projects generally require various governmental and other approvals, and we
cannot be sure that we will receive these approvals. Our development activities
will entail certain risks, including:

        -       The expenditure of funds on and devotion of management's time to
                projects which may not come to fruition.

        -       The risk that construction costs of a project may exceed
                original estimates, possibly making the project uneconomic.

        -       The risk that occupancy rates and rents at a completed project
                will be less than anticipated.

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

These risks may result in a reduction in the funds available for distribution to
you as dividends.

WE CANNOT REINVEST OUR EARNINGS AND MUST RELY ON DEBT AND EQUITY FINANCING FOR
ACQUISITIONS

        Because we operate as a real estate investment trust, we must distribute
95% of our earnings as dividends and cannot reinvest our earnings in our
business. Therefore, we rely on equity and debt financing to support our
acquisition activities which require a substantial up-front payment. We will be


                                        3

<PAGE>   7



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 existing indebtedness on our properties cannot be
refinanced or that the terms of the refinancing will not be as favorable as the
terms of existing indebtedness. In addition, investors risk that the book value
of their shares of common stock purchased in this offering may be diluted by any
future equity offerings used to finance acquisitions.

WE MAY BE RESPONSIBLE FOR ENVIRONMENTAL HAZARDS WE DID NOT CAUSE

        Under various Federal, state and local laws, we are liable for the costs
of removal or remediation of certain hazardous or toxic substances on or in our
properties. These laws often impose liability without regard to whether we knew
of, or were responsible for, the presence of the hazardous or toxic substances.
The presence of such substances, or our failure to properly remove such
substances, may adversely affect our ability to sell or rent such property.

        We are not aware of any environmental liability that would have a
material adverse effect on our business, assets or results of operations.
However, there is always the chance that material environmental liabilities do
exist, and if they did, they would have an adverse effect on our results of
operations and cash flow.

EARTHQUAKES AND OTHER EXTRAORDINARY EVENTS MAY CAUSE LOSSES

        We carry comprehensive liability, fire, flood, extended coverage and
rental loss insurance. There are, however, certain types of extraordinary losses
which may be either uninsurable or not economically feasible to insure. Further,
a substantial number of our properties are located in areas that are subject to
earthquake activity. Although we have obtained limited earthquake insurance
coverage, if a property sustains damage as a result of an earthquake, we may
still incur substantial losses due to insurance deductibles and co-payments.
Additionally, earthquake insurance may not be available for some properties, or
if available, may not be available on terms acceptable to us. Should an
uninsured loss occur, we could lose our investment in a number of our
properties, as well as the rents generated from these properties.

                          DESCRIPTION OF CAPITAL STOCK

        The following is a description of the general terms and provisions of
our capital stock. This description is subject to and qualified in its entirety
by reference to the applicable provisions of our Articles of Incorporation and
Bylaws. The Bank of New York is our transfer agent.

GENERAL

        As of March 19, 1999, we had authority to issue 1,000,000,000 shares of
all classes of capital stock. The following table sets forth our capital stock
as of March 19, 1999:



                                        4

<PAGE>   8



<TABLE>
<CAPTION>
Class of Capital Stock            Authorized           Issued and Outstanding
- ----------------------            ----------           ----------------------
<S>                              <C>                           <C>       
Common Stock                     649,000,000                   63,259,366
Class B Common Stock               2,000,000                            0
Class C Common Stock               1,500,000                            0
Series A Preferred Stock           1,000,000                    1,000,000
Series B Preferred Stock           5,000,000                    4,250,000
Series C Preferred Stock           6,000,000                    6,000,000
Series D Preferred Stock           1,500,000                            0
Series E Preferred Stock           4,000,000                    4,000,000
Excess Stock                     330,000,000                            0
                                            
</TABLE>

        At any given time, the maximum number of shares of common stock that may
be issued under our Stock Incentive Plan is equal to:

        (a)     9.9% of the number of shares of common stock outstanding as of
                the last day of the immediately preceding quarter, plus

        (b)     the number of shares of common stock issuable upon conversion of
                partnership units, Series A preferred stock and all classes of
                our convertible securities that may be issued in the future, as
                of the last day of the preceding quarter, reduced by

        (c)     the number of shares of common stock reserved for issuance under
                other stock compensation plans.

        In addition, as of March 19, 1999, we had the following number of shares
of common stock reserved for issuance:

        -       150,000 shares under our Directors Stock Option Plan.

        -       1,219,512 shares upon the conversion of the Series A preferred
                stock.

        -       8,931,916 shares upon the conversion of limited partnership
                units in the operating partnership.

        We have also reserved 1,500,000 shares of Series D preferred stock for
issuance upon conversion of Series D preferred units in the operating
partnership. As of March 19, 1999, pursuant to our stock option plans, options
to purchase 5,076,500 shares of common stock were outstanding.

COMMON STOCK

        The holders of the outstanding common stock are entitled to one vote per
share for each director being elected and on all other matters voted on by
stockholders. The Articles of Incorporation do not provide for cumulative voting
in the election of directors.

        Subject to the preferential rights of our preferred stock and any
preferential rights of any other outstanding series of capital stock, the
holders of common stock are entitled to distributions declared


                                        5

<PAGE>   9



from time to time by the board of directors from funds available for
distribution to such holders. We currently pay regular quarterly dividends to
holders of common stock. The shares of common stock offered by this prospectus
will be fully paid and nonassessable and will not be subject to preemptive or
similar rights.

        In the event of our liquidation, dissolution or winding up, the holders
of common stock are entitled to receive ratably the assets remaining after
satisfaction of all liabilities and payment of liquidation preferences and
accrued dividends, if any, on our preferred stock and any other series of
capital stock that has a liquidation preference. The rights of holders of common
stock are subject to the rights and preferences established by the board of
directors for any capital stock that may subsequently be issued.

        Subject to limitations prescribed by Maryland law and our Articles of
Incorporation, the board of directors is authorized to reclassify any unissued
portion of the authorized shares of capital stock into other classes or series
of common stock or preferred stock. The board may also establish the number of
shares in each class or series, fix the designation and any preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption.

PREFERRED STOCK

        Each series of preferred stock ranks prior to each class of common stock
with respect to dividends and amounts upon liquidation or winding up. The Series
B, Series C and Series E preferred stock are publicly traded, and the Series A
preferred stock is held by an institutional investor. The Series D preferred
stock is issuable after April 20, 2008, or earlier upon the occurrence of
specified events, upon the conversion of Series D preferred units of the
operating partnership. Each series of preferred stock has only limited voting
rights.

        Additional rights, privileges and preferences of our outstanding
preferred stock are as follows:


<TABLE>
<CAPTION>

                                                                                       NYSE
                                         Liquidation  Conversion                       Trading
Class               Dividend Rate        Preference   Rights             Redemption    Symbol
- -----               -------------        ----------   ------             ----------    ------

<S>                 <C>                  <C>          <C>                <C>           <C>
Series A preferred  common stock         $25.00       Convertible into   Yes, after    n/a
                    dividend times                    1.2195 shares of   5/13/1999
                    1.2195                            common stock

Series B preferred  $2.3625 per annum    $25.00       n/a                Yes, after    SPKPrB
                                                                         12/11/2000

Series C preferred  $1.9688 per annum    $25.00       n/a                Yes, after    SPKPrC
                                                                         10/10/2002

Series D preferred  $3.8438 per annum    $50.00       n/a                Yes, after    n/a
                                                                         4/30/2003

Series E preferred  $2.00 per annum      $25.00       n/a                Yes, after    SPKPrE
                                                                         6/4/2003
</TABLE>


SHAREHOLDER PROTECTION RIGHTS

         The following description of the shareholder protection purchase rights
contains the general terms and description of these rights. If you desire more
detailed information, please see the complete text of the Stockholder Protection
Rights Agreement, dated as of September 10, 1998, between us and


                                        6

<PAGE>   10



The Bank of New York, which has been filed with the SEC. The following
discussion is qualified in its entirety by the terms of the Rights Agreement.

        On September 9, 1998, our board of directors declared a dividend payable
on September 30, 1998 of one right for each outstanding share of common stock
held of record at the close of business on September 30, 1998. Shares of common
stock issued thereafter and prior to the Separation Time (as defined below) will
have an attached right. The board of directors adopted the Rights Agreement for
the purpose of protecting stockholders against attempts to acquire control of us
by means of a hostile tender offer made at less than a full and fair price and
other takeover tactics that can be used to deprive stockholders of the ability
to get a full and fair price for all of their shares.

        The Separation Time will occur upon the earliest of:

        -       10 days following the date any entity commences a tender or
                exchange offer which, if completed, would result in such entity
                becoming an Acquiring Person.

        -       10 days following a public announcement that an entity has
                become an Acquiring Person.

        An Acquiring Person is any person or entity which beneficially owns 15%
or more of the common stock, subject to certain exceptions described in the
Rights Agreement. The board of directors may shorten or lengthen the 10 day time
period by resolution prior to the expiration of the 10 day period, in which case
the Separation Time will be the date determined by the board of directors. If a
tender offer or exchange offer is cancelled or terminated prior to the
Separation Time without the purchase or exchange of any shares of our common
stock, the offer will be deemed not to have been made.

        Until the Separation Time, common stock certificates will also evidence
the rights, and the rights will be transferred with and only with the common
stock. After the Separation Time, the rights agent will mail separate rights
certificates to holders of common stock, and the rights may trade separately.

        The rights will become exercisable one business day following the
Separation Time. In such event, each right, other than rights beneficially owned
by the Acquiring Person, shall entitle the holder to purchase for an exercise
price of $140 a number of shares of common stock having a market value of $280.
The board of directors may also elect, at any time after the Separation Time and
before the Acquiring Person becomes the beneficial owner of 50% of the common
stock, to exchange each outstanding right for one share of common stock or one
one-hundredth of a share of participating preferred stock.

        The board of directors may, at its option, at any time prior to the
Separation Time, redeem all of the outstanding rights at a price of $.01 per
right. Immediately upon the action of the board of directors electing to redeem
the rights, without any further action and without any notice, the right to
exercise the rights will terminate and each right will thereafter represent only
the right to receive the redemption price in cash.

        The rights will expire on the earliest of (1) the close of business on
September 30, 2008, (2) the date on which the rights are redeemed, (3) the date
the board of directors elects to exchange the rights for common stock or
participating preferred stock or (4) upon our merger into another corporation
pursuant to an agreement entered into prior to the public announcement that a
person has become an Acquiring Person.

        The exercise price and the number of rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the rights, are
subject to adjustment from time to time to prevent dilution in the event of a
stock split or the distribution of any securities or assets in respect of, in
lieu of or in exchange for common stock.



                                        7

<PAGE>   11



        If at any time following the date of the public announcement that a
person has become an Acquiring Person, either (1) we are acquired in a merger or
other business combination in which we are not the surviving corporation or (2)
50% or more of our assets, cash flow or earning power is sold or transferred,
then each holder of a right would be entitled to receive, upon exercise, common
stock of the acquiring company having a value equal to two times the exercise
price of the right.

PARTICIPATING PREFERRED STOCK

        We may file Articles Supplementary relating to the participating
preferred stock and may issue them in exchange for stockholder protection rights
after the Separation Time. Each share of participating preferred stock would be
the economic equivalent of 100 shares of common stock and would pay preferential
cash dividends quarterly at a rate equal to the greater of (1) the dividends
paid on 100 shares of common stock or (2) $35.00. In addition, the participating
preferred stock would be entitled to vote as a class with the common stock on
matters requiring a vote of the stockholders, with each share of participating
preferred stock taken as 100 votes.

        In the event we liquidate, dissolve or wind up our operations, the
holders of participating preferred stock would be entitled to receive on a
parity with the holders of our other series of preferred stock, and prior and in
preference to any distribution to the holders of any class of common stock, an
amount per share equal to $14,000. We would not be able to redeem the
participating preferred stock.

RESTRICTIONS ON OWNERSHIP

        For us to qualify as a REIT under the Internal Revenue Code of 1986, as
amended (the "Code"):

               (1) not more than 50% in value of our outstanding stock may be
        owned, directly or indirectly, by five or fewer individuals (as defined
        in the Code) during the last half of a taxable year,

               (2) the stock must be beneficially owned by 100 or more persons
        during at least 335 days of a taxable year of 12 months or during a
        proportionate part of a shorter taxable year and

               (3) certain percentages of our gross income must be from
        particular activities.

