EQUITY OFFICE PROPERTIES TRUST
S-11/A, 1997-06-23
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>   1
 
   
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1997
    
 
                                                      REGISTRATION NO. 333-26629
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
 
   
                                AMENDMENT NO. 2
    
                                       TO
 
                                   FORM S-11
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                             ---------------------
 
                         EQUITY OFFICE PROPERTIES TRUST
      (Exact name of registrant as specified in its governing instrument)
 
                     TWO NORTH RIVERSIDE PLAZA, SUITE 2200
                            CHICAGO, ILLINOIS 60606
                    (Address of principal executive offices)
                             ---------------------
 
                               STANLEY M. STEVENS
                              CHIEF LEGAL COUNSEL
                     TWO NORTH RIVERSIDE PLAZA, SUITE 2200
                            CHICAGO, ILLINOIS 60606
                    (Name and address of agent for service)
                             ---------------------
 
                                   COPIES TO:
 
<TABLE>
<S>                                                    <C>
                  SHELI Z. ROSENBERG                                   J. WARREN GORRELL, JR.
                 RUTH PINKHAM HARING                                      JAMES E. SHOWEN
            ROSENBERG & LIEBENTRITT, P.C.                              HOGAN & HARTSON L.L.P.
        TWO NORTH RIVERSIDE PLAZA, SUITE 1515                       555 THIRTEENTH STREET, N.W.
               CHICAGO, ILLINOIS 60606                              WASHINGTON, D.C. 20004-1109
                    (312) 466-3456                                         (202) 637-5600
</TABLE>
 
                             ---------------------
 
    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon as
practicable after this Registration Statement becomes effective.
 
    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  [ ]
- ---------------
 
    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
- ---------------
 
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
                             ---------------------
 
                        CALCULATION OF REGISTRATION FEE
 
   
<TABLE>
<CAPTION>
==========================================================================================================================
                                                              PROPOSED MAXIMUM     PROPOSED MAXIMUM
            TITLE OF CLASS                 AMOUNT BEING        OFFERING PRICE     AGGREGATE OFFERING       AMOUNT OF
    OF SECURITIES BEING REGISTERED        REGISTERED(1)         PER SHARE(2)           PRICE(2)       REGISTRATION FEE(3)
- --------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                  <C>                  <C>                  <C>
Common Shares of Beneficial Interest,
  $.01 par value per share............      28,750,000             $21.00            $603,750,000         $177,727.22
========================================================================================================================
</TABLE>
    
 
   
(1) Includes 3,750,000 shares that are issuable upon exercise of the
    Underwriters' over-allotment option.
    
(2) Estimated solely for the purpose of calculating the registration fee.
   
(3) The filing fee has been computed in accordance with Rule 457(a). Of this
    amount, $104,545.40 has previously been paid based upon the estimated
    maximum offering price per share of $20.00 for 17,250,000 shares and an
    additional fee of $73,181.82 is being paid with the filing of this Amendment
    with regard to an additional 11,500,000 shares with an estimated maximum
    offering price per share of $21.00.
    
                             ---------------------
 
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 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
 
   
                                EXPLANATORY NOTE
    
 
   
     This registration statement contains two forms of prospectus: one to be
used in connection with a United States and Canadian offering of the Company's
Common Shares (the "U.S. Prospectus") and one to be used in connection with a
concurrent international offering of the Common Shares (the "International
Prospectus" and, together with the U.S. Prospectus, the "Prospectuses"). The
International Prospectus will be identical to the U.S. Prospectus except that it
will have a different front cover page, back cover page and "Underwriting"
section. The U.S. Prospectus is included herein and is followed by the alternate
pages to be used in the International Prospectus. The alternate pages for the
International Prospectus included herein have been labeled "Alternate Pages for
International Prospectus."
    
<PAGE>   3
 
     INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
     REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
     SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
     MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
     BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
     THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
     SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
     UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
     OF ANY SUCH STATE.
 
   
                   SUBJECT TO COMPLETION, DATED JUNE 23, 1997
    
 
PROSPECTUS
- ---------------------
   
                            25,000,000 COMMON SHARES
    
 
                         EQUITY OFFICE PROPERTIES TRUST
                      COMMON SHARES OF BENEFICIAL INTEREST
                             ---------------------
 
   
    Equity Office Properties Trust (together with its subsidiaries, the
"Company") has been formed to continue and expand the national office property
business organized by Mr. Samuel Zell, Chairman of the Board of Trustees of the
Company. The Company will be a fully integrated, self-administered and
self-managed real estate company and expects to qualify as a real estate
investment trust ("REIT") for federal income tax purposes. Upon completion of
the offering (the "Offering"), the Company will own 90 office properties
containing approximately 32.2 million rentable square feet and 14 parking
facilities containing approximately 14,785 parking spaces, located in 47 markets
throughout the United States. The Company expects to control the largest office
portfolio (based on revenues and square footage) of any publicly traded, full
service office company in the United States.
    
 
   
    All of the common shares of beneficial interest, $.01 par value per share,
of the Company ("Common Shares") offered hereby are being sold by the Company
and will represent approximately 15.7% of the Company's outstanding common
equity. The remaining common equity in the Company will be beneficially owned
75% by existing investors and 9.3% by officers and trustees of the Company and
certain other affiliated parties. Of the 25,000,000 Common Shares being offered
hereby, 20,000,000 Common Shares are being offered initially in the United
States and Canada by the U.S. Underwriters and 5,000,000 Common Shares are being
offered initially outside the United States and Canada by the International
Managers. See "Underwriting."
    
 
   
    Prior to the Offering, there has been no public market for the Common
Shares. It is currently anticipated that the initial public offering price per
share will be between $19.00 and $21.00. See "Underwriting" for a discussion of
the factors to be considered in determining the initial public offering price.
The Common Shares have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance, under the symbol "EOP". There is no
assurance that a public trading market will develop or be sustained.
    
                             ---------------------
 
   
     SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE COMMON SHARES, INCLUDING:
    
 
    - The possibility that the consideration paid by the Company for the
     properties and other assets contributed to the Company in its formation may
     exceed their fair market value, and the fact that there were no arm's
     length negotiations or third-party appraisals of such properties and other
     assets in connection with the formation of the Company;
   
    - Conflicts of interest in connection with the Company's formation and
     operation, including the receipt by Mr. Zell of equity interests therein;
    
    - Real estate investment and property management risks, such as the need to
     renew leases or relet space upon lease expirations, the potential
     instability of cash flows and changes in the value of office properties
     owned by the Company due to economic and other conditions;
   
    - The possibility that the Company may not be able to refinance outstanding
     indebtedness (approximately $1.6 billion on a pro forma basis as of March
     31, 1997) upon maturity, that indebtedness might be refinanced on less
     favorable terms, interest rates might increase on variable rate
     indebtedness, and the lack of limitations in the Company's organizational
     documents on the amount of indebtedness that the Company may incur; and
    
   
    - Taxation of the Company as a regular corporation if it fails to qualify as
     a REIT, and the resulting decrease in cash available for distribution.
    
                             ---------------------
 
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
 
<TABLE>
<CAPTION>
======================================================================================================================
                                                    PRICE TO               UNDERWRITING             PROCEEDS TO
                                                     PUBLIC                DISCOUNT(1)               COMPANY(2)
- ----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                      <C>                      <C>
Per Common Share...........................            $                        $                        $
- ----------------------------------------------------------------------------------------------------------------------
Total(3)...................................            $                        $                        $
======================================================================================================================
</TABLE>
 
(1) The Company has agreed to indemnify the several Underwriters against certain
    liabilities, including liabilities under the Securities Act of 1933, as
    amended. See "Underwriting."
(2) Before deducting estimated expenses of $         payable by the Company.
   
(3) The Company has granted the U.S. Underwriters a 30-day option to purchase up
    to an additional 3,000,000 Common Shares, and has granted the International
    Managers a 30-day option to purchase up to an additional 750,000 Common
    Shares, on the same terms and conditions as set forth above, solely to cover
    over-allotments, if any. If such options are exercised in full, the total
    Price to Public, Underwriting Discount and Proceeds to Company will be
    $         , $         and $         , respectively. See "Underwriting."
    
                             ---------------------
 
    The Common Shares are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them, subject to approval of
certain legal matters by counsel to the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Common Shares offered hereby will be made in New York, New York,
on or about             , 1997.
                             ---------------------
 
MERRILL LYNCH & CO.
   
          LEHMAN BROTHERS
    
   
                   J.P. MORGAN & CO.
    
   
                            PRUDENTIAL SECURITIES INCORPORATED
    
   
                                                      SMITH BARNEY INC.
    
