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SAN MATEO, CA-Glenborough Realty Trust on Thursday reported adrop in profit and Funds From Operations during the third quarterdespite improved performance in its 8.3-million-sf, 45-propertyportfolio. The locally headquartered office REIT in August agreedto be acquired by a Morgan Stanley Real Estate affiliate in atransaction valued at $1.9 billion ($26 per share plus debtassumption).

Glenborough's net income for the third quarter of 2006 was $11.5million, or $0.36 per diluted common share, which is less than halfthe $26.8 million or $0.74 per share generated during the thirdquarter of 2005. The decline in net income is being attributedprimarily to fewer gains on sales of the company's properties. Thecompany reported $13.9 million in net gains from property salesduring the third quarter of 2006 compared to $27.6 million in netgains in the third quarter of 2005.