See "Federal Income Tax Considerations--Requirements for Qualification--Gross
Income Tests". To enable us to continue to qualify as a REIT, the Articles of
Incorporation restrict the ownership of shares of common stock and preferred
stock.

        The Articles of Incorporation provide that, subject to certain
exceptions, no stockholder may own, or be deemed to own by virtue of the
attribution provisions of the Code, more than 9.9% of the value of our
outstanding common stock and preferred stock. The board of directors may waive
the ownership limit in certain limited situations if the Board receives a ruling
of the Internal Revenue Service or an opinion of counsel to the effect that such
ownership will not jeopardize our status as a REIT. As a condition to obtaining
a waiver, the board of directors may require representations and undertakings
from the applicant with respect to preserving our REIT status. The ownership
limit will not apply if the board of directors and the stockholders determine
that it is no longer in our best interests to continue to qualify as a REIT. If
the issuance or transfer of shares of common stock or preferred stock to any
person would cause the person to exceed the ownership limit, would cause us to
be beneficially owned by fewer than 100 persons or would cause us to become
"closely held" under Section 856(h) of the Code, the issuance or transfer shall
be null and void.

        The Articles of Incorporation also provides that shares involved in a
transfer or change in capital structure that results in a person owning in
excess of the ownership limit or would cause us to become "closely held" within
the meaning of Section 856(h) of the Code will automatically be exchanged for
Excess Stock. All Excess Stock will be transferred, without action by the
stockholder, to us as trustee of


                                        8

<PAGE>   12



a trust for the exclusive benefit of the transferee or transferees to whom the
Excess Stock is ultimately transferred. While the Excess Stock is held in trust,
it will not be entitled to vote, it will not be considered for purposes of any
stockholder vote or the determination of a quorum for such vote and it will not
be entitled to participate in any distributions made by us, except upon
liquidation. We would have the right, for a period of 90 days during the time
the Excess Stock is held by us in trust, to purchase all or any portion of the
Excess Stock from the intended transferee at the lesser of the price paid for
the stock by the intended transferee and the closing market price for the stock
on the date we exercise our option to purchase.

        The ownership limit provision of the Articles of Incorporation will not
be automatically removed if the REIT provisions of the Code are changed to
remove or increase the ownership concentration limitation. Except as otherwise
described above, any change in the ownership limit would require an amendment to
the Articles of Incorporation. In addition to preserving our status as a real
estate investment trust, the ownership limit may have the effect of precluding a
third party from acquiring control of us.

        All certificates representing shares of common stock and preferred stock
will bear a legend referring to the restrictions described above.

        All persons who own of record (1) more than 5% of the outstanding common
and preferred stock, (2) 1% of the outstanding common and preferred stock if
there are more than 200 but fewer than 2,000 stockholders or (3) one-half of 1%
of the outstanding common and preferred stock if there are 200 or less
stockholders of record, must file an affidavit with us containing the
information specified in the Articles of Incorporation within 30 days after
January 1 of each year. In addition, each stockholder shall upon demand be
required to disclose to us in writing such information with respect to the
direct, indirect and constructive ownership of shares as the board of directors
deems necessary to determine our status as a real estate investment trust and to
ensure compliance with the ownership limit.

                        DESCRIPTION OF PARTNERSHIP UNITS

        Substantially all of our assets are held by, and all of its operations
are conducted through, the operating partnership. We are the sole general
partner, as well as a limited partner, of the operating partnership and as of
December 31, 1998 held approximately 88% of its partnership units. The remaining
partnership units are held by persons who contributed property or cash to the
operating partnership and by our senior officers. The following sets forth a
summary description of terms and provisions of the partnership units and is
subject to and qualified in its entirety by reference to applicable provisions
of California law and the Second Amended and Restated Agreement of Limited
Partnership of Spieker Properties, L.P., as amended.

GENERAL

        We hold our interest in the operating partnership in the forms of a
general partnership and limited partnership interest. Other holders of
partnership units have limited partnership interests in the operating
partnership. All holders of partnership units share in cash distributions from,
and the profits and losses of, the operating partnership.

        Holders of partnership units have the rights to which limited partners
are entitled under the Partnership Agreement and the California Revised Uniform
Limited Partnership Act. The partnership units have not been registered pursuant
to the federal or state securities laws and have not been listed on any exchange
or quoted on any national market system.



                                        9

<PAGE>   13



EXCHANGE OF PARTNERSHIP UNITS

        Subject to certain limitations, limited partners may require that the
operating partnership convert a portion of their partnership units into shares
of our common stock. A limited partner may convert his or her partnership units
in the operating partnership into shares of common stock until he or she owns up
to 9.9% of the outstanding common stock, and the remainder may be sold for cash
to us.

PREFERRED UNITS

        In addition to the partnership units, the operating partnership has
outstanding WCB preferred units, which are convertible into partnership units
and common stock, and Series D preferred units, which are convertible into our
Series D preferred stock. The WCB preferred units and the Series D preferred
units rank prior to the partnership units with respect to distributions and
amounts upon liquidation, dissolution or winding up of the operating
partnership.

        The WCB preferred units are convertible into common stock or partnership
units at a ratio of .90909 shares of common stock or partnership units per WCB
preferred unit. Each holder of WCB preferred units may convert such WCB
preferred units on up to four occasions per year for not less than 5,000 WCB
preferred units. The Series D preferred units are convertible after April 20,
2008 into shares of Series D preferred stock at a one to one ratio. Holders of
both the WCB preferred units and Series D preferred units are entitled to
registration rights for our equity securities into which partnership units are
convertible.

                        SHARES AVAILABLE FOR FUTURE SALE

        In certain circumstances, the selling stockholders may elect to sell
their shares in accordance with the exemptions provided by Rule 144 under the
Securities Act rather than pursuant to this prospectus. In general, under Rule
144 as currently in effect, a person who has beneficially owned the shares for
at least one year, as well as any persons considered to be our "affiliate", as
defined below, would be entitled to sell within any three month period a number
of shares of common stock that does not exceed the greater of: (1) 1% of the
then outstanding number of shares or (2) the average weekly trading volume of
the shares during the four calendar weeks preceding each such sale. After shares
are held for two years, any person who is not an "affiliate" is entitled to sell
such shares under Rule 144 without regard to the volume limitations. As defined
in Rule 144, an "affiliate" of an issuer is a person that directly or
indirectly, through the use of one or more intermediaries, controls, or is
controlled by, or is under common control with, such issuer.

        In addition, pursuant to registration statements on Form S-3 that we
have filed, we may offer and sell shares of common stock, or securities
convertible into or exercisable for shares of common stock, with an aggregate
initial offering price not to exceed $660 million. Shares of common stock
offered and sold pursuant to these shelf registration statements may be
tradeable without restriction under the Securities Act.

        No prediction can be made as to the effect, if any, that future sales of
shares of common stock, will have on the market price prevailing from time to
time. Sales of substantial amounts of shares of common stock including shares
issued upon the redemption of partnership units or the exercise of options, or
the perception that such sales could occur, could adversely affect prevailing
market price of the shares.




                                       10

<PAGE>   14



                               REGISTRATION RIGHTS

        We have filed the registration statement of which this prospectus is a
part pursuant to our obligations under:

        (1)    The Investor Rights Agreement, dated May 5, 1994, relating to the
               Series A preferred stock.

        (2)    The Amended and Restated Investor Rights Agreement, dated
               December 4, 1997, relating to the registration rights of limited
               partners of the Operating Partnership.

        (3)    Conversion, Registration Rights and Lock-Up Agreements relating
               to property contributions by entities associated with the
               Transpacific Development Company.

        (4)    Conversion, Registration Rights and Lock-Up Agreements relating
               to property contributions by entities associated with the San
               Carlos properties.

The above-referenced agreements are collectively referred to as the
"Registration Rights Agreements."

        Under each of the Registration Rights Agreements, we have agreed to pay
all expenses of effecting the registration of the shares of common stock covered
in such agreements other than underwriting discounts and commissions, fees and
disbursements of counsel retained by limited partners, and transfer taxes, if
any. Pursuant to each of the Registration Rights Agreements, we have also agreed
to indemnify each selling stockholder and any person who controls any selling
stockholder against certain losses, claims, damages and expenses arising under
the securities laws. In addition, each selling stockholder agreed to indemnify
us and the other selling stockholders, and our directors and officers, and any
person who controls us against certain other losses, claims damages and expenses
arising under the securities laws with respect to written information furnished
to us by such selling stockholder.

        We have no obligation under any of the Registration Rights Agreements to
retain any underwriter to effect the sale of the shares covered by such
agreements.

                              SELLING STOCKHOLDERS

        The following table provides the names of and the number and percentage
of shares of common stock beneficially owned by each selling stockholder at
March 19, 1999 and upon completion of the offering. The post-offering figures
assume each selling stockholder exchanges and converts all of his or her
partnership units or Series A preferred stock for shares of common stock and
sells all of his or her shares pursuant to this prospectus. The number of shares
in the following table represents the number of shares of common stock the
person holds plus the number of options to purchase common stock which are
exercisable within 60 days of March 19, 1999 plus the number of shares of common
stock into which partnership units or Series A preferred stock held by the
person may be exchanged or converted. The selling shareholders named below may
have sold, transferred or otherwise disposed of all or a portion of their shares
of common stock, partnership units or Series A preferred stock since the date of
this prospectus in transactions exempt from the registration requirements of the
Securities Act.

        The shares of common stock offered by this prospectus may be offered
from time to time by the selling stockholders named below and other selling
stockholders named in supplements to this prospectus:



                                       11

<PAGE>   15


<TABLE>
<CAPTION>


                                  Beneficial Ownership                           Beneficial Ownership
                                    Prior to Offering                             After the Offering
                               ---------------------------                   -----------------------------
                                                               Number of                                   
                                             Percentage of      Shares                      Percentage of
                                Number of        Shares         Offered        Number          Shares
                                 Shares       Outstanding       Hereby        of Shares      Outstanding
                               -----------   -------------   -------------   -----------   ---------------
<S>                            <C>           <C>             <C>             <C>           <C>
Frank L. Alexander(1)......         59,554         *                 5,714        53,840          *
Annenberg Trust(2).........      1,219,512       1.9%            1,219,512            --         --
Joel Benoliel(3)...........         66,798         *                66,798            --         --
The Blake Family Trust(4)..        105,043         *               105,043            --         --
Gregg R. Daugherty(5)......         21,344         *                20,604           740          *
John G. Davenport(6).......        277,600         *                25,000       202,600          *
James C. Eddy(7)...........        226,473         *               100,000       126,473          *
John A. Foster(8)..........        281,562         *               140,000       141,562          *
John K. French(9)..........        758,202       1.2%               17,500       740,702        1.2%
Adrian J. Gordon(10).......         10,753         *                10,738           115          *
Bruce E. Hosford(11).......        654,947       1.0%              358,500       296,447          *
Donald S. Jefferson(12)....        287,514         *               229,749        57,765          *
Richard T. Leider(13)......         14,123         *                 4,286         9,837          *
The Meier Family Trust(14).        500,000         *               500,000            --         --
The Meier Group II, L.P. (15)       23,662         *                23,662            --         --
Vincent D. Mulroy(16)......        165,893         *               123,393        42,500          *
Richard L. Romney(17)......        189,076         *                50,000       139,076          *
Stuart A. Rothstein(18)....         34,939         *                 6,877        28,062          *
Peter H. Schnugg(19).......        322,539         *               202,667       119,872          *
Joshua N. Smith(20)........          9,392         *                 4,020         5,372          *
John B. Souther, Jr.(21)...         86,826         *                35,000        51,826          *
Warren E. Spieker, Jr.(22).      2,912,379       4.4%              480,210     2,432,169        3.7%
Dennis E. Singleton(23)....        913,907       1.4%               22,467       891,440        1.4%
Peter C. Thompson(24)......         52,671         *                 8,306        44,365          *
John L. de Benedetti(25)...         45,250         *                45,250            --         --
Francis J. Pokigo, Jr.(26).         27,354         *                27,254           100          *
Constance B. Seymour(27)...         17,398         *                17,398            --         --
Timothy G. Sheehan(28).....         37,409         *                37,409            --         --
Sippl Properties, LLC(29)..        133,406         *               133,406            --         --
</TABLE>

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

*     Less than 1%.