                             ---------------------
              The date of this Prospectus is              , 1997.
<PAGE>   4
<TABLE>
<CAPTION>

[PHOTO]                 [PHOTO]                 [PHOTO]                 [PHOTO]                 [PHOTO]                 [PHOTO]
<S>                     <C>                     <C>                     <C>                    <C>                   <C>
28 State Street         201 Mission             Sun Trust Center        University Tower       850 Third Avenue      One American
Boston, MA              San Francisco, CA       Orlando, FL             Durham, NC             New York, NY          Center
                                                                                                                     Austin, TX


</TABLE>


                        EQUITY OFFICE PROPERTIES TRUST

United States Map depicting locations of Office Properties and Parking
Facilities




     Certain persons participating in this Offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Shares.
Such transactions may include stabilizing, the purchase of Common Shares to
cover syndicate short positions and the imposition of penalty bids.  For a
description of these activities, see "Underwriting."

Information contained in or delivered in connection with this Prospectus
contains "forward-looking statements" relating to, without limitation, future
economic performance, plans and objectives of management for future operations
and projections of revenue and other financial items, which can be identified
by the use of forward-looking terminology such as "may," "will," "should,"
"expect," "anticipate," "estimate" or "continue" or the negative thereof or
other variations thereon or comparable terminology.  The cautionary statements
set forth under the caption "Risk Factors" and elsewhere in this Prospectus
identify important factors with respect to such forward-looking statements,
including certain risks and uncertainties, that could cause actual results to
differ materially from those in such forward-looking statements.
<PAGE>   5
NATIONAL PORTFOLIO


<TABLE>
<S>                                           <C>
[PHOTOS]
Wachovia Center, Charlotte,  NC               1920 & 2010 Main Plaza, Irvine, CA
Lakeway Center, New Orleans, LA               One Market, San Francisco, CA
First Union Center, Ft. Lauderdale, FL        BP Tower, Cleveland, OH
Dominion Tower, Norfolk, VA                   San Felipe Plaza, Houston, TX
Reston Town Center, Reston, VA                Canterbury Green,Stamford, CT      
Preston Commons, Dallas, TX                   NationsBank Plaza, Nashville, TN   
Oakbrook Terrace Tower, Oakbrook Terrace, IL  PacesWest, Atlanta, GA             
The Quandrant, Denver, CO                     Theatre District Garage, Chicago,IL
300 Atlantic, Stamford, CT                    Four Forest, Dallas, TX            
                                              500 Orange Tower, Orange, CA       
                                                                                 


                                              LOCAL MANAGEMENT

</TABLE>


<PAGE>   6
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
</TABLE>
 
   
SUMMARY.....................................................    1
  Summary Risk Factors......................................    2
  Business and Growth Strategies............................    2
  The Properties............................................    4
  Structure and Formation of the Company....................    5
  The Offering..............................................    8
  Distributions.............................................    8
  Tax Status of the Company.................................    9
  Summary Selected Combined Financial Information...........   10
RISK FACTORS................................................   12
  Conflicts of Interest.....................................   12
  Real Estate Risks.........................................   14
  Debt Financing............................................   15
  Federal Income Tax Risks..................................   16
  Limitations on Changes in Control and of Ownership
     Limit..................................................   17
  Immediate and Substantial Dilution........................   18
  Managed Property Business and Non-REIT Services...........   19
  Possible Environmental Liabilities........................   19
  Absence of Prior Public Market for Common Shares..........   20
  Ownership of Common Shares................................   20
  Potential Litigation Related to the Consolidation.........   21
  Dependence on Key Personnel...............................   22
  Contingent or Undisclosed Liabilities.....................   22
THE COMPANY.................................................   23
  General...................................................   23
  Operations................................................   24
  Operational Structure.....................................   24
BUSINESS AND GROWTH STRATEGIES..............................   26
USE OF PROCEEDS.............................................   27
DISTRIBUTIONS...............................................   28
CAPITALIZATION..............................................   34
DILUTION....................................................   35
SELECTED COMBINED FINANCIAL INFORMATION.....................   36
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
  AND RESULTS OF OPERATIONS.................................   38
  General...................................................   38
  Results of Operations.....................................   38
     Quarters ended March 31, 1997 and 1996.................   38
     Years ended December 31, 1996 and 1995.................   39
     Years ended December 31, 1995 and 1994.................   40
  Parking Facilities........................................   42
  Dispositions of Property..................................   42
  Liquidity and Capital Resources...........................   42
  Cash Flows................................................   44
  Inflation.................................................   45
  Funds From Operations.....................................   45
THE PROPERTIES..............................................   47
  General...................................................   47
  Office Property Market Information........................   60
    
 
                                       (i)
<PAGE>   7
 
   
<TABLE>
<CAPTION>
                                                                                                                 PAGE
                                                                                                              -----------
<S>                                                                                                           <C>
  Parking Facilities........................................................................................          65
  Lease Expirations by Region...............................................................................          67
  Lease Expirations -- Portfolio Total......................................................................          68
  Lease Distributions.......................................................................................          68
  Tenant Retention and Expansions; National Marketing Program...............................................          69
  Capital Improvements......................................................................................          69
  Tenant Improvement and Leasing Commission Costs...........................................................          71
  Occupancy.................................................................................................          72
  Debt Financing............................................................................................          72
  Realty Taxes..............................................................................................          72
  Legal Proceedings.........................................................................................          72
MANAGEMENT..................................................................................................          74
  Trustees, Trustee Nominees and Executive and Senior Officers..............................................          74
  Committees of the Board of Trustees.......................................................................          78
  Compensation of the Board of Trustees; Payment in Common Shares...........................................          78
  Executive Compensation....................................................................................          79
  Option and Restricted Share Plan..........................................................................          80
  401(k) Plan...............................................................................................          80
  Incentive Compensation....................................................................................          81
  Limitation of Liability and Indemnification...............................................................          81
STRUCTURE AND FORMATION OF THE COMPANY......................................................................          82
  Operating Entities of the Company.........................................................................          82
  Formation Transactions....................................................................................          82
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES.................................................................          87
  Investment Policies.......................................................................................          87
  Financing Policies........................................................................................          87
  Lending Policies..........................................................................................          88
  Conflict of Interest Policies.............................................................................          88
  Policies with Respect to Other Activities.................................................................          89
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............................................................          89
  Sale of Common Shares to Mr. Zell.........................................................................          89
  Leases and Parking Operations.............................................................................          90
  Equity Group Distributions and Fees.......................................................................          90
  Miscellaneous.............................................................................................          90
PRINCIPAL SHAREHOLDERS......................................................................................          91
SHARES OF BENEFICIAL INTEREST...............................................................................          93
  General...................................................................................................          93
  Common Shares.............................................................................................          93
  Preferred Shares..........................................................................................          94
  Power to Issue Additional Common Shares and Preferred Shares..............................................          94
  Restrictions on Ownership and Transfer....................................................................          94
  Transfer Agent and Registrar..............................................................................          96
CERTAIN PROVISIONS OF MARYLAND LAW AND THE COMPANY'S DECLARATION OF TRUST AND BYLAWS........................          97
  Classification and Removal of Board of Trustees; Other Provisions.........................................          97
  Changes in Control Pursuant to Maryland Law...............................................................          98
  Amendments to the Declaration of Trust....................................................................          98
  Advance Notice of Trustee Nominations and New Business....................................................          99
</TABLE>
    
 
                                      (ii)
<PAGE>   8
   
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
  Anti-takeover Effect of Certain Provisions of Maryland Law
     and of the Declaration of Trust and Bylaws.............   99
  Maryland Asset Requirements...............................   99
PARTNERSHIP AGREEMENT.......................................  100
  Management................................................  100
  Sales of Assets...........................................  100
  Removal of the Managing General Partner; Transfer of the
     Company's Interests....................................  100
  Reimbursement of the Company; Transactions with the
     Company and its Affiliates.............................  100
  Redemption of Units.......................................  101
  Restrictions on Transfer of Units by Limited Partners.....  101
  Issuance of Additional Units and/or Preference Units......  101
  Capital Contributions.....................................  102
  Distributions; Allocations of Income and Loss.............  102
  Exculpation and Indemnification of the Company............  102
  Amendment of the Partnership Agreement....................  103
  Term......................................................  103
SHARES AVAILABLE FOR FUTURE SALE............................  103
FEDERAL INCOME TAX CONSIDERATIONS...........................  104
  Taxation of the Company...................................  105
  Taxation of Taxable U.S. Shareholders of the Company
     Generally..............................................  112
  Backup Withholding for Company Distributions..............  113
  Taxation of Tax-Exempt Shareholders of the Company........  113
  Taxation of Non-U.S. Shareholders of the Company..........  114
  Tax Aspects of the Company's Ownership of Interests in the
     ZML Opportunity Partnerships and the Operating
     Partnership............................................  116
  Other Tax Consequences for the Company, its Shareholders
     and the Management Corp. ..............................  118
ERISA CONSIDERATIONS........................................  118
  Employment Benefit Plans, Tax-Qualified Pension, Profit
     Sharing or Stock Bonus Plans and IRS...................  118
  Status of the Company and the Operating Partnership under
     ERISA..................................................  118
UNDERWRITING................................................  121
EXPERTS.....................................................  123
LEGAL MATTERS...............................................  124
ADDITIONAL INFORMATION......................................  124
GLOSSARY....................................................  125
INDEX TO FINANCIAL STATEMENTS...............................  F-1
</TABLE>
    
