EXECUTIVE TRANSITION EMPLOYMENT AGREEMENT

Exhibit 10.25

EXECUTIVE TRANSITION EMPLOYMENT AGREEMENT

This Executive Transition Agreement ( “the Agreement” ) is entered into between Frank McDowell, an individual ( “Executive” ), and BRE Properties, Inc., (the “Company” ), as of December 31, 2003.

This Agreement shall become effective on January 1, 2004 (“ Effective Date ”), and shall supercede Executive’s Employment Agreement dated January 24, 2001, except as otherwise provided herein.

Executive will be employed under this Agreement from January 1, 2004 to his retirement date of January 31, 2007, subject to earlier termination as set forth in Section 18 (the “Employment Term” ). Executive’s positions will be as follows: (a) from January 1, 2004 to December 31, 2004, as Chief Executive Officer and Vice Chairman, reporting to the Board of Directors (‘ Board ”); and (b) from January 1, 2005 to January 31, 2007, as Executive Consultant, reporting to the Chief Executive Officer and the Board. For the purposes of the Company’s benefit plans, Executive’s position as Executive Consultant shall be equivalent to a position of Senior Vice President or higher and he will continue to be considered a “key salaried employee.” During the period January 1, 2007 through January 31, 2007, Executive shall be placed on an unpaid administrative leave. During the unpaid administrative leave, Executive will continue to vest in his stock options and will be eligible for payment of a long-term bonus under his January 24, 2002 long-term Bonus Arrangement, but will not be entitled to participate in or further vest in his employer balance under the Company’s 401(k) plan, will not receive Company-sponsored insurance benefits, will not be eligible for an incentive bonus, and will not vest in his restricted stock. The unpaid administrative leave shall not be treated a termination of employment or service for the purpose of Executive’s participation in the Company’s 1999 BRE Stock Incentive Plan as amended (the “ 1999 Plan ”) and 1992 Amended and Restated Employee Stock Plan (“the “1992 Plan” ).

During the Employment Term, Executive will be expected to assist the Board of Directors (“Board”) and his successor and other executive management by, among other things: (a) maintaining and transitioning key relationships with clients, business partners, vendors, and others; (b) advising on strategic issues, including potential developments, acquisitions, and other opportunities; (c) mentoring and coaching the Executive’s successor and other emerging Company leaders; (d) undertaking special projects and initiatives at the request and direction of the Board; and (e) performing any temporary management position requested by the Board. At the end of the first year of the Employment Term, Executive’s office will be relocated to more modest space within the Company’s facilities. At the end of the first year of the Employment Term, and on any earlier termination of his employment however effected, Executive will tender his resignation from the Board.

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Beginning on January 1, 2004 and through December 31, 2006 (or the actual Employment Term, if earlier), Executive will receive a fixed annual base salary of $425,000, paid in accordance with the Company’s regular payroll practices and subject to withholdings required by law.

Executive will be eligible to receive an annual incentive bonus (“ Annual Bonus ”) of up to 120% of Base Salary for the first year of the Employment Term. The amount of the first year’s Annual Bonus, if any, will be based on the Company’s achievement of predefined operating or performance criteria established by the Board (the “ Annual Criteria ”), with emphasis on Funds from Operations and other operating measures deemed appropriate by the Board. It is anticipated that the amount of the first year’s Annual Bonus could range from 0% of Base Salary (in the event of a failure to achieve the Annual Criteria), to 80% of Base Salary (in the event of achievement of the Annual Criteria), up to 120% of Base Salary (in the event the Annual Criteria are exceeded). For the second and third years of the Employment Term, the Annual Bonuses, if any, paid to the Executive will be the average of the Annual Bonuses, if any, paid to the Executive for 2003 and 2004. Any Annual Bonuses will be paid to Executive within 90 days of the end of each year subject to withholdings required by law.

Executive will remain eligible for additional grants of stock options in January 2004 and January 2005 under the 1999 Plan, if he is employed by the Company on those dates. The amount of any such grants will be determined by the Board. Executive has existing grants of stock options pursuant to the Company’s 1992 Plan and the 1999 Plan. Such existing grants remain in full force and effect and the options shall vest and become exercisable, if ever, only in accordance with the terms of the applicable plan and the stock option agreements entered into between Executive and the Company, except as provided in Section 19 below.

Executive will remain eligible for additional awards of restricted stock in January 2004 and January 2005 under the 1999 Plan, if he is employed by the Company on those dates. The amount of any such awards will be determined by the Board. The terms and conditions of any such awards shall be substantially similar to the terms and conditions of Executive’s 2003 restricted stock award. Executive has existing awards of restricted stock pursuant to the 1999 Plan. Such existing awards remain in full force and effect and shall vest, if ever, only in accordance with the terms of the 1999 Plan, and Performance Stock Award Agreements entered into between Executive and the Company, except as otherwise provided in Section 19 below.

Executive has a special restricted stock award entitled BRE Properties, Inc. Restricted Share Award Agreement, dated May 11, 1999. This Agreement shall remain in full

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force and effect during the Employment Term, except as otherwise provided in Section 19 below.