(1)   Mr. Alexander is Senior Vice President - Northern Bay Area and
      beneficially owns 9,301 partnership units, 4,662 shares of common stock,
      5,091 shares of restricted stock and 90,000 options to purchase common
      stock, 40,500 of which are exercisable within 60 days of March 19, 1999.


                                       12

<PAGE>   16



(2)   Represents shares of common stock issuable upon conversion of 1,000,000
      shares of our Series A preferred stock held by Walter H. Annenberg, as
      Trustee under the will of M.L. Annenberg.

(3)   Mr. Benoliel beneficially owns 66,798 partnership units.

(4)   The Blake Family Trust beneficially owns 105,043 partnership units.
      Bradley N. Blake was our Regional Senior Vice President - Retail until
      March 20, 1997.

(5)   Until April 1995, Mr. Daugherty was our Senior Vice President - Seattle.
      Mr. Daugherty beneficially owns 21,244 partnership units and 100 shares of
      common stock.

(6)   Mr. Davenport is Regional Senior Vice President - Southern California and
      beneficially owns 152,835 partnership units, 24,265 shares of restricted
      common stock and 242,500 options to purchase common stock, 100,500 of
      which are exercisable within 60 days of March 19, 1999.

(7)   Mr. Eddy is Regional Senior Vice President - Oregon. Mr. Eddy beneficially
      owns 146,397 partnership units, 5,176 shares of restricted common stock
      and options to purchase 148,500 shares of common stock, 74,900 of which
      are exercisable within 60 days of March 19, 1999.

(8)   Mr. Foster is Executive Vice President and Chief Investment Officer. Mr.
      Foster beneficially owns 143,958 partnership units, 36,304 shares of
      restricted common stock and options to purchase 254,500 shares of common
      stock, 101,300 of which are exercisable within 60 days of March 19, 1999.

(9)   Mr. French is Executive Vice President and Chief Operating Officer. Mr.
      French beneficially owns 523,281 partnership units, 4,700 shares of common
      stock, 21,221 shares of restricted common stock and 462,000 options to
      purchase common stock, 209,000 of which are exercisable within 60 days of
      March 19, 1999.

(10)  Until July 1996, Mr. Gordon was our General Counsel and Vice President.
      Mr. Gordon beneficially owns 10,738 partnership units and 115 shares of
      common stock owned by Mr. Gordon's spouse, of which Mr.
      Gordon may be deemed to have beneficial ownership.

(11)  Mr. Hosford was Executive Vice President until February 1, 1998. Mr.
      Hosford beneficially owns 644,447 partnership units, 9,500 shares of
      common stock and 1,000 shares of common stock held by Mr. Hosford as
      custodian for his children, of which Mr. Hosford may be deemed to have
      beneficial ownership.

(12)  Mr. Jefferson is Senior Vice President - Washington/Idaho. Mr. Jefferson
      beneficially owns 229,749 partnership units, 1,450 shares of restricted
      common stock, 1,563 shares of common stock, 7,552 shares of common stock
      indirectly held through a trust and options to purchase 98,000 shares of
      common stock, 47,200 of which are exercisable within 60 days of March 19,
      1999.

(13)  Mr. Leider is Vice President - Seattle. Mr. Leider beneficially owns 6,678
      partnership units, 4,553 shares of common stock, 1,592 shares of
      restricted common stock and 43,500 options to purchase common stock,
      13,000 of which are exercisable within 60 days of March 19, 1999.

(14)  The Meier Family Trust beneficially owns 500,000 partnership units.

(15)  The Meier Group II, L.P. beneficially owns 23,662 units.

(16)  Mr. Mulroy is Senior Vice President - Northern Bay Area. Mr. Mulroy
      beneficially owns 123,393 partnership units and 42,500 options to purchase
      common stock, all of which are exercisable within 60 days of March 19,
      1999.

(17)  Mr. Romney is Senior Vice President - San Diego. Mr. Romney beneficially
      owns 119,036 partnership units, 2,740 shares of restricted common stock
      and 119,500 options to purchase common stock, 67,300 of which are
      exercisable within 60 days of March 19, 1999.

(18)  Mr. Rothstein is Senior Vice President - Finance. Mr. Rothstein
      beneficially owns 14,689 partnership units and 75,000 options to purchase
      common stock, 20,250 of which are exercisable within 60 days of March 19,
      1999.

(19)  Mr. Schnugg is Regional Senior Vice President - Northeast Bay
      Area/Sacramento. Mr. Schnugg beneficially owns 203,642 partnership units,
      23,397 shares of restricted common stock and 207,500 options to purchase
      common stock, 95,500 of which are exercisable within 60 days of March 19,
      1999.

(20)  Mr. Smith was Vice President - Retail until March 20, 1997. Mr. Smith
      beneficially owns 4,020 partnership units and 5,372 shares of common
      stock.

(21)  Mr. Souther was Senior Vice President - Portland until January 27, 1998.
      Mr. Souther beneficially owns 85,811 partnership units, 965 shares of
      common stock and 50 shares of common stock held in his wife's IRA, of
      which Mr. Souther may be deemed to have beneficial ownership.

(22)  Mr. Spieker is Chairman of the Board and Chief Executive Officer. Mr.
      Spieker beneficially owns 2,421,695 partnership units, 38,734 shares of
      restricted common stock, 100,000 shares of common stock, 1,450 shares of
      common stock held by his wife and children, of which Mr. Spieker may be
      deemed to have beneficial


                                       13

<PAGE>   17



      ownership, and 722,500 options to purchase common stock, of which 350,500
      are exercisable within 60 days of March 19, 1999.

(23)  Mr. Singleton is Vice Chairman of the Board. Mr. Singleton beneficially
      owns 683,123 partnership units, 17,500 shares of common stock, 900 shares
      of common stock held by Mr. Singleton as custodian for his children for
      which Mr. Singleton may be deemed to have beneficial ownership, 16,884
      shares of restricted common stock and 342,500 options to purchase common
      stock, of which 195,500 are exercisable within 60 days of March 19, 1999.

(24)  Mr. Thompson is Senior Vice President - Sacramento. Mr. Thompson
      beneficially owns 11,893 partnership units, 315 shares of common stock,
      2,713 shares of restricted common stock, and 85,000 options to purchase
      common stock, of which 37,750 are exercisable within 60 days of March 19,
      1999.

(25)  Mr. de Benedetti beneficially owns 45,250 partnership units.

(26)  Pokigo Family Trust u/t/a May 8,1987 beneficially owns 27,254 partnership
      units and Frank J. Pokigo, Jr. owns 100 shares of common stock.

(27)  Mr. Seymour beneficially owns 17,398 partnership units.

(28)  Mr. Sheehan beneficially owns 37,406 partnership units.

(29) Sippl Properties, LLC beneficially owns 133,406 partnership units.

        Information concerning the selling stockholders may change from time to
time and any significant changes will be set forth in supplements to this
prospectus if and when necessary.

                      ANTI-TAKEOVER PROVISIONS OF OUR CHARTER AND BYLAWS

        Certain provisions of our Articles of Incorporation and Bylaws might
discourage transactions that involve an actual or threatened takeover of us. For
example, the ownership limit would delay or impede a transaction or a change in
control that might involve a premium price for our capital stock or would
otherwise be in the best interest of the stockholders. See "Description of
Capital Stock--Restrictions on Ownership." In addition, our board of directors
is divided into three classes of directors, each class serving staggered
three-year terms, and directors may only be removed for cause and with the vote
of 80% of the shares eligible to vote. These provisions may reduce the
possibility of a tender offer or an attempt to change our control.

    We have also adopted a shareholder protection rights plan which has
anti-takeover effects. See "Description of Capital Stock -- Shareholder
Protection Rights."

                        FEDERAL INCOME TAX CONSIDERATIONS

        The following summary of material federal income tax considerations is
based on current law and does not purport to deal with all aspects of taxation
that may be relevant to you in light of your personal investment or tax
circumstances, or to certain types of stockholders (including insurance
companies, financial institutions and broker-dealers) subject to special
treatment under the federal income tax laws. Certain federal income tax
considerations relevant to holders of the Offered Securities will be provided in
the applicable Prospectus Supplement relating thereto.

        YOU ARE ADVISED TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE SPECIFIC
TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND SALE OF THE OFFERED
SECURITIES.

GENERAL

        We believe that since our formation we have operated in a manner that
permits us to satisfy the requirements for taxation as a REIT under the
applicable provisions of the Code. We intend to continue


                                       14

<PAGE>   18



to operate to satisfy such requirements. No assurance can be given, however,
that such requirements will be satisfied.

        The provisions of the Code, Treasury Regulations promulgated thereunder
and other federal income tax laws relating to qualification and operation as a
REIT are highly technical and complex. The following sets forth the material
aspects of the laws that govern the federal income tax treatment of a REIT and
its stockholders. This summary is qualified in its entirety by the applicable
Code provisions, rules and Treasury Regulations thereunder, and administrative
and judicial interpretations thereof. Morrison & Foerster LLP has acted as our
special tax counsel in connection with our election to be taxed and operated as
a REIT.

        In the opinion of Morrison & Foerster LLP, commencing with our taxable
year ended December 31, 1993, we have been organized in conformity with the
requirements for qualification as a REIT, and our method of operation has and
will enable us to continue to meet the requirements for qualification and
taxation as a REIT under the Code. It must be emphasized that this opinion is
based on various assumptions and is conditioned upon certain representations
made by us as to factual matters. Moreover, qualification and taxation as a REIT
depends upon our ability to meet, through actual annual operating results,
distribution levels and diversity of stock ownership, the various qualification
tests imposed under the Code discussed below, the results of which will not be
reviewed by Morrison & Foerster LLP. Accordingly, no assurance can be given that
the actual results of our operations for any particular taxable year will
satisfy such requirements. See "-- Failure to Qualify."

        In brief, if certain detailed conditions imposed by the REIT provisions
of the Code are satisfied, entities, such as us, that invest primarily in real
estate and that otherwise would be treated for federal income tax purposes as
corporations, are generally not taxed at the corporate level on their "REIT
taxable income" that is currently distributed to stockholders. This treatment
substantially eliminates the "double taxation" (i.e., taxation at both the
corporate and stockholder levels) that generally results from investing in
corporations.

        If we fail to qualify as a REIT in any year, however, we will be subject
to federal income tax as if we were a domestic corporation, and you will be
taxed in the same manner as stockholders of ordinary corporations. In that
event, we could be subject to potentially significant tax liabilities and the
amount of cash available for distribution to you could be reduced.

TAXATION OF THE COMPANY

        In any year in which we qualify as a REIT, in general, we will not be
subject to federal income tax on that portion of our net income that we
distribute to stockholders. However, we will be subject to federal income tax as
follows: First, we will be taxed at regular corporate rates on any undistributed
real estate investment trust taxable income, including undistributed net capital
gains. (However, we can elect to "pass through" any of our taxes paid on our
undistributed net capital gains income to our stockholders on a pro rata basis.)
Second, under certain circumstances, we may be subject to the "alternative
minimum tax" on our items of tax preference. Third, if we have (1) net income
from the sale or other disposition of "foreclosure property" which is held
primarily for sale to customers in the ordinary course of business or (2) other
nonqualifying income from foreclosure property, we will be subject to tax at the
highest corporate rate on such income. Fourth, if we have net income from
prohibited transactions (which are, in general, certain sales or other
dispositions of property held primarily for sale to customers in the ordinary
course of business, other than property held for at least four years,
foreclosure property, and property involuntarily converted), such income will be
subject to a 100% tax. Fifth, if we should fail to satisfy the 75% or the 95%
tests (as discussed below), and have nonetheless maintained our qualification as
a REIT because certain other requirements have been satisfied, we will be
subject to a 100% tax on the net income attributable to the greater of the
amount by which we fail the 75% or 95% test. Sixth, if we should fail to
distribute during each calendar year at least the sum of (1) 85% of our ordinary
income for such year, (2) 95% of our net capital gain income for such year, and
(3) any undistributed taxable income from prior periods, we will be subject to a
4% excise tax on the excess of

                                       15

<PAGE>   19



such required distribution over the amounts distributed. Seventh, if we acquire
any asset from a C corporation (i.e., generally a corporation subject to full
corporate-level tax) in a transaction in which the basis of the asset in our
hands is determined by reference to the basis of the asset (or any other
property) in the hands of the C corporation, and we recognize gain on the
disposition of such asset during the 10-year period beginning on the date on
which such asset was acquired by the REIT, then, to the extent of any built-in
gain at the time of acquisition, such gain will be subject to tax at the highest
regular corporate rate.