 
                                      (iii)
<PAGE>   9
 
                                    SUMMARY
 
   
     The following summary is qualified in its entirety by the more detailed
information included elsewhere in the Prospectus. Unless otherwise indicated,
the information contained in this Prospectus assumes that (i) the initial public
offering price is $20.00 per share (the mid-point of the range of public
offering prices set forth on the cover page of this Prospectus), (ii) the
transactions described under "Structure and Formation of the Company" are
consummated, and (iii) the Underwriters' overallotment option is not exercised.
As used herein, "Company" means Equity Office Properties Trust, a Maryland real
estate investment trust, and one or more of its subsidiaries (including EOP
Operating Limited Partnership, a Delaware limited partnership (the "Operating
Partnership")), and the predecessors thereof or, as the context may require,
Equity Office Properties Trust only or the Operating Partnership only. See
"Glossary" for the meanings of other terms used herein, including "market rent"
and "replacement cost rent." Unless otherwise required by the context, all
rental and square footage data is approximate and/or on a weighted average basis
and all Property information is presented as of April 30, 1997, except as
adjusted to reflect the purchase of 30 N. LaSalle in Chicago, Illinois and the
sale of 8383 Wilshire in Beverly Hills, California. All references to the
historical activities of the Company refer to the activities of the Equity
Office Predecessors. The Company will be the managing general partner of, will
own a substantial majority interest in, and will conduct all of its operations
through, the Operating Partnership.
    
 
   
     The Company has been formed to continue and expand the national office
property businesses organized by Mr. Samuel Zell, Chairman of the Board of
Trustees of the Company. The Company expects to qualify as a real estate
investment trust ("REIT") for federal income tax purposes. The Company expects
to control the largest office portfolio (based on revenues and square footage)
of any publicly traded, full-service office company in the United States.
    
 
   
     The Company initially will own and operate 90 office properties (the
"Office Properties") and will own 14 stand-alone parking facilities (the
"Parking Facilities" and, together with the Office Properties, the
"Properties"). The Office Properties contain approximately 32.2 million rentable
square feet of office space located in 47 markets in 20 states and the District
of Columbia. The average size of the Office Properties is 358,000 rentable
square feet, compared to an estimated average of 144,000 rentable square feet
for all office buildings owned by publicly traded REITs focusing primarily on
office assets.
    
 
   
     Management believes that the Company has been among the most active buyers
of institutional quality office properties throughout the United States,
investing in excess of $3.5 billion since 1987 and averaging $762 million
annually in acquisitions (calculated on a cost basis) for the three years ending
June 30, 1997. The average age of the Office Properties is 13 years. At the time
of acquisition, the Office Properties were, on a weighted average basis, 79%
occupied. During the period from 1987 through June 1997, the Company leased (net
of expiring leases) in excess of an additional 4.5 million rentable square feet
of office space. As of April 30, 1997, the Office Properties were 92.5% occupied
by a total of 3,066 tenants, with no single tenant accounting for more than 2.3%
of annualized rent.
    
 
   
     The Company currently has approximately 790 employees providing in-house
expertise in property management, leasing, finance, tax, acquisition,
development, disposition, marketing, accounting, information systems and real
estate law. The five most senior executives have an average tenure of 11 years
with the Company or its affiliates and an average of 23 years experience in the
real estate industry.
    
 
     The Company believes that, given its size, its UPREIT structure, and its
relationship with many of the major institutional owners of real estate in the
United States, it is well positioned to benefit from the consolidation that is
occurring in the real estate industry.
                                        1
<PAGE>   10
 
   
                              SUMMARY RISK FACTORS
    
 
     An investment in the Common Shares involves various risks, and prospective
investors should carefully consider the matters discussed under "Risk Factors"
prior to making an investment in the Company. Such risks include:
 
   
     - the absence of arm's length negotiations and third-party appraisals with
       respect to the Properties and the other assets contributed to the Company
       in its formation, such that the consideration paid by the Company for
       such assets may exceed their fair market value and that the market value
       of the Common Shares may exceed the shareholders' proportionate share of
       the aggregate fair market value of such assets;
    
 
   
     - conflicts of interest in connection with the Company's formation and
       operation (including the receipt by Mr. Zell of equity interests in the
       Company);
    
 
   
     - the need to renew leases or re-lease space upon lease expirations and to
       pay renovation and re-leasing costs in connection therewith, the effect
       of economic and other conditions on Office Property cash flows and
       values, the ability of tenants to make lease payments, the ability of a
       Property to generate revenue sufficient to meet operating expenses
       (including future debt service), and the illiquidity of real estate
       investments;
    
 
     - the inability to refinance outstanding indebtedness upon maturity or
       refinance such indebtedness on favorable terms;
 
   
     - taxation of the Company as a corporation if it fails to qualify as a REIT
       for federal income tax purposes, the Company's liability for certain
       federal, state and local income taxes in such event, and the resulting
       decrease in cash available for distribution;
    
 
     - the possible anti-takeover effect of the Company's ability to limit, for
       purposes of maintaining its REIT status, the actual or constructive
       ownership of Common Shares to 9.9% of the outstanding Common Shares, and
       of certain other provisions contained in the organizational documents of
       the Company and the Operating Partnership, which could have the effect of
       delaying, deferring or preventing a transaction or change in control of
       the Company that might involve a premium price for the Common Shares or
       otherwise would be in the best interests of the Company's shareholders;
 
   
     - immediate and substantial dilution of $5.68 in the net tangible book
       value per Common Share purchased in the Offering (based on the assumed
       offering price of $20.00 per share);
    
 
   
     - the inability of the Company to control the operations of its Managed
       Property Business (management of properties not wholly owned by the
       Company), which could result in decisions that do not reflect the
       Company's interests; and
    
 
   
     - absence of a prior public market for the Common Shares and no assurance
       that a public market will develop or be sustained.
    
 
                         BUSINESS AND GROWTH STRATEGIES
 
     The Company's primary business objective is to achieve sustainable
long-term growth in cash flow per share and to maximize long-term shareholder
value. The Company intends to achieve this objective by owning and operating
institutional quality office buildings and providing a superior level of service
to tenants in central business districts ("CBDs") and suburban markets across
the United States.
 
     Internal Growth.  Management believes that the Company's future internal
growth will come from (i) lease up of vacant space, (ii) tenant roll-over at
increased rents, (iii) repositioning of certain Properties which have not yet
achieved stabilization, and (iv) increasing economies of scale.
 
   
     As of April 30, 1997, 2.4 million rentable square feet of Office Property
space was vacant. Of this amount, 737,000 square feet was leased, with occupancy
to commence in whole or in part during 1997. The Company believes that the
current average market rent for this space is $25.12 per square foot. The
Company's average
    
                                        2
<PAGE>   11
 
   
operating expenses for this space are $9.67 per square foot. The following five
Properties account for 50% of the total vacant space as of April 30, 1997:
    
 
   
<TABLE>
<CAPTION>
                                                                           AMOUNT OF VACANT
                                                              VACANT        SQUARE FOOTAGE
                                                          SQUARE FOOTAGE      LEASED(1)
                                                          --------------   ----------------
<S>                                                       <C>              <C>
28 State Street, Boston, MA.............................      519,485          263,761
Two California Plaza, Los Angeles, CA...................      194,773           18,124
161 North Clark, Chicago, IL............................      324,813          300,730
Bank One Center, Indianapolis, IN.......................       79,050            7,816
BP Tower, Cleveland, OH.................................       94,165                0
                                                            ---------          -------
                                                            1,212,286          590,431
</TABLE>
    
 
- ---------------
   
(1) Represents the amount of unoccupied space as of April 30, 1997 that was
    subject to an executed lease with a commencement date after April 30, 1997.
    
 
   
     During the period from April 30, 1997, through December 31, 2001, 2,335
leases for 15.5 million rentable square feet of space are scheduled to expire.
As of April 30, 1997, the average rent for this space was $20.14 per square
foot, the market rent for such space averaged $22.62 per square foot, and the
weighted average operating expenses were $8.23 per square foot. Replacement cost
rents (rents that would provide a 12% return on investment to a developer of new
office buildings of similar quality) for this space are estimated by the Company
to be $34.64 per square foot.
    