Executive has four outstanding Loan and Stock Pledge Agreements with the Company pursuant to which Executive purchased common stock of the Company. Such loan agreements shall continue to be governed by the terms and conditions of the applicable Loan and Stock Pledge Agreements, as subject to Executive’s Employment Agreement dated January 24, 2001, and Exhibit B thereto. Nothing in this Agreement is intended to or shall be construed to modify in any respect the terms and conditions of Executive’s loans from the Company outstanding as of the date of this Agreement.

Executive has three existing long-term Bonus Arrangements with the Company: Bonus Arrangement of January 28, 2000; Bonus Arrangement of February 16, 2001; and Bonus Arrangement of January 24, 2002. Pursuant to such existing Bonus Arrangements, Executive is eligible for long-term bonuses based on the formulae set forth in the applicable Bonus Arrangements. During the Employment Term, such Bonus Arrangements shall remain in full force and effect, and shall be subject to the same Pro Rata Calculation upon termination of employment as Executive’s loan agreements, as set forth in Section 8 of Executive’s Employment Agreement dated January 24, 2001, and Exhibit B thereto. Executive will not be eligible for additional Bonus Arrangements during the Employment Term.

Executive is a participant in the BRE Properties, Inc. Deferred Compensation Plan, effective January 1, 2000 (“ Deferred Compensation Plan ”). Except during Executive’s unpaid administrative leave, Executive will continue to be eligible to participate in the Deferred Compensation Plan.

Except during Executive’s unpaid administrative leave, Executive will be eligible to participate in any employee benefit plans or programs, including but not limited to group medical, dental, and vision benefits, life and disability insurance benefits, long term care insurance, and other programs, maintained or established by the Company to the same extent as other employees of the Company, subject to the generally applicable terms and conditions of the plan or program in question and the determination of any committee administering such plan or program; provided, however Executive shall not be entitled to participate in any benefit plan from which he may be disqualified as a result of providing services on a less than full-time basis. While Executive holds the position of Executive Consultant, he will not be eligible to accrue vacation. Executive shall report to the Company all vacation time taken during the second and third year of the Employment Term until Executive depletes his accrued vacation.

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Executive will be reimbursed on a regular basis for reasonable, necessary and properly documented business and travel expenses incurred for the purpose of conducting the Company’s business.

During the first year of the Employment Term, Executive shall devote his entire business time, attention and energy exclusively to the business interests of the Company except as otherwise specifically approved by the Board. During the second year of the Employment Term, Executive shall remain available to work full-time for the Company. During the third year of the Employment Term, Executive shall remain available to work a minimum of thirty (30) hours per week. Following the first year of the Employment Term and for the remainder of the Employment Term, Executive may engage in outside activities, other than as an employee, or may provide consulting services, whether or not for remuneration, to the extent that such activities do not: (a) conflict with Executive’s duties and responsibilities for the Company; (b) violate Executive’s non-competition obligations, set forth in Section 16 below; or (c) provide Executive with remuneration of any kind with an aggregate value of greater than $200,000 per year. Notwithstanding the above and throughout the Employment Term, Executive: (i) may accept speaking or presentation engagements in exchange for honoraria; (ii) may serve on boards of directors and advisory boards of charitable organizations; (iii) may serve on boards of directors and advisory boards of business entities that are not involved in development, construction and/or management of multi-family residential housing (subject to prior approval of the Board during the first year of the Employment Term); (iv) may have a passive ownership interest in any business entity that is not publicly traded and that does not compete with the Company; (v) may have a passive ownership interest in any business entity that is publicly traded; or (vi) may have an active ownership interest in any business entity the primary purpose of which is providing consulting services by Executive, so long as Executive’s activities on behalf of such entity do not violate subsections (a) through (c) of this Section 14.

Except as herein provided, Executive agrees that during and after termination of his employment with the Company, he (i) shall keep Confidential Information (as defined below) confidential and shall not directly or indirectly, use, divulge, publish or otherwise disclose or allow to be disclosed any aspect of Confidential Information without the prior written consent of the Board except in the performance of Executive’s duties for Company; (ii) shall refrain from any action or conduct which might reasonably or foreseeably be expected to compromise the confidentiality or proprietary nature of the Confidential Information; and (iii) shall follow recommendations made by the Board, officers or supervisors of the Company from time to time regarding Confidential Information.

a. For purposes of this Agreement “Confidential Information” includes but is not limited to trade secrets, confidential information, knowledge or data of the Company,

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or any of its clients, customers, business partners, joint venturers, consultants, shareholders, licensees, licensors, vendors or affiliates, that Executive may produce, obtain or otherwise acquire or have access to during the course of his or her employment by the Company (whether before or after the date of this Agreement), including but not limited to: business plans, records, financial data, and affairs; development plans; acquisition plans; customer files and lists; special customer matters; sales practices; methods and techniques; merchandising concepts, strategies and plans; sources of supply and vendors; special business relationships; promotional materials and information; financial matters; mergers; acquisitions; equipment, technologies and processes; selective personnel matters; inventions; developments; product specifications; procedures; pricing information; intellectual property; technical data; software programs; finances; operations and production costs; ideas; propo