REQUIREMENTS FOR QUALIFICATION

        The Code defines a REIT as a corporation, trust or association (1) which
is managed by one or more trustees or directors; (2) the beneficial ownership of
which is evidenced by transferable shares, or by transferable certificates of
beneficial interest; (3) which would be taxable as a domestic corporation, but
for Sections 856 through 860 of the Code; (4) which is neither a financial
institution nor an insurance company subject to certain provisions of the Code;
(5) the beneficial ownership of which is held by 100 or more persons; (6) not
more than 50% in value of the outstanding stock of which is owned, directly or
indirectly, by five or fewer individuals (as defined in the Code) at any time
during the last half of each taxable year; and (7) which meets certain other
tests, described below, regarding the nature of income and assets. The Code
provides that conditions (1) to (4), inclusive, must be met during the entire
taxable year and that condition (5) must be met during at least 335 days of a
taxable year of 12 months, or during a proportionate part of a taxable year of
less than 12 months. Beginning in 1998, a REIT's failure to satisfy condition
(6) during a taxable year will not result in its disqualification as REIT under
the Code for such taxable year as long as (i) the REIT satisfies the stockholder
demand statement requirements described in the succeeding paragraph and (ii) the
REIT did not know, or exercising reasonable diligence would not have known,
whether it had failed condition (6). The President's Fiscal 2000 Budget Proposal
would also prevent any "person" (i.e., an individual, corporation, partnership
or trust) from possessing more than 50% of the total combined voting power of
all classes of voting stock or more than 50% of the total value of shares of all
classes of stock of a REIT, effective for entities electing REIT status after
the date of first committee action.

        In order to ensure compliance with the ownership tests described above,
we have placed certain restrictions on the transfer of the common stock and
preferred stock to prevent further concentration of stock ownership. Moreover,
to evidence compliance with these requirements, we must maintain records which
disclose the actual ownership of our outstanding common stock and preferred
stock. In fulfilling our obligations to maintain records, we must and will
demand written statements each year from the record holders of designated
percentages of our common stock and preferred stock disclosing the actual owners
of such common stock and preferred stock. A list of those persons failing or
refusing to comply with such demand must be maintained as part of our records. A
stockholder failing or refusing to comply with our written demand must submit
with his federal income tax returns a similar statement disclosing the actual
ownership of common stock and preferred stock and certain other information. In
addition, our Articles of Incorporation provide restrictions regarding the
transfer of our shares that are intended to assist us in continuing to satisfy
the share ownership requirements. See "Description of Capital Stock
- --Restrictions on Ownership."

        Although we intend to satisfy the stockholder demand statement
requirements described in the preceding paragraph, beginning in 1998, our
failure to satisfy those requirements will not result in our disqualification as
a REIT under the Code but may result in the imposition of IRS penalties against
us.

        In the case of a REIT that is a partner in a partnership, Treasury
Regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the income
of the partnership attributable to such share. In addition, the character of the
assets and gross income of a partnership shall retain the same character in the
hands of a partner qualifying as a REIT for purposes of Section 856 of the Code,
including satisfying the gross income tests and the asset tests, described
below. Thus, our proportionate share of the assets, liabilities and items of

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<PAGE>   20



income of the operating partnership will be treated as our assets, liabilities
and items of income for purposes of applying the requirements described below.

      ASSET TESTS

        At the close of each quarter of our taxable year, we must satisfy two
tests relating to the nature of our assets. First, at least 75% of the value of
our total assets must be represented by interests in real property, interests in
mortgages on real property, shares in other REITs, cash, cash items and
government securities (as well as certain temporary investments in stock or debt
instruments purchased with the proceeds of new capital raised by us). Second,
although the remaining 25% of our assets generally may be invested without
restriction, securities in this class may not exceed either (1) 5% of the value
of our total assets as to any one nongovernment issuer, or (2) 10% of the
outstanding voting securities of any one issuer. The President's Fiscal 2000
Budget Proposal would also generally prohibit a REIT from owning securities in a
corporation representing more than 10% of the corporation's vote or value. Our
investment in the properties through our interest in the operating partnership
constitutes qualified assets for purposes of the 75% asset test. In addition, we
may own 100% of "qualified REIT subsidiaries," which are, in general, 100%
owned, corporate subsidiaries of a REIT. All assets, liabilities, and items of
income, deduction, and credit of such a qualified REIT subsidiary will be
treated as owned and realized directly by us. Our investment in preferred stock
of Spieker Northwest, Inc. is not a qualifying asset for purposes of the 75%
asset test. We expect, however, that such investment will continue to represent
less than 5% of our total assets and, together with any other nonqualifying
assets, will continue to represent less than 25% of our total assets.

      GROSS INCOME TESTS

        There are three separate percentage tests (two beginning in 1998)
relating to the sources of our gross income which must be satisfied for each
taxable year. For purposes of these tests, where we invest in a partnership, we
will be treated as receiving our share of the income and loss of the
partnership, and the gross income of the partnership will retain the same
character in our hands as it has in the hands of the partnership. See "-- Tax
Aspects of our Investment in the Operating Partnerships --General."

        The 75% Test. At least 75% of our gross income for the taxable year must
be "qualifying income." Qualifying income generally includes (1) rents from real
property (except as modified below); (2) interest on obligations collateralized
by mortgages on, or interests in, real property; (3) gains from the sale or
other disposition of interests in real property and real estate mortgages, other
than gain from property held primarily for sale to customers in the ordinary
course of our trade or business ("dealer property"); (4) dividends or other
distributions on shares in other REITs, as well as gain from the sale of such
shares; (5) abatements and refunds of real property taxes; (6) income from the
operation, and gain from the sale, of property acquired at or in lieu of a
foreclosure of the mortgage collateralized by such property ("foreclosure
property"); and (7) commitment fees received for agreeing to make loans
collateralized by mortgages on real property or to purchase or lease real
property.

        Rents received from a tenant will not, however, qualify as rents from
real property in satisfying the 75% test (or the 95% test described below) if
we, or an owner of 10% or more of our equity securities, directly or
constructively owns 10% or more of such tenant (a "related party tenant"). In
addition, if rent attributable to personal property, leased in connection with a
lease of real property, is greater than 15% of the total rent received under the
lease, then the portion of rent attributable to such personal property will not
qualify as rents from real property. Moreover, an amount received or accrued
generally will not qualify as rents from real property (or as interest income)
for purposes of the 75% test and 95% test (described below) if it is based in
whole or in part on the income or profits of any person. Rent or interest will
not be disqualified, however, solely by reason of being based on a fixed
percentage or percentages of receipts or sales. Finally, for rents received to
qualify as rents from real property, we generally must not operate or manage the
property or furnish or render services to tenants, other than through an
"independent contractor" from whom we derive no revenue. The "independent
contractor"


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<PAGE>   21

requirement, however, does not apply to the extent that the services provided by
us are "usually or customarily rendered" in connection with the rental of space
for occupancy only, and are not otherwise considered "rendered to the occupant."
For both the related party tenant rules and determining whether an entity
qualifies as an independent contractor of a REIT, certain attribution rules of
the Code apply, pursuant to which shares of a REIT held by one entity are deemed
held by another.

        In general, if a REIT provides impermissible services to its tenants,
all of the rent from those tenants can be disqualified from satisfying the 75%
test and 95% test (described below). However, rents will not be disqualified if
a REIT provides de minimis impermissible services. For this purpose, services
provided to tenants of a property are considered de minimis where income derived
from the services rendered equals 1% or less of all income derived from the
property (threshold determined on a property-by-property basis). For purposes of
the 1% threshold, the amount treated as received for any service shall not be
less than 150% of the direct cost incurred in furnishing or rendering the
service.

        Through the operating partnership (which is not an independent
contractor), we will provide certain services with respect to the properties
currently held by the operating partnership and any newly acquired properties.
We believe that the services provided by the operating partnership are usually
or customarily rendered in connection with the rental of space for occupancy
only, and therefore that the provision of such services will not cause the rents
received with respect to the properties to fail to qualify as rents from real
property for purposes of the 75% and 95% tests. We do not intend to rent to
related party tenants or to charge rents that would not qualify as rents from
real property because the rents are based on the income or profits of any person
(other than rents that are based on a fixed percentage or percentages of
receipts or sales).

        The 95% Test. In addition to deriving 75% of our gross income from the
sources listed above, at least 95% of our gross income for the taxable year must
be derived from the above-described qualifying income, or from dividends,
interest or gains from the sale or disposition of stock or other securities that
are not dealer property. Dividends from a corporation other than a REIT and
interest on any obligation not collateralized by an interest on real property
are included for purposes of the 95% test, but not for purposes of the 75% test.
For purposes of determining whether we comply with the 75% and 95% tests, gross
income does not include income from "prohibited transactions." A "prohibited
transaction" is a sale of dealer property, generally excluding certain property
held by us for at least four years and foreclosure property. See "-- Taxation of
the Company" and "-- Tax Aspects of our Investment in the Operating Partnership
- -- Sale of the Properties."

        We believe that we and the operating partnership have held and managed
the Properties in a manner that has given rise to rental income qualifying under
the 75% and 95% tests. Gains on sales of the Properties will generally qualify
under the 75% and 95% tests.

        Even if we fail to satisfy one or both of the 75% or 95% tests for any
taxable year, we may still qualify as a REIT for such year if we are entitled to
relief under certain provisions of the Code. These relief provisions will
generally be available if: (1) our failure to comply was due to reasonable cause
and not to willful neglect; (2) we report the nature and amount of each item of
our income included in the 75% and 95% tests on a schedule attached to our tax
return; and (3) any incorrect information on this schedule is not due to fraud
with intent to evade tax. It is not possible, however, to state whether in all
circumstances we would be entitled to the benefit of these relief provisions. If
these relief provisions apply, we will, however, still be subject to a special
tax upon the greater of the amount by which we fail either the 75% or 95% test
for that year.

        The 30% Test. For each taxable year ending on or before December 31,
1997, we must have derived less than 30% of our gross income from the sale or
other disposition of (1) real property held for less than four years (other than
foreclosure property and involuntary conversions), (2) stock or securities held
for less than one year, and (3) property in a prohibited transaction. The 30%
test has been repealed, effective for tax years beginning after December 31,
1997.


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<PAGE>   22



      ANNUAL DISTRIBUTION REQUIREMENTS

        In order to qualify as a REIT, we are required to distribute dividends
(other than capital gain dividends) to our stockholders each year in an amount
equal to at least (A) the sum of (i) 95% of our REIT taxable income (computed
without regard to the dividends paid deduction and our net capital gain) and
(ii) 95% of the net income (after tax), if any, from foreclosure property, minus
(B) the sum of certain items of non-cash income. Such distributions must be paid
in the taxable year to which they relate, or in the following taxable year if
declared before we timely file our tax return for such year and if paid on or
before the first regular dividend payment after such declaration. To the extent
that we do not distribute all of our net capital gain or distribute at least
95%, but less than 100%, of our REIT taxable income, as adjusted, we will be
subject to tax on the undistributed amount at regular capital gains or ordinary
corporate tax rates, as the case may be. (However, we can elect to "pass
through" any of our taxes paid on our undistributed net capital gain income to
our stockholders on a pro rata basis.) Furthermore, if we should fail to
distribute during each calendar year at least the sum of (1) 85% of our ordinary
income for such year, (2) 95% of our net capital gain income for such year, and
(3) any undistributed taxable income from prior periods, we would be subject to
a 4% excise tax on the excess of such required distribution over the sum of the
amounts actually distributed and the amount of any net capital gains we elected
to retain and pay tax on. For these and other purposes, dividends declared by us
in October, November or December of one taxable year and payable to a
stockholder of record on a specific date in any such month shall be treated as
both paid by us and received by the stockholder during such taxable year,
provided that the dividend is actually paid by us by January 31 of the following
taxable year.