 
   
     As one of the largest publicly traded full service office companies in the
United States, the Company expects to benefit from certain economies of scale.
Management intends to maximize the benefits attributable to its large scale
operations by aggressive cash management, bulk purchasing, national and regional
service agreements and utilization of state-of-the-art information technology
(which provides the Company with extensive operational data, including daily
leasing, occupancy and other property and financial data). Historically, as the
Company's portfolio has increased in size, the Company's general and
administrative costs as a percentage of total revenue have decreased.
    
 
   
     The Company owns a total of approximately 50 acres of undeveloped land
adjacent to 15 Office Properties on which approximately 2.1 million square feet
of office space could be developed. The Company may decide to develop these
properties if significant pre-leasing can be arranged and does not currently
anticipate other development activities.
    
 
     External Growth.  The Company believes there will be significant
opportunities for future external growth by continuing to acquire institutional
quality properties with long-term competitive advantages such as a superior
location or a particularly high level of building improvement that is unlikely
to be reproduced in the foreseeable future. Management believes that properties
may be acquired for less than replacement cost in many markets and that current
rents generally do not justify new construction in these markets. Properties may
be acquired separately or as part of a portfolio, and may be acquired for cash
and/or in exchange for equity or debt securities of the Company, and such
acquisitions may be customary real estate transactions and/or mergers or other
business combinations.
 
   
     The real estate industry is in the early stages of a major consolidation
which the Company believes will continue as institutional owners gain increasing
confidence in indirect rather than direct ownership of real estate. The Company
generally has acquired the Office Properties from institutional sellers.
Emerging Trends in Real Estate 1997 published by Equitable Real Estate
Investment Management Inc. and Real Estate Research Corporation, estimates that
out of the approximately $3.2 trillion invested in commercial real estate in the
United States as of June 30, 1996, institutions had total equity and debt
investments of approximately $1.3 trillion. The Company believes that given its
size, its UPREIT structure (which enables it to acquire properties in
transactions that may permit sellers to defer tax consequences) and its
relationship with many of the major institutional owners of real estate in the
United States, it is well positioned to benefit from the consolidation that is
occurring in the real estate industry.
    
                                        3
<PAGE>   12
 
   
     Parking Facilities.  Management believes that Parking Facilities offer the
Company attractive investment opportunities which will be complementary to
investments in Office Properties. Because the parking industry is highly
fragmented and in the early stages of consolidation and privatization,
management expects there to be future opportunities to acquire parking
facilities from smaller owners who lack capital for expansion, technological
upgrades or repairs and who cannot achieve the economics of scale available to
the Company. Management also expects municipalities and other government
entities to be a significant source of properties for acquisition as budget
constraints force such entities to consider nontraditional sources of capital
such as privatization of parking facilities. The Company will focus its
acquisition efforts on municipal or private parking facilities that have limited
competition, no (or minimal) rental rate restrictions and/or a superior location
proximate to or affiliated with airports, CBDs, entertainment projects or
healthcare facilities.
    
 
                                 THE PROPERTIES
 
   
     Upon completion of the Offering, the Company expects to control the largest
office portfolio (based on revenues and square footage) of any publicly traded,
full service office company in the United States. Management believes that the
Properties are generally well located in markets that exhibit strong growth
characteristics, are well maintained and professionally managed, and are
generally capable of attracting and retaining high quality tenants while
maintaining high rent, occupancy and tenant retention rates.
    
 
     The operation of the Properties is under the direction of five regional
managers, each of whom has oversight responsibility for all of the Properties in
his respective region. Each regional manager reports to one of two divisional
managers at the Company's headquarters in Chicago who, in turn, report to the
Company's Executive Vice President -- Real Estate Operations.
                                        4
<PAGE>   13
 
   
     The Company owns 90 Office Properties and 14 Parking Facilities. The
following table shows the distribution of these Properties and the Company's
employees by region:
    
 
   
       DISTRIBUTION OF OFFICE PROPERTIES AND PARKING FACILITIES BY REGION
    
 
   
<TABLE>
<CAPTION>
                                                 OFFICE PROPERTIES     PARKING FACILITIES
                                                --------------------   ------------------     NUMBER
                                                          RENTABLE               NUMBER         OF
       REGION                 OFFICE            NUMBER   SQUARE FEET   NUMBER   OF SPACES    EMPLOYEES
       ------                 ------            ------   -----------   ------   ---------    ---------
<S>                    <C>                      <C>      <C>           <C>      <C>          <C>
Pacific                Los Angeles                                                               70
  CBD.......................................       6      4,238,821
  Suburban..................................      12      2,505,449
Southeast              Atlanta                                                                  111
  CBD.......................................       6      2,887,795
  Suburban..................................       8      2,120,652
Northeast              Washington, D.C.                                                         120
  CBD.......................................       6      2,625,458       6       3,140
  Suburban..................................      11      2,537,749
Central                Chicago                                                                  337(1)
  CBD.......................................       7      5,261,555       4       4,181
  Suburban..................................       4      1,286,556
Southwest              Houston                                                                   89
  CBD.......................................       3      1,423,948
  Suburban..................................       9      3,159,286
West                   Denver                                                                    63
  CBD.......................................       1        230,022       4       7,464
  Suburban..................................      17      3,939,450
                                                  --     ----------      --      ------
                                                                                                ---
          Total.............................      90     32,216,741      14      14,785         790
                                                  ==     ==========      ==      ======         ===
</TABLE>
    
 
- ---------------
 
   
(1) 200 of these employees are located at the Company's headquarters.
    
 
                     STRUCTURE AND FORMATION OF THE COMPANY
 
     Company Structure.  At the completion of the Offering all of the Company's
assets will be owned by, and its operations conducted through, the Operating
Partnership and its subsidiaries. The Company will be the managing general
partner of the Operating Partnership and will contribute the proceeds of the
Offering to the Operating Partnership in exchange for a number of units of
limited partnership interest ("Units") in the Operating Partnership equal to the
number of Common Shares sold in the Offering.
 
     Consolidation.  Prior to or simultaneously with the completion of the
Offering, the Company will engage in the transactions described below, which are
designed to consolidate the ownership of the Office Properties, the Parking
Facilities and the Management Business (as defined below), to facilitate the
Offering and to enable the Company to qualify as a REIT for federal income tax
purposes commencing with the taxable year ending December 31, 1997.
 
   
     - The ZML Opportunity Partnerships (the predecessor owners of the Office
      Properties and Parking Facilities) will contribute to the Operating
      Partnership all of their interests in the Office Properties and Parking
      Facilities, which include interests in joint ventures, that will comprise
      the Company's initial portfolio.
    
 
     - The ZML REITs (each a majority or sole limited partner of a ZML
      Opportunity Partnership) will merge into the Company, with the Company
      succeeding to their interest in, and becoming the managing general partner
      of, the ZML Opportunity Partnerships.
                                        5
<PAGE>   14
 
   
     - Certain entities (collectively, the "Equity Group") owned directly or
      indirectly by certain trusts (together with certain partnerships comprised
      of such trusts, the "Equity Group Owners") established for the benefit of
      the families of Mr. Zell and of Mr. Robert Lurie, the deceased former
      partner of Mr. Zell, will contribute to the Operating Partnership
      substantially all of the interests in their office property and asset
      management businesses and parking facility asset management business
      (collectively, the "Management Business").
    
 
     - Shareholders in the ZML REITs will receive Common Shares of the Company
       in exchange for their interests in the ZML REITs.
 
     - Partners in the ZML Opportunity Partnerships (including the Company as
       the successor to the ZML REITs) will receive Units in the Operating
       Partnership (to be distributed over the two-year period following the
       Consolidation). Such Units are intended to correspond in value to, and
       will be exchangeable commencing two years following the Closing for,
       Common Shares of the Company or, at the Company's option, cash equal to
       the fair market value of such Common Shares.
 
     - Units in the Operating Partnership will be issued to the Equity Group in
       exchange for the Management Business, which Units will be exchangeable
       for Common Shares, or, at the Company's option, the cash equivalent
       thereof, commencing one year following the Closing.
 
   
     - The Operating Partnership and the Equity Group will transfer the Managed
       Property Business to the Management Corp., in which the Operating
       Partnership will own non-voting stock representing 95% of the equity
       interest and the Equity Group will own voting stock representing 5% of
       the equity interest.
    
 
     Benefits to Related Parties.  Certain affiliates of the Company will
realize certain material benefits in connection with the Consolidation,
including the following:
 
   
     - Through the Equity Group Owners and the ZML Partners (the current general
       partners of the ZML Opportunity Partnerships), Mr. Zell will be deemed to
       be the beneficial owner of an aggregate of approximately 14.9 million
       Units and Common Shares, with a total value of $298.3 million based on
       the assumed offering price of $20.00 per Common Share. Such Units and
       Common Shares will be issued in exchange for the Management Business,
       partnership interests in the ZML Opportunity Partnerships and shares of
       the ZML REITs owned by the ZML Partners. The aggregate book value of the
       foregoing interests as of March 31, 1997 was approximately $91 million.
       The Company does not believe that the book values of the interests and
       assets exchanged (which reflect the depreciated historical cost of such
       interests and assets) are equivalent to the fair market values of such
       interests and assets, and the fair market value of such interests may
       vary from the value of the Common Shares and Units issued in exchange
       therefor.
    
 
   
     - Through the ZML Partners, Mr. Zell may become the deemed beneficial owner
       of up to an additional 11.4 million Units that may be distributed by the
       ZML Opportunity Partnerships over the two-year period following the
       Consolidation. Any distribution of these Units to the ZML Partners will
       not dilute the interest in the Company of the purchasers of Common Shares
       in the Offering.
    
 
   
     - The Equity Group and the ZML Partners will realize an immediate accretion
       in the net tangible book value of their investment in the Company of $.72
       per Common Share representing an aggregate accretion amount of
       approximately $10.7 million.
    
 
     - Mr. Zell will serve as Chairman of the Board of Trustees of the Company
       and will participate in the Company's Employee Plan, including grants of
       options to purchase 200,000 Common Shares at the offering price.
 
     - Commencing on the first anniversary of the Offering, the Equity Group and
       the ZML Partners will have registration rights with respect to a portion
       of the Common Shares received in the Consolidation as well as the Common
       Shares that may be issued in exchange for Units received in the
       Consolidation or in liquidation of the ZML Opportunity Partnerships.
                                        6
<PAGE>   15
 
     The following diagram depicts the Company's structure following
consummation of the Offering:
 
                          COMPANY'S STRUCTURE DIAGRAM
 
- ---------------
 
   
(1) The initial holders of Units will be the Company, the Equity Group, and the
    ZML Opportunity Partnerships. The ZML Opportunity Partnerships will be
    liquidated during the two-year period following consummation of the Offering
    and, pursuant to such liquidation, Units will be distributed to the Company,
    the ZML Partners and an Investor Limited Partner. Prior to liquidation, ZML
    Opportunity Partnership II will be a non-managing general partner of the
    Operating Partnership and the Company will be the sole managing general
    partner of the Operating Partnership and each of the ZML Opportunity
    Partnerships. See "Structure and Formation of the Company -- Formation
    Transactions."
    
                                        7
<PAGE>   16
 
                                  THE OFFERING
 
     All of the Common Shares offered hereby are being offered by the Company.
 
   
Common Shares Offered by the
Company.............................     25,000,000 shares
    
 
   
          U.S. Offering.............     20,000,000 shares
    
 
   
          International Offering....      5,000,000 shares
    
 
   
Common Shares Outstanding After the
Offering............................     147,851,200 shares
    
 
   
Common Shares and Units Outstanding
  After the Offering (1)............     159,779,400 shares and Units
    
 
   
Use of Proceeds.....................     To repay indebtedness
    
 
   
NYSE Symbol.........................     "EOP"
    
- ---------------
 
(1) Units are exchangeable on a one-for-one basis for Common Shares or, at the
    option of the Company, cash, subject to certain exceptions.
 
                                    DISTRIBUTIONS
 
   
     The Company and the Operating Partnership intend to pay regular quarterly
distributions to holders of Common Shares and Units. The initial distribution,
covering a partial quarter commencing on the date of the Closing of the Offering
and ending on September 30, 1997, is expected to be $   per share, which
represents a pro rata distribution based upon a full quarterly distribution of
$.30 per share and an annual distribution of $1.20 per share (or an annual
distribution rate of approximately 6%, based upon an assumed offering price of
$20.00). See "Distributions."
    
 
   
     The Company intends initially to distribute annually approximately 89% of
estimated cash available for distribution. The Company's estimate of the cash
available for distribution for the twelve months ending March 31, 1998, is based
upon pro forma Funds from Operations for the 12 months ended March 31, 1997,
with certain adjustments as described in "Distributions." The actual
distributions made by the Company will be affected by a number of factors,
including the gross revenues received from its Properties, the operating
expenses of the Company, the interest expense incurred in borrowing, and
unanticipated capital expenditures. No assurance can be given that the Company's
estimates will prove accurate or that any level of distributions will be made or
sustained. The Company anticipates that distributions will exceed net income
determined in accordance with generally accepted accounting principles due to
non-cash expenses, primarily depreciation and amortization.
    
 
   
     Distributions by the Company to the extent of its current and accumulated
earnings and profits for Federal income tax purposes generally will be taxable
to shareholders as ordinary dividend income (except to the extent designated as
"capital gain" dividends). Distributions in excess of such earnings and profits
generally will be treated as first a non-taxable reduction of the shareholder's
basis in the Common Shares to the extent thereof (which may have the effect of
increasing the gain or decreasing the loss recognized on such shareholder's sale
of the Common Shares), and thereafter as taxable gain. The Company anticipates
that approximately 30% (or $.36 per Common Share) of the distributions intended
to be paid by the Company for the 12-month period following the Offering will
represent a return of capital for federal income tax purposes.
    
 
     For a discussion of the annual distribution requirements applicable to
REITs, see "Federal Income Tax Considerations -- Taxation of the
Company -- Annual Distribution Requirements Applicable to REITs." For a
discussion of the tax treatment of distributions to the holders of Common
Shares, see "Federal Income Tax Considerations -- Taxation of Taxable U.S.
Shareholders of the Company Generally" "-- Taxation of Tax-Exempt Shareholders
of the Company," and "-- Taxation of Non-U.S. Shareholders of the Company."
                                        8
<PAGE>   17
 
                           TAX STATUS OF THE COMPANY
 
     The Company intends to elect to be taxed as a REIT under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended (the "Code"),
commencing with its taxable year ending December 31, 1997, and believes its
organization and proposed method of operation will enable it to meet the
requirements for qualification as a REIT. To maintain REIT status, an entity
must meet a number of organizational and operational requirements. In addition,
in order to maintain its qualification as a REIT under the Code, the Company
generally will be required each year to distribute at least 95% of its net
taxable income. As a REIT, the Company generally will not be subject to Federal
income tax on net income it distributes currently to its shareholders. If the
Company fails to qualify as a REIT in any taxable year, it will be subject to
Federal income tax at regular corporate rates. See "Federal Income Tax
Considerations -- Taxation of the Company -- Failure to Qualify" and "Risk
Factors -- Tax Risks -- Failure to Qualify as a REIT." Even if the Company
qualifies for taxation as a REIT, the Company will be subject to certain
Federal, state and local taxes on its income and property.
                                        9
<PAGE>   18
 
                SUMMARY SELECTED COMBINED FINANCIAL INFORMATION
 
   
     The following sets forth summary selected combined financial and operating
information on a pro forma basis for the Company and on an historical basis for
the Company's predecessors ("Equity Office Predecessors"). The following
information should be read in conjunction with the combined financial statements
and notes thereto of Equity Office Predecessors included elsewhere in this
Prospectus. The summary selected combined historical financial and operating
information of Equity Office Predecessors at March 31, 1997, and for the three
months ended March 31, 1997 and 1996, has been derived from the historical
unaudited combined financial statements of Equity Office Predecessors. The
summary selected combined historical financial and operating information of
Equity Office Predecessors at December 31, 1996 and 1995, and for each of the
three years in the period ended December 31, 1996, has been derived from the
historical combined financial statements of Equity Office Predecessors audited
by Ernst & Young LLP, independent auditors, whose report with respect thereto is
included elsewhere in this Prospectus. The summary selected combined historical
financial and operating information of Equity Office Predecessors at December
31, 1994, 1993 and 1992, and for each of the two years in the period ended
December 31, 1993, has been derived from the historical unaudited combined
financial statements of the Equity Office Predecessors. Unaudited pro forma
operating information for the three months ended March 31, 1997 and the year
ended December 31, 1996 is presented as if the Offering and the Consolidation
occurred on January 1, 1997 and 1996, respectively, and, therefore, incorporates
certain assumptions that are described in the notes to the Pro Forma Condensed
Combined Financial Statements included elsewhere in this Prospectus. The
unaudited pro forma balance sheet data is presented as if the aforementioned
transactions had occurred on March 31, 1997. The pro forma information does not
purport to represent what the Company's financial position or results of
operations would actually have been if these transactions had, in fact, occurred
on such date or at the beginning of the period indicated, or to project the
Company's financial position or results of operations at any future date or for
any future period.
    