        We believe that we have made timely distributions sufficient to satisfy
the annual distribution requirements. In this regard, the partnership agreement
of the operating partnership authorizes us, as general partner, to take such
steps as may be necessary to cause the operating partnership to distribute to
its partners an amount sufficient to permit us to meet these distribution
requirements. It is possible that in the future we may not have sufficient cash
or other liquid assets to meet the 95% distribution requirement, due to timing
differences between the actual receipt of income and actual payment of expenses
on the one hand, and the inclusion of such income and deduction of such expenses
in computing our REIT taxable income on the other hand. Further, as described
below, it is possible that, from time to time, we may be allocated a share of
net capital gain attributable to the sale of depreciated property that exceeds
our allocable share of cash attributable to that sale. To avoid any problem with
the 95% distribution requirement, we will closely monitor the relationship
between our REIT taxable income and cash flow and, if necessary, will borrow
funds (or cause the operating partnership or other affiliates to borrow funds)
in order to satisfy the distribution requirement. We (directly or through the
operating partnership) may be required to borrow funds at times when market
conditions are not favorable.

        If we fail to meet the 95% distribution requirement as a result of an
adjustment to our tax return by the IRS, we may retroactively cure the failure
by paying a "deficiency dividend" (plus applicable penalties and interest)
within a specified period.

      FAILURE TO QUALIFY

        If we fail to qualify for taxation as a REIT in any taxable year and the
relief provisions do not apply, we will be subject to tax (including any
applicable alternative minimum tax) on our taxable income at regular corporate
rates. Distributions to stockholders in any year in which we fail to qualify
will not be deductible by us, nor will they be required to be made. In such
event, to the extent of our current and accumulated earnings and profits, all
distributions to stockholders will be taxable as ordinary income, and, subject
to certain limitations in the Code, corporate distributees may be eligible for
the dividends received deduction. Unless entitled to relief under specific
statutory provisions, we will also be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
It is not possible to state whether we would be entitled to such statutory
relief.



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<PAGE>   23



TAX ASPECTS OF OUR INVESTMENT IN THE OPERATING PARTNERSHIP

        The following discussion summarizes certain federal income tax
considerations applicable solely to our investment in the operating partnership.
The discussion does not cover state or local tax laws or any federal tax laws
other than income tax laws.

      GENERAL

        We hold a direct ownership interest in the operating partnership. In
general, partnerships are "pass-through" entities which are not subject to
federal income tax. Rather, partners are allocated their proportionate shares of
the items of income, gain, loss, deduction and credit of a partnership, and are
potentially subject to tax thereon, without regard to whether the partners
receive a distribution from the partnership. We include our proportionate share
of the foregoing operating partnership items for purposes of the various REIT
income tests and in the computation of our REIT taxable income. See "--Taxation
of the Company" and "-- Requirements for Qualification -- Gross Income Tests."
Any resultant increase in our REIT taxable income increases our distribution
requirements (see "-- Requirements for Qualification -- Annual Distribution
Requirements"), but is not subject to federal income tax in our hands provided
that such income is distributed to our stockholders. Moreover, for purposes of
the REIT asset tests (see "-- Requirements for Qualification -- Asset Tests"),
we include our proportionate share of assets held by the operating partnership.

      TAX ALLOCATIONS WITH RESPECT TO THE PROPERTIES

        Pursuant to Section 704(c) of the Code, income, gain, loss and deduction
attributable to appreciated or depreciated property that is contributed to a
partnership in exchange for an interest in the partnership (such as some of our
properties), must be allocated in a manner such that the contributing partner is
charged with, or benefits from, respectively, the unrealized gain or unrealized
loss associated with the property at the time of the contribution. The amount of
such unrealized gain or unrealized loss is generally equal to the difference
between the fair market value of contributed property at the time of
contribution, and the adjusted tax basis of such property at the time of
contribution (a "Book-Tax Difference"). Such allocations are solely for federal
income tax purposes and do not affect the book capital accounts or other
economic or legal arrangements among the partners. The operating partnership was
initially formed by way of contributions of appreciated property (including some
of our properties). Consequently, the partnership agreement of the operating
partnership requires such allocations to be made in a manner consistent with
Section 704(c) of the Code.

        In general, the limited partners of the operating partnership will be
allocated lower amounts of depreciation deductions for tax purposes and
increased taxable income and gain on sale by the operating partnership of the
contributed assets (including some of our properties). This will tend to
eliminate the Book-Tax Difference over the life of the operating partnership.
However, the special allocation rules under Section 704(c) of the Code do not
always entirely rectify the Book-Tax Difference on an annual basis or with
respect to a specific taxable transaction, such as a sale. Thus, the carryover
basis of the contributed assets in the hands of the operating partnership may
cause us to be allocated lower depreciation and other deductions, and possibly
greater amounts of taxable income in the event of a sale of such contributed
assets, in excess of the economic or book income allocated to it as a result of
such sale. This may cause us to recognize taxable income in excess of cash
proceeds, which might adversely affect our ability to comply with the REIT
distribution requirements. See "-- Requirements for Qualification -- Annual
Distribution Requirements." In addition, the application of Section 704(c) of
the Code to the operating partnership is not entirely clear and may be affected
by authority that may be promulgated in the future.

      SALE OF THE PROPERTIES

        Generally, any gain realized by the operating partnership on the sale of
property held by the operating partnership will be capital gain, except for any
portion of such gain that is treated as certain


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<PAGE>   24



depreciation or cost recovery recapture. Our share of any gain realized by the
operating partnership on the sale of any dealer property generally will be
treated as income from a prohibited transaction that is subject to a 100%
penalty tax. See "Taxation of the Company" and "-- Requirements for
Qualification --Gross Income Tests -- The 95% Test." Under existing law, whether
property is dealer property is a question of fact that depends on all the facts
and circumstances with respect to the particular transaction. The operating
partnership intends to hold its properties for investment with a view to
long-term appreciation, to engage in the business of acquiring, developing,
owning and operating its properties, and to make such occasional sales of its
properties as are consistent with our investment objectives. Based upon such
investment objectives, we believe that in general our properties should not be
considered dealer property and that the amount of income from prohibited
transactions, if any, will not be material.

TAXATION OF STOCKHOLDERS

      TAXATION OF TAXABLE U.S. STOCKHOLDERS

      IN GENERAL

        As used herein, "U.S. Stockholder" means a holder of company stock who
or that (1) is a citizen or resident of the United States, (2) is a corporation
or other entity created or organized in or under the laws of the United States
or political subdivision thereof (except, in the case of a partnership, as the
Treasury provides otherwise by Treasury Regulations), (3) is an estate the
income of which is subject to U.S. federal income taxation regardless of its
source, (4) is a trust if (A) a U.S. court is able to exercise primary
supervision over the administration of the trust and (B) one more U.S. persons,
within the meaning of Section 7701(a)(30) of the Code, have authority to control
all substantial decisions of the trust, or (5) is otherwise subject to U.S.
federal income taxation on a net income basis in respect of company stock.

        As long as we qualify as a REIT, distributions made to our taxable U.S.
Stockholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by them as
ordinary income. U.S. Stockholders that are corporations will not be entitled to
a dividends received deduction. To the extent that we make distributions in
excess of current and accumulated earnings and profits, these distributions are
treated first as a tax-free return of capital to the stockholder, reducing the
tax basis of a U.S. Stockholder's company stock by the amount of such
distribution (but not below zero), with distributions in excess of the U.S.
Stockholder's tax basis taxable as capital gains (if the stock is held as a
capital asset). In addition, any dividend declared by us in October, November or
December of any year and payable to a U.S. Stockholder of record on a specific
date in any such month shall be treated as both paid by us and received by the
U.S. Stockholder on December 31 of such year, provided that the dividend is
actually paid by us during January of the following calendar year. U.S.
Stockholders may not include in their individual income tax returns any of our
net operating losses or capital losses.

        In general, distributions which are designated by us as capital gain
dividends will be taxed to U.S. Stockholders as gain from the sale of assets
held for greater than 1 year, or "long-term term capital gain," without regard
to the period for which a U.S. Stockholder has held his stock upon which the
capital gain dividend is paid. However, corporate U.S. Stockholders may be
required to treat up to 20% of certain capital gain dividends as ordinary
income. A portion of such capital gain dividends received by noncorporate
taxpayers might be subject to tax at a 25% rate to the extent attributable to
certain gains realized on the sale of real property. In addition, noncorporate
taxpayers are generally taxed at a maximum rate of 20% on net capital gain
(generally, the excess of net long-term capital gain over net short-term capital
loss) attributable to gains realized on the sale of property held for greater
than one year.

        We may elect to retain, rather than distribute as a capital gain
dividend, our net long-term capital gains. In such event, we would pay tax on
such retained net long-term capital gains. In addition, to the


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<PAGE>   25



extent designated by us, a U.S. Stockholder generally would (1) include his
proportionate share of such undistributed long-term capital gains in computing
his long-term capital gains in his return for his taxable year in which the last
day of our taxable year falls (subject to certain limitations as to the amount
so includable), (2) be deemed to have paid the capital gains tax imposed on us
on the designated amounts included in such U.S. Stockholder's long-term capital
gains, (3) receive a credit or refund for such amount of tax deemed paid by the
U.S. Stockholder, (4) increase the adjusted basis of his shares by the
difference between the amount of such includable gains and the tax deemed to
have been paid by him, and (5) in the case of a U.S. Stockholder that is a
corporation, appropriately adjust its earnings and profits for the retained
capital gains in accordance with Treasury Regulations (which have not yet been
issued).

        In general, any loss upon a sale or exchange of our stock by a U.S.
Stockholder who has held such stock for six months or less (after applying
certain holding period rules) will be treated as a long-term capital loss, to
the extent of distributions (actually made or deemed made in accordance with the
preceding paragraph) from us required to be treated by such stockholder as
long-term capital gain.

      INFORMATION REPORTING AND BACKUP WITHHOLDING

        We will report to our U.S. Stockholders and to the IRS the amount of
dividends paid during each calendar year, and the amount of tax withheld, if
any, with respect thereto. Under the backup withholding rules, a U.S.
Stockholder may be subject to backup withholding at the rate of 31% with respect
to dividends paid and redemption proceeds unless such U.S. Stockholder (a) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates that fact, or (b) provides a taxpayer identification number (which,
for an individual, will ordinarily be his U.S. Social Security number),
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. We may
also institute backup withholding with respect to a U.S. Stockholder if
instructed to do so by the IRS. A U.S. Stockholder that does not provide us with
its correct taxpayer identification number may also be subject to penalties
imposed by the IRS. Any amount paid as backup withholding will be creditable
against the stockholder's federal income tax liability, if any, and otherwise be
refundable.

TAXATION OF TAX-EXEMPT STOCKHOLDERS

        Based upon a published ruling by the IRS, distribution by us to a U.S.
Stockholder that is a tax-exempt entity will not constitute "unrelated business
taxable income" ("UBTI") provided that the tax-exempt entity has not financed
the acquisition of its shares with "acquisition indebtedness" within the meaning
of the Code and the shares are not otherwise used in an unrelated trade or
business of the tax-exempt entity.

        Notwithstanding the preceding paragraph, however, a portion of the
dividends paid by us may be treated as UBTI to certain domestic private pension
trusts if we are treated as a "pension-held REIT." We believe that we are not,
and do not expect to become a "pension-held REIT." If we were to become a
pension-held REIT, these rules generally would only apply to certain pension
trusts that held more than 10% of our stock.

TAXATION OF NON-U.S. STOCKHOLDERS

        The following is a discussion of certain anticipated U.S. federal income
tax consequences of the ownership and disposition of our stock applicable to
Non-U.S. Stockholders of such stock. A "Non-U.S. Stockholder" is any person who
or that is not a U.S. Stockholder. The discussion is based on current law and is
for general information only. The discussion addresses only certain and not all
aspects of U.S. federal income taxation.



                                       22

<PAGE>   26



      DISTRIBUTIONS FROM THE COMPANY

        1. Ordinary Dividends. The portion of dividends received by Non-U.S.
Stockholders payable out of our current and accumulated earnings and profits
which are not attributable capital gains and which are not effectively connected
with a U.S. trade or business of the Non-U.S. Stockholder will be subject to
U.S. withholding tax at the rate of 30% (unless reduced by treaty). In general,
Non-U.S. Stockholders will not be considered engaged in a U.S. trade or business
solely as a result of their ownership of our stock. In cases where the dividend
income from a Non-U.S. Stockholder's investment in our stock is effectively
connected with the Non-U.S. Stockholder's conduct of a U.S. trade or business
(or, if an income tax treaty applies, is attributable to a U.S. permanent
establishment of the Non-U.S. Stockholder), the Non-U.S. Stockholder generally
will be subject to U.S. tax at graduated rates, in the same manner as U.S.
Stockholders are taxed with respect to such dividends (and may also be subject
to the 30% branch profits tax in the case of a Non-U.S. Stockholder that is a
foreign corporation).