   
<TABLE>
<CAPTION>
                                         THREE MONTHS ENDED MARCH 31,
                                     ------------------------------------
                                      COMPANY                                COMPANY
                                        PRO         COMBINED HISTORICAL        PRO
                                       FORMA      -----------------------     FORMA
                                        1997         1997         1996         1996
                                     ----------   ----------   ----------   ----------
                                      (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                  <C>          <C>          <C>          <C>
OPERATING DATA:
Revenue:
 Rental, parking and other.........  $  168,425   $  148,471   $  107,645   $  655,256
                                     ==========   ==========   ==========   ==========
       Total Revenue...............  $  174,586   $  154,567   $  110,150   $  670,226
                                     ==========   ==========   ==========   ==========
Expenses:
 Interest..........................  $   28,914   $   36,355   $   26,267   $  112,712
 Depreciation and amortization.....      34,131       28,081       21,173      133,346
 Property operating(1).............      65,379       58,148       43,820      261,388
 General and administrative........       7,673        7,073        6,056       25,545
 Provision for value impairment....           0            0            0            0
                                     ----------   ----------   ----------   ----------
       Total Expenses..............  $  136,097   $  129,657   $   97,316   $  532,991
                                     ==========   ==========   ==========   ==========
Income before (income) loss
 allocated to minority interests,
 income from investments in
 unconsolidated joint ventures,
 gain on sale of real estate, and
 extraordinary items...............  $   38,489   $   24,910   $   12,834   $  137,235
Minority interests allocation......      (3,504)        (529)        (610)     (13,028)
Income from investments in
 unconsolidated joint ventures.....       1,580          922          492        4,725
Gain on sale of real estate and
 extraordinary items...............           0        5,466        5,262        5,338
                                     ----------   ----------   ----------   ----------
       Net income..................  $   36,565   $   30,769   $   17,978   $  134,270
                                     ==========   ==========   ==========   ==========
       Net income per Common
        Share(2)...................  $      .25                             $      .91
                                     ==========                             ==========
BALANCE SHEET DATA:
 (AT END OF PERIOD)
Investment in real estate after
 accumulated depreciation..........  $4,758,788   $3,377,515           --           --
       Total assets................   4,924,908    3,966,355           --           --
Mortgage debt and revolving lines
 of credit.........................   1,621,494    1,996,474           --           --
       Total liabilities...........   1,719,975    2,197,669           --           --
Minority interests.................     249,015        9,346           --           --
Owners'/Shareholders' equity.......   2,955,918    1,759,340           --           --
 
<CAPTION>
 
                                            EQUITY OFFICE PREDECESSORS (COMBINED HISTORICAL)
                                                        YEARS ENDED DECEMBER 31,
                                     --------------------------------------------------------------
                                        1996         1995         1994         1993         1992
                                     ----------   ----------   ----------   ----------   ----------
                                            (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                  <C>          <C>          <C>          <C>          <C>
OPERATING DATA:
Revenue:
 Rental, parking and other.........  $  493,396   $  356,959   $  230,428   $  150,315   $   96,787
                                     ==========   ==========   ==========   ==========   ==========
       Total Revenue...............  $  508,124   $  371,457   $  240,878   $  159,246   $  107,154
                                     ==========   ==========   ==========   ==========   ==========
Expenses:
 Interest..........................  $  119,595   $  100,566   $   59,316   $   36,755   $   25,775
 Depreciation and amortization.....      96,237       74,156       46,905       29,752       19,266
 Property operating(1).............     201,067      151,488      107,412       74,028       48,856
 General and administrative........      23,145       21,987       15,603       12,012        8,720
 Provision for value impairment....           0       20,248            0            0            0
                                     ----------   ----------   ----------   ----------   ----------
       Total Expenses..............  $  440,044   $  368,445   $  229,236   $  152,547   $  102,617
                                     ==========   ==========   ==========   ==========   ==========
Income before (income) loss
 allocated to minority interests,
 income from investments in
 unconsolidated joint ventures,
 gain on sale of real estate, and
 extraordinary items...............  $   68,080   $    3,012   $   11,642   $    6,699   $    4,537
Minority interests allocation......      (2,086)      (2,129)       1,437        1,772        1,793
Income from investments in
 unconsolidated joint ventures.....       2,093        2,305        1,778            0            0
Gain on sale of real estate and
 extraordinary items...............       5,338       31,271        1,705            0            0
                                     ----------   ----------   ----------   ----------   ----------
       Net income..................  $   73,425   $   34,459   $   16,562   $    8,471   $    6,330
                                     ==========   ==========   ==========   ==========   ==========
       Net income per Common
        Share(2)...................
 
BALANCE SHEET DATA:
 (AT END OF PERIOD)
Investment in real estate after
 accumulated depreciation..........  $3,291,815   $2,393,403   $1,815,160   $1,220,268   $  820,805
       Total assets................   3,912,565    2,650,890    2,090,933    1,318,644      912,631
Mortgage debt and revolving lines
 of credit.........................   1,964,892    1,434,827    1,261,156      798,897      526,830
       Total liabilities...........   2,174,483    1,529,334    1,350,552      845,315      552,666
Minority interests.................      11,080       31,587        9,283      (15,298)     (14,133)
Owners'/Shareholders' equity.......   1,727,002    1,089,969      731,098      488,627      374,098
</TABLE>
    
 
                                       10
<PAGE>   19
   
<TABLE>
<CAPTION>
                                         THREE MONTHS ENDED MARCH 31,
                                     ------------------------------------
                                      COMPANY                                COMPANY
                                        PRO         COMBINED HISTORICAL        PRO
                                       FORMA      -----------------------     FORMA
                                        1997         1997         1996         1996
                                     ----------   ----------   ----------   ----------
                                      (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                  <C>          <C>          <C>          <C>
OTHER DATA:
General and administrative expenses
 as a percentage of total
 revenues..........................         4.4%         4.6%         5.5%         3.8%
Number of Office Properties owned
 at period end(3)(4)(5)............          90           86           74           90
Net rentable square feet of Office
 Properties owned at period end (in
 millions)(3)......................        32.2         29.7         23.8         32.2
Occupancy of Office Properties
 owned at period end(3)............          93%          91%          88%          93%
Number of Parking Facilities owned
 at period end(6)..................          15           10            3           15
Number of spaces at Parking
 Facilities owned at period
 end(6)............................      15,455        7,321        3,323       15,455
Funds from Operations(7)...........  $   73,974   $   52,755   $   33,321   $  274,504
Weighted average number of Common
 Shares outstanding (in
 thousands)........................     147,851           --           --      147,851
Cash flow from operating
 activities........................          --   $   41,087   $    2,407           --
Cash flow from investing
 activities........................          --   $ (109,506)  $  (36,116)          --
Cash flow from financing
 activities........................          --   $   34,120   $   63,900           --
 
<CAPTION>
 
                                            EQUITY OFFICE PREDECESSORS (COMBINED HISTORICAL)
                                                        YEARS ENDED DECEMBER 31,
                                     --------------------------------------------------------------
                                        1996         1995         1994         1993         1992
                                     ----------   ----------   ----------   ----------   ----------
                                            (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                  <C>          <C>          <C>          <C>          <C>
OTHER DATA:
General and administrative expenses
 as a percentage of total
 revenues..........................         4.6%         5.9%         6.5%         7.5%         8.1%
Number of Office Properties owned
 at period end(3)(4)(5)............          83           73           63           48           33
Net rentable square feet of Office
 Properties owned at period end (in
 millions)(3)......................        29.2         23.1         18.5         13.6          9.1
Occupancy of Office Properties
 owned at period end(3)............          90%          86%          88%          80%          73%
Number of Parking Facilities owned
 at period end(6)..................          10            3            0            0            0
Number of spaces at Parking
 Facilities owned at period
 end(6)............................       7,321        3,323            0            0            0
Funds from Operations(7)...........  $  160,460   $   96,104   $   60,372           --           --
Weighted average number of Common
 Shares outstanding (in
 thousands)........................          --           --           --           --           --
Cash flow from operating
 activities........................  $  165,975   $   93,878   $   73,821           --           --
Cash flow from investing
 activities........................  $ (924,227)  $ (380,615)  $ (513,965)          --           --
Cash flow from financing
 activities........................  $1,057,551   $  276,513   $  514,923           --           --
</TABLE>
    
 
- ---------------
(1) Includes Property operating expenses, real estate taxes, insurance, as well
    as repair and maintenance expenses.
   