        2. Non-Dividend Distributions. Unless our stock constitutes a USRPI (as
defined below), distributions by us which are not paid out of our current and
accumulated earnings and profits will not be subject to U.S. income or
withholding tax. If it cannot be determined at the time a distribution is made
whether or not such distribution will be in excess of current and accumulated
earnings and profits, the distribution will be subject to withholding at the
rate applicable to dividends. However, the Non-U.S. Stockholder may seek a
refund of such amounts from the IRS if it is subsequently determined that such
distribution was, in fact, in excess of our current and accumulated earnings and
profits. If our stock constitutes a USRPI, a distribution in excess of current
and accumulated earnings and profits shall be subject to 10% withholding tax and
may be subject to additional taxation under FIRPTA (as defined below). However,
the 10% withholding tax will not apply to distributions already subject to the
30% dividend withholding.

        We expect to withhold U.S. income tax at the rate of 30% on the gross
amount of any distributions of ordinary income made to a Non-U.S. Stockholder
unless (1) a lower treaty rate applies and proper certification is provided or
(2) the Non-U.S. Stockholder files an IRS Form 4224 with us claiming that the
distribution is effectively connected with the Non-U.S. Stockholder's conduct of
a U.S. trade or business (or, if an income tax treaty applies, is attributable
to a U.S. permanent establishment of the Non-U.S. Stockholder). Pursuant to
current Treasury Regulations, dividends paid to an address in a country outside
the United States are generally presumed to be paid to a resident of such
country for purposes of ascertaining the requirement of withholding discussed
above and the applicability of an income tax treaty rate. However, under
temporary Treasury Regulations, certain Non-U.S. Stockholders who seek to claim
the benefit of an applicable treaty rate are required to satisfy certain
residency and other requirements.

        3. Capital Gain Dividends. Under the Foreign Investment in Real Property
Tax Act of 1980 ("FIRPTA"), a distribution made by us to a Non-U.S. Stockholder,
to the extent attributable to gains ("USRPI Capital Gains") from dispositions of
United States Real Property Interests ("USRPIs"), which includes the properties
held by the operating partnership, will be considered effectively connected with
a U.S. trade or business of the Non-U.S. Stockholder and therefore will be
subject to U.S. income tax at the rate applicable to U.S. individuals or
corporations, without regard to whether such distribution is designated as a
capital gain dividend. In addition, we will be required to withhold tax equal to
35% of the amount of dividends to the extent such dividends constitute USRPI
Capital Gains. Distributions subject to FIRPTA may also be subject to a 30%
branch profits tax in the hands of a corporate Non-U.S.
Stockholder that is not entitled to treaty exemption.

        Distributions attributable to our capital gains, which are not USRPI
Capital Gains, generally will not be subject to taxation, unless (1) investment
in the shares is effectively connected with the Non-U.S. Stockholder's U.S.
trade or business (or, if an income tax treaty applies, is attributable to a
U.S. permanent establishment of the Non-U.S. Stockholder), in which case the
Non-U.S. Stockholder will be subject to the same treatment as U.S. stockholders
with respect to such gain (except that a corporate Non-U.S. Stockholder may also
be subject to the 30% branch profits tax), or (2) the Non-U.S.


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<PAGE>   27



Stockholder is a non-resident alien individual who is present in the United
States for 183 days or more during the taxable year and certain other conditions
are satisfied, in which case the non-resident alien individual will be subject
to a 30% tax on the individual's capital gains.

        Disposition of Stock. Unless our stock constitutes a USRPI, a sale of
such stock by a Non-U.S. Stockholder generally will not be subject to U.S.
taxation under FIRPTA. The stock will not constitute a USRPI if we are a
"domestically controlled REIT." A domestically controlled REIT is a REIT in
which, at all times during a specified testing period, less than 50% in value of
its shares is held directly or indirectly by Non-U.S. Stockholders. We believe
that we are, and we expect to continue to be, a domestically controlled REIT,
and therefore that the sale of our stock will not be subject to taxation under
FIRPTA. Because our stock will be publicly traded, however, no assurance can be
given that we will continue to be a domestically controlled REIT.

        If we do not constitute a domestically controlled REIT, a Non-U.S.
Stockholder's sale of stock generally will still not be subject to tax under
FIRPTA as a sale of a USRPI provided that (1) the stock is "regularly traded"
(as defined by applicable Treasury Regulations) on an established securities
market and (2) the selling Non-U.S. Stockholder held 5% or less of our
outstanding stock at all times during a specified testing period.

        If gain on the sale of our stock were subject to taxation under FIRPTA,
the Non-U.S. Stockholder would be subject to the same treatment as a U.S.
stockholder with respect to such gain (subject to applicable alternative minimum
tax and a special alternative minimum tax in the case of nonresident alien
individuals) and the purchaser of the stock could be required to withhold 10% of
the purchase price and remit such amount to the IRS.

        New Withholding Regulations. Final Treasury regulations dealing with
withholding tax on income paid to foreign persons and related matters (the "New
Withholding Regulations") were recently promulgated. In general, the New
Withholding Regulations do not significantly alter the substantive withholding
and information reporting requirements, but unify current certification
procedures and forms and clarify reliance standards. For example, the New
Withholding Regulations adopt a certification rule which was in the proposed
regulations under which a Non-U.S. Stockholder who wishes to claim the benefit
of an applicable treaty rate with respect to dividends received from a U.S.
corporation will be required to satisfy certain certification and other
requirements. In addition, the New Withholding Regulations require a corporation
that is a REIT to treat as a dividend the portion of a distribution that is not
designated as a capital gain dividend or return of basis and is not a
distribution in excess of basis treated as a capital gain under Section
301(c)(3) of the Code. The 30% withholding tax (subject to any applicable
deduction or exemption) will apply to such portion. The FIRPTA withholding rules
(discussed above) will apply with respect to the portion of the distribution
designated by the REIT as capital gain dividend and, unless the Common Stock is
not a USRPI (discussed above), to the portion that is a distribution in excess
of basis treated as a capital gain under Section 301(c)(3) of the Code. The New
Withholding Regulations will generally be effective for payments made after
December 31, 1999, subject to certain transition rules. EXCEPT FOR THIS
PARAGRAPH, THE DISCUSSION SET FORTH ABOVE UNDER "TAXATION OF NON-U.S.
STOCKHOLDERS" DOES NOT TAKE THE NEW WITHHOLDING REGULATIONS INTO ACCOUNT.
PROSPECTIVE NON-U.S. STOCKHOLDERS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE IMPACT TO THEM OF THE NEW WITHHOLDING REGULATIONS.

OTHER TAX CONSIDERATIONS

      DIVIDEND REINVESTMENT PROGRAM

        Under our dividend reinvestment program, stockholders participating in
the program will be deemed to have received the gross amount of any cash
distributions which would have been paid by us to such stockholders had they not
elected to participate. These deemed distributions will be treated as actual
distributions from us to the participating stockholders and will retain the
character and tax effect applicable to distributions from us generally. See
"Federal Income Tax Considerations -- Taxation of


                                       24

<PAGE>   28



Stockholders." Participants in the dividend reinvestment program are subject to
federal income tax on the amount of the deemed distributions to the extent that
such distributions represent dividends or gains, even though they receive no
cash. Shares of company Stock received under the program will have a holding
period beginning with the day after purchase, and a tax basis equal to their
cost (which is the gross amount of the deemed distribution).

      POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING TAX CONSIDERATIONS

        Prospective investors should recognize that the present federal income
tax treatment of an investment in us may be modified by legislative, judicial or
administrative action at any time, and that any such action may affect
investments and commitments previously made. The rules dealing with federal
income taxation are constantly under review by persons involved in the
legislative process and by the IRS and the U.S. Treasury Department, resulting
in revisions of regulations and revised interpretations of established concepts
as well as statutory changes. Revisions in federal tax laws and interpretations
thereof could adversely affect the tax consequences of an investment in us.

      STATE AND LOCAL TAXES

        We and our stockholders may be subject to state or local taxation in
various jurisdictions, including those in which we or they transact business or
reside. The state and local tax treatment of us and our stockholders may not
conform to the federal income tax consequences discussed above. Consequently,
prospective stockholders should consult their own tax advisers regarding the
effect of state and local tax laws on an investment in our common stock.

                              PLAN OF DISTRIBUTION

        This prospectus relates to the offer and sale from time to time by the
holders of up to 4,020,763 shares of common stock. These shares may be issued by
us to the holders of 1,000,000 shares of Series A preferred stock and 2,801,251
partnership units in the operating partnership, if and to the extent such
holders tender such Series A preferred stock or partnership units for exchange
into shares of common stock. We have registered the shares for sale pursuant to
registration rights agreements we entered into with the holders, but this
registration does not necessarily mean that we will issue any of these shares or
that the holders will offer to sell them.

        We will not receive any proceeds from the offering by the selling
stockholders or from the issuance of the shares of common stock to holders of
partnership units. The shares of common stock may be sold from time to time to
purchasers directly by any of the selling stockholders. Alternatively, the
selling stockholders may from time to time offer the shares of common stock
through dealers or agents, which may receive compensation in the form of
commissions from the selling stockholders and/or the purchasers for whom they
may act as an agent. The selling stockholders and any dealers or agents that
participate in the distribution of shares of common stock may be deemed to be
"underwriters" within the meaning of the Securities Act and any profits and
commissions received by them might be considered to be underwriting commissions
under the Securities Act.

        The selling stockholders may also distribute the shares from time to
time in one or more underwritten transactions at a fixed price, at market prices
prevailing at the time of sale or at negotiated prices. An underwritten offering
may be on a "best efforts" or a "firm commitment" basis. In connection with an
underwritten offering, underwriters or agents may receive compensation in the
form of discounts, concessions or commissions from the selling stockholders or
from the purchasers. Underwriters may sell shares of common stock to or through
dealers, and dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers.

        At the time a particular offer of shares of common stock is made, a
prospectus supplement, if required, will be distributed that will set forth the
names of any dealers or agents, any commissions and


                                       25

<PAGE>   29



any other required information. The shares of common stock may be sold from time
to time at varying prices determined at the time of sale.

        In some states the shares of common stock may be sold only through
registered or licensed brokers or dealers.

                                     EXPERTS

        The audited financial statements and schedule incorporated by reference
in this prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in 
reliance upon the authority of said firm as experts in accounting and auditing 
in giving said report.

                               VALIDITY OF SHARES

        The validity of the shares of common stock offered by this prospectus
will be passed upon for us by Sullivan & Cromwell, Los Angeles, California.
Sullivan & Cromwell will rely as to all matters of Maryland law upon the opinion
of Piper & Marbury L.L.P., Baltimore, Maryland. The description of our
qualification and taxation as a REIT contained in this Prospectus under the
caption entitled "Federal Income Tax Considerations -- General" is based upon
the opinion of Morrison & Foerster LLP, San Francisco, California.

                              AVAILABLE INFORMATION

        We have filed with the Securities and Exchange Commission a registration
statement on Form S-3. This prospectus is a part of the registration statement
and does not contain all of the information in the registration statement.
Wherever a reference is made in this prospectus to a contract or other document
of us or the operating partnership, please be aware that such reference is not
necessarily complete and that you should refer to the exhibits that are a part
of the registration statement for a copy of the contract or other document. You
may review a copy of the registration statement at the SEC's public reference
room in Washington, D.C., as well as through the SEC's internet site.

        We and the operating partnership are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and we both
file reports, proxy statements and other information with the SEC. All documents
filed by us may be accessed electronically without fees by means of the SEC's
web site on the internet at http://www.sec.gov. You may also read and copy these
documents at the public reference facilities of the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549. Our filings with the SEC are also
available to the public at prescribed rates by writing to the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for more information on the public reference
rooms and their copy charges. In addition, similar information can be inspected
and copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.

                     INCORPORATION OF DOCUMENTS BY REFERENCE

        The SEC allows us to "incorporate by reference" the information we file
with the SEC. This permits us to disclose important information to you by
referring to these filed documents. Any information incorporated by reference is
considered part of this prospectus, and any information filed by us with the SEC
after the date of this prospectus will automatically update and supersede this
information. We incorporate by reference the following documents filed with the
SEC:

        1.      Our annual report on Form 10-K for the year ended December 31,
                1998.



                                       26

<PAGE>   30



        2.      The description of our common stock contained in our
                registration statement on Form 8-A (File No. 1-12528).