(2) The pro forma net income per Common Share, based solely on the number of
    shares issued in the Offering, the proceeds of which will be used to retire
    debt, would be $.28 and $.79 per share for the three months ended March 31,
    1997 and the year ended December 31, 1996, respectively, calculated as
    follows:
    
 
   
<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED      YEAR ENDED
                                                                    MARCH 31, 1997     DECEMBER 31, 1996
                                                                  ------------------   -----------------
                                                                        (ALL AMOUNTS IN THOUSANDS
                                                                        EXCEPT PER SHARE AMOUNTS)
    <S>                                                           <C>                  <C>
    Pro forma Common Shares in the Offering issued to retire
      debt......................................................        147,851             147,851
    Historical net income of Equity Office Predecessors.........       $ 30,769            $ 73,425
    Plus pro forma reduction in interest expense due to
      repayment of indebtedness.................................         11,366              43,041
                                                                       --------            --------
    Pro forma net income........................................       $ 42,135            $116,466
                                                                       ========            ========
    Pro forma net income per Common Share.......................       $    .28            $    .79
                                                                       ========            ========
</TABLE>
    
 
   
(3) The data at the periods ended March 31, 1997, December 31, 1996 and 1995
    includes 28 State Street, a 570,040 square foot Office Property which is
    undergoing major redevelopment and was vacant prior to May, 1997. The
    weighted average occupancy, excluding 28 State Street, as of March 31, 1997,
    December 31, 1996 and 1995 was approximately 92%, 92% and 88%, respectively.
    
   
(4) The pro forma number of Office Properties as of March 31, 1997 includes
    Oakbrook Terrace Tower, One Maritime Plaza, 201 Mission Street, Smith Barney
    Tower and 30 N. LaSalle, each of which was acquired after March 31, 1997;
    and the pro forma number of Office Properties as of December 31, 1996
    includes each of the foregoing plus Preston Commons and 177 Broad Street,
    each of which was a 1997 acquisition. The pro forma number of Office
    Properties as of December 31, 1996 excludes Barton Oaks Plaza II and 8383
    Wilshire, each of which is a 1997 disposition; and the pro forma number of
    Office Properties as of March 31, 1997 excludes 8383 Wilshire, which was
    sold after March 31, 1997.
    
   
(5) The number of Office Properties owned as of December 31, 1996, as reflected
    in the combined historical financial statements, includes Barton Oaks Plaza
    II, an Office Property which was sold in January 1997, and 8383 Wilshire, an
    Office Property which was sold in May, 1997.
    
   
(6) The pro forma number of Parking Facilities and number of spaces include the
    1997 acquisition of a 50% ownership in a portfolio of four parking
    facilities in St. Louis, Missouri containing 7,464 spaces, and the 100%
    ownership of a parking facility in Chicago, Illinois containing 670 spaces,
    which is expected to close after the Closing of the Offering.
    
   
(7) The White Paper on Funds from Operations approved by the Board of Governors
    of the National Association of Real Estate Investment Trusts ("NAREIT") in
    March 1995 defines Funds from Operations as net income (loss) (computed in
    accordance with GAAP), excluding gains (or losses) from debt restructuring
    and sales of properties, plus real estate related depreciation and
    amortization and after adjustments for unconsolidated partnerships and joint
    ventures. The Company believes that Funds from Operations is helpful to
    investors as a measure of the performance of an equity REIT because, along
    with cash flow from operating activities, financing activities and investing
    activities, it provides investors with an indication of the ability of the
    Company to incur and service debt, to make capital expenditures and to fund
    other cash needs. The Company computes Funds from Operations in accordance
    with standards established by NAREIT which may not be comparable to Funds
    from Operations reported by other REITs that do not define the term in
    accordance with the current NAREIT definition or that interpret the current
    NAREIT definition differently than the Company. Funds from Operations does
    not represent cash generated from operating activities in accordance with
    GAAP and should not be considered as an alternative to net income
    (determined in accordance with GAAP) as an indication of the Company's
    financial performance or to cash flow from operating activities (determined
    in accordance with GAAP) as a measure of the Company's liquidity, nor is it
    indicative of funds available to fund the Company's cash needs, including
    its ability to make cash distributions. For a reconciliation of net income
    and Funds from Operations, see "Management's Discussion and Analysis of
    Financial Condition and Results of Operations -- Funds from Operations."
    
                                       11
<PAGE>   20
 
                                  RISK FACTORS
 
     An investment in the Common Shares involves various risks. Prospective
investors should carefully consider the following information in conjunction
with the other information contained in this Prospectus before making a decision
to purchase Common Shares in the Offering.
 
   
CONFLICTS OF INTEREST
    
 
   
     Absence of Arm's Length Negotiations in the Formation Transactions. There
have been no arm's length negotiations or third-party appraisals with respect to
the valuation of the Properties and other assets contributed to the Company in
its formation. See "Structure and Formation of the Company -- Formation
Transactions." As a result, the consideration paid by the Company for such
assets may exceed their fair market value and the market value of the Common
Shares may exceed a shareholder's proportionate share of the aggregate fair
value of such assets. Further, there were no arm's length negotiations with
respect to other terms of the Formation Transactions, in particular with respect
to the representations and warranties made by the contributors of properties to
the Company in the Formation Transactions, or the indemnification provided for
breach of such representations and warranties. Such indemnification is limited
generally to an amount equal to 1% of the value of consideration paid by the
Company for the Properties and to $15 million with respect to pre-Closing
liabilities in connection with the contribution of the Management Business. In
addition, Mr. Zell, who had significant influence in structuring the Formation
Transactions, had preexisting ownership interests in the Equity Group and will
receive substantial economic benefits as a result of the Formation Transactions.
Further, in the course of structuring the Formation Transactions, Mr. Zell had
the ability to influence the type and level of benefits that he and the
executive officers of the Company will receive from the Company.
    
 
   
     Influence of Trustees, Officers and Significant Shareholders. Upon
consummation of the Offering, through the Equity Group and the ZML Partners, Mr.
Zell will be deemed to beneficially own approximately 9.3% of the outstanding
Common Shares (on a fully diluted basis, i.e., including Common Shares issuable
upon exchange of Units). In addition, the ZML Partners may receive distributions
of up to approximately 11.4 million additional Units (representing approximately
7.1% of the outstanding Common Shares on a fully diluted basis) from the ZML
Opportunity Partnerships during the two-year period following the Offering. All
such Units will be exchangeable for Common Shares (subject to the Ownership
Limit) or, at the option of the Company, for the cash equivalent of that number
of Common Shares, beginning on the first anniversary of the Closing for Units
issued to the Equity Group for the Management Business and beginning on the
second anniversary of the Closing for Units issued to the ZML Partners in
liquidation of the ZML Opportunity Partnerships. See "Structure and Formation of
the Company -- Formation Transactions." In addition, Mr. Zell, Ms. Sheli Z.
Rosenberg (one of the Company's trustees) and the Named Executive Officers of
the Company will receive options to purchase 1,000,000 Common Shares exercisable
at the initial offering price. Mr. Zell and Ms. Rosenberg are affiliated with
the Equity Group Owners and, as trustees, will have influence on the management
and operation of the Company and, as shareholders, on the outcome of any matters
submitted to a vote of the shareholders. Such influence might be exercised in a
manner that is inconsistent with the interests of other shareholders. Although
there is no understanding or arrangement for these trustees, officers and
shareholders and their affiliates to act in concert, such parties would be in a
position to exercise significant influence over the Company's affairs should
they choose to do so. If all or a substantial portion of the Units were
exchanged for Common Shares and such Common Shares were retained and not sold,
subject to the Ownership Limit described under "-- Risks of Ownership of Units
and Common Shares -- Possible Adverse Consequences of Ownership Limit," the
influence of the holders thereof over the affairs of the Company would increase,
and the influence of the remaining shareholders would be diminished accordingly.
See "Management -- Trustees and Executive Officers" and "Principal
Shareholders."
    
 
   
     Management Corp. Conflicts.  Equity Office Properties Management Corp. (the
"Management Corp.") will provide property and asset management services to the
Joint Venture Properties and properties not owned by the Company but which are
owned or controlled by the Equity Group Owners or their affiliates. These
management contracts were not negotiated on an arm's length basis. Although the
Company believes that the management fees to be charged by Management Corp. are
at current market rates, there is no assurance that
    
 
                                       12
<PAGE>   21
 
   
these management fees will equal at all times those fees that would be charged
by an unaffiliated third party. In this regard, through the Equity Group Owners,
Mr. Zell has a substantial interest in EOH which will own the voting stock of
the Management Corp.
    