        We also incorporate by reference any future filings made with the SEC
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent
to the date of this prospectus and prior to the termination of the offering.

        We will provide without charge upon written or oral request a copy of
all documents which are incorporated by reference in this prospectus, other than
the exhibits to such information. Requests should be directed to the Investor
Relations Coordinator, Spieker Properties, Inc., 2180 Sand Hill Road, Menlo
Park, California 94025, telephone number: (650) 854-5600.



                                       27

<PAGE>   31



                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

        The following table sets forth the estimated fees and expenses payable
by the Company in connection with the issuance and distribution of the common
stock registered hereby. All of such fees and expenses are estimates, except the
Securities Act registration fee.
<TABLE>
<CAPTION>

<S>                                                                             <C>
        Securities Act Registration Fee.......................................  $ 3,300
        Printing fees and duplicating fees ...................................    1,500
        Legal fees and expenses...............................................   20,000
        Accounting fees and expenses..........................................    3,000
        Miscellaneous expenses................................................    2,200
                                                                                -------

                  Total.......................................................  $30,000
                                                                                -------
</TABLE>

ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

        Article EIGHTH, Section (a)(6) of the Articles of Incorporation of the
Company limits the liability of a director or officer to the Company or its
stockholders for money damages to the full extent permitted by Maryland law. No
amendment of the Articles of Incorporation of the Company shall limit or
eliminate the right to this limitation of liability with respect to acts or
omissions occurring prior to such amendment or repeal. Section 2-405.2 of the
Corporations and Associations Article and Section 5-349 of the Courts and
Judicial Proceedings Article of the Annotated Code of Maryland permits the
Company to limit the liability of a director or officer to the Company or its
stockholders for money damages, with certain limitations.

        Article EIGHTH, Section (a)(5) of the Articles of Incorporation of the
Company provides indemnification for a director or officer of the Company to the
full extent permitted by Maryland law. No amendment of the Articles of
Incorporation of the Company shall limit or eliminate the right to this
indemnification with respect to acts or omissions occurring prior to such
amendment or repeal. Article IX of the Bylaws of the Company contains provisions
which implement the indemnification provisions of the Articles of Incorporation.
Section 2-418 of the Corporations and Associations Article of the Annotated Code
of Maryland permits (and in part requires) the Company to provide
indemnification to a director or officer, with certain limitations.

        The Company has entered into indemnification agreements with each of the
directors and executive officers of the Company to provide them with
indemnification to the full extent permitted by the Articles of Incorporation
and Bylaws of the Company.

        The Company has obtained an insurance policy to provide liability
coverage for directors and officers of the Company.

ITEM 16.  EXHIBITS

3.1   - Articles of Incorporation of Spieker Properties, Inc. (incorporated by
        reference to Exhibit 3.1 to Spieker Properties, Inc.'s registration
        statement on Form S-11 (File No. 33-67906))

3.1A  - Articles of Amendment of Spieker Properties, Inc. (incorporated by
        reference to Exhibit 3.1A to Spieker Properties, Inc.'s, Report on Form
        10-K for the year ended December 31, 1996)

                                     II-1

<PAGE>   32



3.2  -  Articles Supplementary of Spieker Properties, Inc. for the Series A
        preferred stock (incorporated by reference to Exhibit 4.2 to Spieker
        Properties, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
        March 31, 1994)

3.3  -  Articles Supplementary of Spieker Properties, Inc. for the Class B
        common stock (incorporated by reference to Exhibit 4.2 to Spieker
        Properties, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
        March 31, 1995)

3.4   - Articles Supplementary of Spieker Properties, Inc. for the Series B
        preferred stock (incorporated by reference to Exhibit 3.5 to Spieker
        Properties, Inc.'s annual report on Form 10-K for the year ended
        December 31, 1995)

3.5   - Articles Supplementary of Spieker Properties, Inc. for the Class C
        common stock (incorporated by reference to Exhibit 3.6 to Spieker
        Properties, Inc.'s annual report on Form 10-K for the year ended
        December 31, 1995)

3.6   - Articles Supplementary of Spieker Properties, Inc. for the Series C
        preferred stock (incorporated by reference to Exhibit 3.1 to Spieker
        Properties, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
        September 30,1997)

3.7   - Articles Supplementary of Spieker Properties, Inc. for the Series D
        preferred stock (incorporated by reference to Exhibit 3.8 to Spieker
        Properties, Inc.'s Annual Report on Form 10-K for the year ended
        December 31, 1998)

3.8   - Articles Supplementary of Spieker Properties, Inc. for the Series E
        preferred stock (incorporated by reference to Exhibit 3.1 to Spieker
        Properties, Inc.'s Current Report on Form 8-K dated June 4, 1998)

3.9   - Bylaws of Spieker Properties, Inc. (incorporated by reference to
        Exhibit 3.2 to Spieker Properties, Inc.'s registration statement on Form
        S-11 (File No. 33-67906))

4.1   - Stockholder Protection Rights Agreement (incorporated by reference to
        Exhibit 4 of Spieker Properties, Inc.'s Current Report on Form 8-K
        dated September 22, 1998.)

5.1   - Opinion of Sullivan & Cromwell

5.2   - Opinion of Piper & Marbury L.L.P

8.1   - Opinion of Morrison & Foerster LLP relating to certain tax matters

23.1  - Consent of Arthur Andersen LLP

23.2  - Consent of Sullivan & Cromwell (included in Exhibit 5.1)

23.3  - Consent of Piper & Marbury L.L.P. (included in Exhibit 5.2)

23.4  - Consent of Morrison & Foerster LLP (included in Exhibit 8.1)

24.1  - Power of Attorney (included on signature page)

ITEM 17. UNDERTAKINGS

Each of the undersigned Registrant hereby undertakes:


                                      II-2

<PAGE>   33



        (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;

                (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 this 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 price 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 this registration
        statement or any material change to such information in this
        registration statement;

provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this registration statement.

        (2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

        (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.

        The undersigned Registrant hereby further undertakes that, for the
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual reports pursuant to Section 13(a) or Section
15(d) of the Exchange Act that is incorporated by reference in this 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.

        The undersigned Registrant hereby further undertakes that:

        (1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance under Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.

        (2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
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.

        Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described under


                                      II-3

<PAGE>   34



Item 15 of this registration statement, or otherwise (other than insurance), the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in such
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 such Act and will
be governed by the final adjudication of such issue.


                                      II-4

<PAGE>   35



                                   SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, 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 Menlo Park, State of California, on the 7th day of
April, 1999.


                                   SPIEKER PROPERTIES, INC.
                                   By: /s/ Craig G. Vought  
                                       -----------------------------------
                                           Craig G. Vought
                                           Chief Financial Officer

        We, the undersigned officers and directors of Spieker Properties, Inc.,
do hereby constitute and appoint Warren E. Spieker, Jr., Dennis E. Singleton,
Craig G. Vought and Sara R. Steppe, and each of them, our true and lawful
attorneys-in-fact and agents, each with full power of substitution and
resubstitution, for each of us and in each of our names, places and stead, in
any and all capacities, to sign any and all amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as each of us might
or could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his/her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>

          SIGNATURE                         TITLE                             DATE
          ---------                         -----                             ----
<S>                              <C>                                        <C>
/s/ Warren E. Spieker, Jr.       Chairman of the Board, Director            April 7, 1999
- ---------------------------      and Chief Executive Officer
Warren E. Spieker, Jr.           (Principal Executive Officer)
                                 

/s/ John A. Foster               Executive Vice President and               April 7, 1999
- ------------------               Chief Investment Officer
John A. Foster                

/s/ John K. French               Director, Executive Vice President         April 7, 1999
- ------------------               and Chief Operating Officer
John K. French                   


/s/ Dennis E. Singleton          Vice Chairman of the Board                 April 7, 1999
- -----------------------
Dennis E. Singleton

</TABLE>

                                      II-5

<PAGE>   36


<TABLE>
<CAPTION>

          SIGNATURE                         TITLE                             DATE
          ---------                         -----                             ----

<S>                           <C>                                        <C>
/s/ Elke Strunka              Vice President and Principal               April 7, 1999
- ----------------------------  Accounting Officer (Principal
Elke Strunka                  Accounting Officer)


/s/ Craig G. Vought           Executive Vice President and               April 7, 1999
- ----------------------------  Chief Financial Officer
Craig G. Vought               (Principal Financial Officer)


                              Director                                   
- ----------------------------
Richard J. Bertero


                              Director                                   
- ----------------------------
Harold M. Messmer, Jr.


/s/ David M. Petrone          Director                                   April 7, 1999
- ----------------------------
David M. Petrone


                              Director                                   
- ----------------------------
William S. Thompson, Jr.

</TABLE>


                                      II-6

<PAGE>   37



                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

Exhibit Sequentially Numbered
Number  Description Pages                                             
- ------  -----------------------------------------------------------------------
<S>     <C>                                                                      
3.1  -  Articles of Incorporation of Spieker Properties, Inc. (incorporated by
        reference to Exhibit 3.1 to Spieker Properties, Inc.'s registration
        statement on Form S-11 (File No. 33-67906))

3.1A -  Articles of Amendment of Spieker Properties, Inc. (incorporated by
        reference to Exhibit 3.1A to Spieker Properties, Inc.'s Report on Form
        10-K for the year ended December 31, 1996)

3.2  -  Articles Supplementary of Spieker Properties, Inc. for the Series A
        preferred stock (incorporated by reference to Exhibit 4.2 to Spieker
        Properties, Inc.'s quarterly report on Form 10-Q for the quarter ended
        March 31, 1994)

3.3  -  Articles Supplementary of Spieker Properties, Inc. for the Class B
        common stock (incorporated by reference to Exhibit 4.2 to Spieker
        Properties, Inc.'s quarterly report on Form 10-Q for the quarter ended
        March 31, 1995)

3.4  -  Articles Supplementary of Spieker Properties, Inc. for the Series B
        preferred stock (incorporated by reference to Exhibit 3.5 to Spieker
        Properties, Inc.'s annual report on Form 10-K for the year ended
        December 31, 1995)

3.5  -  Articles Supplementary of Spieker Properties, Inc. for the Class C
        common stock (incorporated by reference to Exhibit 3.6 to Spieker
        Properties, Inc.'s annual report on Form 10-K for the year ended
        December 31, 1995)

3.6  -  Articles Supplementary of Spieker Properties, Inc. for the Series C
        preferred stock (incorporated by reference to Exhibit 3.1 to Spieker
        Properties, Inc.'s quarterly report on Form 10-Q for the quarter ended
        September 30, 1997)

3.7  -  Articles Supplementary of Spieker Properties, Inc. for the Series D
        preferred stock (incorporated by reference to Exhibit 3.8 to Spieker
        Properties, Inc.'s Annual Report on Form 10-K for the year ended
        December 31, 1998)

3.8  -  Articles Supplementary of Spieker Properties, Inc. for the Series E
        preferred stock (incorporated by reference to Exhibit 3.1 to Spieker
        Properties, Inc.'s Current Report on Form 8-K dated June 4, 1998)

3.9  -  Bylaws of Spieker Properties, Inc. (incorporated by reference to
        Exhibit 3.2 to Spieker Properties, Inc.'s registration statement on Form
        S-11 (File No. 33-67906))

4.1  -  Stockholder Protection Rights Agreement (incorporated by reference to
        Exhibit 4 of Spieker Properties, Inc.'s current report on Form 8-K dated
        September 22, 1998.)

5.1  -  Opinion of Sullivan & Cromwell

5.2  -  Opinion of Piper & Marbury L.L.P.

8.1  -  Opinion of Morrison & Foerster LLP relating to certain tax matters

23.1 -  Consent of Arthur Andersen LLP

23.2 -  Consent of Sullivan & Cromwell (included in Exhibit 5.1)
</TABLE>


                                      II-7

<PAGE>   38
<TABLE>


<S>         <C> 
23.3     -  Consent of Piper & Marbury L.L.P. (included in Exhibit 5.2)

23.4     -  Consent of Morrison & Foerster LLP (included in Exhibit 8.1)

24.1     -  Power of Attorney (included on signature page)
</TABLE>


                                      II-8



<PAGE>   1

                                                                     EXHIBIT 5.1

                        [SULLIVAN & CROMWELL LETTERHEAD]

                                                                   April 7, 1999

Spieker Properties, Inc.,
   2180 Sand Hill Road,
      Menlo Park, California  94025.

Ladies and Gentlemen:

     In connection with the registration under the Securities Act of 1933 (the 
"Act") of 335,509 shares (the "Securities") of common stock, par value $.0001
per share, of Spieker Properties, Inc., a Maryland corporation (the "Company"),
and 335,509 related stock purchase rights (the "Rights") to be issued pursuant
to the Stockholder Protection Rights Agreement, dated as of September 10, 1998
(the "Rights Agreement"), between the Company and The Bank of New York, as
Rights Agent (the "Rights Agent"), we, as your special counsel, have examined
such corporate records, certificates and other documents, and such questions of
law, as we have considered necessary or appropriate for the purposes of this
opinion. Upon the basis of such examination, we advise you that, in our opinion:

          (1)  When the registration statement relating to the Securities and
     the Rights (the "Registration Statement") has become effective under the
     Act, the terms of the sale of the Securities have been duly established in
     conformity with the Company's articles of incorporation so as not to
     violate any applicable law or result in a default under or breach of any
     agreement or instrument binding upon the Company and so as to comply with
     any requirement or restriction imposed by any court or governmental body
     having jurisdiction over the Company, and the Securities have been duly
     issued and sold as contemplated by the Registration Statement, the
     Securities will be validly issued, fully paid and nonassessable.

          (2)  Assuming that the Rights Agreement has been duly authorized,
     executed and delivered by the Rights Agent, then when the Registration
     Statement has become effective under the Act and the Securities have been
     validly issued and sold as contemplated by the Registration Statement, the
     Rights attributable to the Securities will be validly issued.

     In connection with our opinion set forth in paragraph (2) above, we note
that the question whether the Board of Directors of the Company might be
required to redeem the Rights at some future time will depend upon the facts and
circumstances existing at that time and, accordingly, is beyond the scope of
such opinion.

     The foregoing opinion is limited to the Federal laws of the United States
and the laws of the State of Maryland, and we are expressing no opinion as to
the effect of the laws of any other jurisdiction. With respect to all matters of
Maryland law, we have relied upon the opinion, dated April 7, 1999, of Piper &
Marbury, and our opinion is subject to the same assumptions,

<PAGE>   2

Spieker Properties, Inc.                                                     -2-



qualifications and limitations with respect to such matters as are contained in
such opinion of Piper & Marbury.

     Also, we have relied as to certain matters on information obtained from
public officials, officers of the Company and other sources believed by us to be
responsible.

     We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity of
Shares" in the Prospectus. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Act.

                                             Very truly yours,
          
                                             /s/ Sullivan & Cromwell

<PAGE>   1

                                                                     EXHIBIT 5.2

                      [Piper & Marbury L.L.P. Letterhead]


                                 April 7, 1999


SPIEKER PROPERTIES, INC.
2180 Sand Hill Road, Suite 200
Menlo Park, California 94025

Ladies and Gentlemen:

     We have acted as special Maryland counsel to Spieker Properties, Inc., a
Maryland corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended (the "Act"), on a Registration Statement
of the Company on Form S-3 (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") of 335,509 shares (the
"Exchange Shares") of Common Stock, par value $.0001 per share, of the Company
(the "Common Stock") and 335,509 rights to purchase preferred stock attached
thereto (the "Rights"). Each Right entitles the holder thereof to purchase,
under certain circumstances, one one-hundredth (1/100) of a share of
Participating Preferred Stock, par value $.0001 per share, of the Company. This
opinion is being provided at your request in connection with the filing of the
Registration Statement.

     The Exchange Shares (plus such additional shares as may be issued pursuant
to certain antidilution provisions) and Rights may be issued by the Company from
time to time in exchange for up to 335,509 limited partner units (the "OP
Units") of Spieker Properties, L.P., a California limited partnership (the
"Operating Partnership"), tendered for exchange and subsequently offered for
sale from time to time by certain stockholders.

     In rendering the opinion expressed herein, we have reviewed originals or
copies, certified or otherwise identified to our satisfaction, of the
Registration Statement, the Charter and By-Laws of the Company, the Agreement of
Limited Partnership of the Operating Partnership, as amended to date (the
"Partnership Agreement"), the Stockholder Protection Rights Agreement (the
"Rights Agreement") dated as of September 10, 1998, between the Company and The
Bank of New York as Rights Agent, the Rights Distribution Agreement dated as of
September 10, 1998 between the Company and the Operating Partnership, the
proceedings of the Board of Directors of the Company

<PAGE>   2

SPIEKER PROPERTIES, INC.
April 7, 1999
Page 2


or a committee thereof relating to the authorization and issuance of the 
Exchange Shares and the Rights, a Certificate of the Secretary of the Company
(the "Certificate"), and such other statutes, certificates, instruments, and
documents relating to the Company and matters of law as we have deemed necessary
to the issuance of this opinion.

     In our examination of the aforesaid documents, we have assumed, without
independent investigation, the genuineness of all signatures, the legal capacity
of all individuals who have executed any of the aforesaid documents, the
authenticity of all documents submitted to us as originals, the conformity with
originals of all documents submitted to us as copies (and the authenticity of
the originals of such copies), and the accuracy and completeness of all public
records reviewed by us. In making our examination of documents executed by
parties other than the Company, we have assumed that such parties had the power,
corporate or other, to enter into and perform all obligations thereunder, and we
have also assumed the due authorization by all requisite action, corporate or
other, and the valid execution and delivery by such parties of such documents
and the validity, binding effect and enforceability thereof with respect to such
parties. As to any facts materials to this opinion which we did not
independently establish or verify, we have relied solely upon the Certificate.

     Based upon the foregoing, having regard for such legal considerations as we
deem relevant, and limited in all respects to applicable Maryland law, we are of
the opinion and advise you that:

     (1)  The Exchange Shares to be issued in exchange for OP Units tendered for
exchange have been duly authorized and, upon exchange of such OP Units in
accordance with the terms of the Partnership Agreement and issuance and delivery
of stock certificates representing the Exchange Shares, will be validly issued,
fully paid, and non-assessable.

     (2)  Upon issuance in accordance with the terms of the Rights Agreement,
the Rights will be validly issued.

     In addition to the qualifications set forth above, this opinion is subject 
to the qualification that we express no opinion as to the laws of any
jurisdiction other than the State of Maryland. We assume that the issuance of
the Exchange Shares and the Rights will not violate the Ownership Limit (as
defined in Article Ninth of the Charter of the Company). This opinion concerns
only the effect of the laws (exclusive of the securities or "blue sky" laws and
the principles of conflict of laws) of the State of Maryland as currently in
effect. We assume no obligation to supplement this opinion if any applicable
laws change after the date hereof or if any facts or circumstances come to our
attention after the date hereof that might change this opinion.

<PAGE>   3

SPIEKER PROPERTIES, INC.
April 7, 1999
Page 3


     We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading "Legal
Matters" in the Prospectus included in the Registration Statement. In giving our
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Commission thereunder.

                                             Very truly yours,

                                             /s/ Piper & Marbury

<PAGE>   1

                                                                     EXHIBIT 8.1

                      [Letterhead of Morrison & Foerster]


                                 April 7, 1999

Spieker Properties, Inc.
2180 Sand Hill Road, Suite 200
Menlo Park, California  94025

Ladies and Gentlemen:

     We have acted as special tax counsel to Spieker Properties, Inc., a
Maryland corporation (the "Company") in connection with the offer and sale from
time to time by (i) the holder of up to 1,219,512 shares (the "Shares") of
common stock, par value $0.0001 per share, that may be issued by the Company to
the holder of up to 1,000,000 shares of Series A preferred stock, if and to the
extent that such holder tenders such preferred stock for exchange into the
Shares and (ii) the holders of up to 2,801,251 Shares that may be issued by the
Company to the holders of up to 2,801,251 units of limited partnership interest
(the "Units") in Spieker Properties, L.P., a California limited partnership, if
and to the extent that such holders tender such Units for exchange into the
Shares. The Shares are the subject of a Registration Statement (the
"Registration Statement") filed by the Company on Form S-3 with the SEC on April
7, 1999 under the Act. Capitalized terms not defined herein shall have the
meanings ascribed to them in the certificate (or incorporated therein by
reference), dated April 7, 1999, (the "Certificate"), delivered to Morrison &
Foerster LLP which provides certain representations of fact by the Company
relevant to this opinion.

     You have requested our opinion as to certain federal income tax matters
regarding the Company. This opinion is solely for the benefit of the Company and
may not be relied upon by, nor may copies be delivered to, any other person
without our prior written consent.

     In our capacity as special tax counsel to the Company and for purposes of
rendering this opinion, we have examined and relied upon the following, with
your consent: (i) the Certificate; (ii) the Registration Statement and (iii)
such other documents we have considered relevant to our analysis. In our
examination of such documents, we have assumed the authenticity of original
documents, the accuracy of copies, the genuineness of signatures, and the legal
capacity of signatories. We have also assumed that all parties to such documents
have acted, and will act, in accordance with the terms of such documents.

     Furthermore, our opinion is based on (a) our understanding of the facts as
represented to us in the Certificate and (b) the assumption that (i) the Company
is operated


<PAGE>   2



Spieker Properties, Inc.
April 7, 1999
Page 2


and will continue to be operated in the manner described in the Certificate,
(ii) the facts contained in the Registration Statement are true and complete in
all material respects, and (iii) all representations of fact contained in the
Certificate are true and complete in all material respects. We have not
undertaken any independent inquiry into or verification of these facts either in
the course of our representation of the Company or for the purpose of rendering
this opinion. While we have reviewed all representations made to us to determine
their reasonableness, we have no assurance that they are or will ultimately
prove to be accurate.

     We also note that the tax consequences addressed herein depend upon the
actual occurrence of events in the future, which events may or may not be
consistent with any representations made to us for purposes of this opinion. In
particular, qualification and taxation of the Company as a REIT for federal
income tax purposes depends upon the Company's ability to satisfy or maintain on
a continuing basis certain distribution levels, diversity of stock ownership,
and the various qualification tests imposed by the Code. To the extent that the
facts differ from those represented to us or assumed by us herein, our opinion
should not be relied upon.

     Our opinion herein is based on existing law as contained in the Code, the
Treasury Regulations promulgated thereunder, administrative pronouncements of
the Internal Revenue Service (the "IRS") and court decisions as of the date
hereof. The provisions of the Code and the Treasury Regulations, IRS
administrative pronouncements and case law upon which this opinion is based
could be changed at any time, perhaps with retroactive effect. In addition, some
of the issues under existing law that could significantly affect our opinion
have not yet been authoritatively addressed by the IRS or the courts, and our
opinion is not binding on the IRS or the courts. Hence, there can be no
assurance that the IRS will not challenge or that the courts will agree with our
conclusions.

     Based upon, and subject to, the foregoing and the next paragraph below, we
are of the opinion that, as of the date hereof, commencing with the Company's
taxable year ending December 31, 1993 through its taxable year ending December
31, 1998, the Company has been organized and operated in conformity with the
requirements for qualification as a REIT under the Code, and if it continues to
be organized and operated after December 31, 1998 in the same manner as it has
prior to that date, it will continue to so qualify.


<PAGE>   3

Spieker Properties, Inc.
April 7, 1999
Page 3



     We undertake no obligation to update this opinion, or to ascertain after
the date hereof whether circumstances occurring after such date may affect the
conclusions set forth herein. We express no opinion as to matters governed by
any laws other than the Code, the Treasury Regulations, published administrative
announcements and rulings of the IRS and case law.

     We hereby consent to the reference to our firm name and this opinion in the
Registration Statement and the prospectus contained therein. In giving such
consent, however, we do not admit and we hereby disclaim that we come within the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the SEC promulgated thereunder, nor do we thereby admit
that we are experts with respect to any part of the Registration Statement
within the meaning of the term "experts" as used in the Act or the rules and
regulations of the SEC promulgated thereunder.

                                Very truly yours,

                                /s/ Morrison & Foerster

<PAGE>   1
                                                                    EXHIBIT 23.1

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 2, 1999
included in Spieker Properties, Inc.'s Form 10-K for the year ended December 31,
1998 and to all references to our Firm included in this registration statement.

                                                             ARTHUR ANDERSEN LLP

San Francisco, California
April 5, 1999


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