 
   
     Conflicts Relating to the Operating Partnership.  After the Offering, the
Company, as the managing general partner of the Operating Partnership, will have
fiduciary obligations to the other limited partners in the Operating
Partnership, the discharge of which may conflict with the interests of the
Company's shareholders. In addition, those persons holding Units (including the
Equity Group), as limited partners, will have the right to vote on amendments to
the Operating Partnership Agreement (most of which require approval by a
majority in interest of the limited partners, including the Company) and
individually to approve certain amendments that would adversely affect their
rights, which may be exercised in a manner that conflicts with the interests of
the Company's shareholders.
    
 
   
     Continued Involvement in Other Investment Activities.  Although Mr. Zell
has agreed to enter into a non-competition agreement with the Company upon
consummation of the Offering, the Equity Group Owners and their affiliates have
and will continue to have a broad and varied range of investment interests, and
companies directly or indirectly involved in real estate investment activities
in which one or more of them has or may acquire an interest will be owners of
real property and will acquire real property in the future. In addition, Mr.
Zell may not have management control over companies in which he or the Equity
Group Owners have or may have an investment interest and, therefore, he may not
be able to control whether any such company engages in activities that are in
competition with activities of the Company.
    
 
   
     Conflicts Relating to Merrill Lynch.  Certain affiliates of Merrill Lynch &
Co. currently are limited partners of the ZML Partners and will indirectly
beneficially own less than 1% of the ownership interest in the Company (on a
fully diluted basis) upon consummation of the Offering. Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an affiliate of Merrill Lynch & Co. is the lead
managing underwriter of the Offering and will receive its share of the
underwriting discounts and commissions set forth on the cover of this
Prospectus. In connection with the Offering, Merrill Lynch & Co. may have
interests which conflict with those of the purchasers of Common Shares in the
Offering.
    
 
   
     Monetary Loss to Company Upon Failure to Enforce Terms of
Contributions.  Through the Equity Group Owners, Mr. Zell has a substantial
economic interest in the Equity Group and controls and has a substantial
economic interest in the ZML Partners. Consequently, Mr. Zell has a conflict of
interest with respect to his obligation as an officer and trustee of the Company
to enforce the terms of the Contribution Agreement. The failure to enforce the
material terms of the Contribution Agreement, particularly the indemnification
provisions and the remedy provisions for breaches of representations and
warranties, could result in a monetary loss to the Company.
    
 
   
     Conflicts of Interest in Connection with Properties Owned or Controlled by
the Equity Group Owners or their Affiliates.  The Equity Group Owners or their
affiliates control or share control and have substantial economic interest in
the Managed Properties (as defined below) not being contributed to the Company.
The Company believes that these Managed Properties generally do not directly
compete with any of the Properties; however, it is possible that a Managed
Property may compete with the Company in the future if the Company were to
invest in an Office Property similar to and in close proximity to such property.
Following the Offering, the Company will be prohibited by the terms of its
Bylaws from acquiring any properties from the Equity Group Owners or their
affiliates without the approval of a majority of its disinterested trustees. See
"Policies With Respect to Certain Activities -- Conflict of Interest Policies."
    
 
   
     Conflicts of Interest in Connection with Lease Agreement with an Affiliate
of Equity Group Owners.  The Company leases office space from an entity
controlled by an affiliate of the Equity Group Owners, at Two North Riverside
Plaza, Chicago, Illinois 60606. The Company believes that the rental rates and
other terms of such lease are at market rates. See "Certain Relationships and
Transactions."
    
 
                                       13
<PAGE>   22
 
REAL ESTATE RISKS
 
   
     Renewal of Leases and Reletting of Space.  The Company will be subject to
the risks that leases may not be renewed, space may not be relet or the terms of
renewal or reletting (including the cost of required renovations) may be less
favorable than current lease terms. Leases on a total of approximately 56% of
the rentable square feet in the Properties will expire prior to 2003. If the
Company were unable to promptly relet or renew the leases for all or a
substantial portion of this space, if the rental rates upon such renewal or
reletting were significantly lower than expected rates or if its reserves for
these purposes proved inadequate, then the Company's cash flow and ability to
make expected distributions to shareholders may be adversely affected.
    
 
   
     Risk of Acquisition Activities.  The Company intends to actively continue
to acquire office and parking properties. See "Business and Growth Strategies."
Acquisitions of office and parking properties entail risks that investments will
fail to perform in accordance with expectations. Estimates of the costs of
improvements to bring an acquired property up to standards established for the
market position intended for that property may prove inaccurate. In addition,
the general investment risks described below under "Uncontrollable Factors
Affecting Performance and Value" are associated with any new real estate
investment. Finally, the Company expects that there will be significant
competition for attractive investment opportunities from other major real estate
investors with significant capital including both publicly traded REITs and
private institutional investment funds. The Company anticipates that future
acquisitions will be financed through secured or unsecured financing and
proceeds from equity or debt offerings by the Company or the Operating
Partnership, including an anticipated $600 million credit facility (the "Line of
Credit") and an anticipated offering of senior unsecured notes in an aggregate
amount of $700 million. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
    
 
     Uncontrollable Factors Affecting Performance and Value.  Shareholders will
bear risks associated with real property investments. The yields available from
equity investments in real estate depend in large part on the amount of income
generated and expenses incurred. The economic performance and value of the
Company's real estate assets will be subject to all of the risks incident to the
ownership and operation of real estate. These include the risks normally
associated with changes in general national, regional and local economic and
market conditions. Such local real estate market conditions may include excess
supply and intense competition for tenants, including competition based on
rental rates, attractiveness and location of the property and quality of
maintenance, insurance and management services. Other factors that may adversely
affect the performance and value of a Property include changes in laws and
governmental regulations (including those governing usage, zoning and taxes),
changes in interest rates, the availability of financing and the possibility of
bankruptcies of tenants at the Properties.
 
     Illiquidity of Real Estate Investments.  Because real estate investments
are relatively illiquid, the Company's ability to vary its portfolio promptly in
response to economic or other conditions will be limited. In addition, certain
significant expenditures, such as debt service, real estate taxes, and operating
and maintenance costs generally are not reduced in circumstances resulting in a
reduction in income from the investment. The foregoing and any other factor or
event that would impede the ability of the Company to respond to adverse changes
in the performance of its investments could have an adverse effect on the
Company's financial condition and results of operations.
 
     Uninsured Loss.  The Company carries comprehensive liability, fire,
extended coverage and rental loss insurance covering all of the Properties, with
policy specifications and insured limits which the Company believes are adequate
and appropriate under the circumstances. There are, however, certain types of
losses that are not generally insured because it is not economically feasible to
insure against such losses. Should an uninsured loss or a loss in excess of
insured limits occur, the Company could lose its capital invested in the
Property, as well as the anticipated future revenue from the Property and, in
the case of debt which is with recourse to the Company, would remain obligated
for any mortgage debt or other financial obligations related to the Property.
The Company carries earthquake insurance on all of its Properties, including
those located in California, subject to coverage limitations which the Company
believes are commercially reasonable. In light of the California earthquake
risk, California building codes since the early 1970's have established
 
                                       14
<PAGE>   23
 
   
construction standards for all new buildings. The current and strictest
construction standards were adopted in 1987. Of the 18 Properties located in
California, six have been built or renovated since January 1, 1988 and the
Company believes that all of the Properties were constructed in full compliance
with the applicable standards existing at the time of construction. No assurance
can be given that material losses in excess of insurance proceeds will not occur
in the future.
    
 
   
     Risk of Reassessment. Certain local real property tax assessors may seek to
reassess certain of the Properties as a result of the Consolidation and the
transfer of interests to occur in connection therewith. In jurisdictions such as
California, where Proposition 13 limits the assessor's ability to reassess real
property so long as there is no change in ownership, the assessed value could
increase by as much as the full value of any appreciation that has occurred
during the ZML Fund's period of ownership. Should that occur, the Company would
contest vigorously any such reassessment. Subject to market conditions, current
leases may permit the Company to pass through to tenants a portion of the effect
of any increases in real estate taxes resulting from any such reassessment.
    
 
DEBT FINANCING
 
   
     Debt Financing and Existing Debt Maturities.  The Company will be subject
to risks normally associated with debt financing, including the risk that the
Company's cash flow will be insufficient to pay distributions at expected levels
and meet required payments of principal and interest, the risk that existing
indebtedness on the Properties (which will not in all cases have been fully
amortized at maturity) will not be able to be refinanced or that the terms of
such refinancing will not be as favorable as the terms of existing indebtedness.
Upon consummation of the Offering, the Company expects to have substantial
outstanding indebtedness (approximately $1.6 billion). See "The
Properties -- Debt Financing" and Schedule III Real Estate and Accumulated
Depreciation as of April 30, 1997 included in the financial statements attached
hereto. If principal payments due at maturity cannot be refinanced, extended or
paid with proceeds of other capital transactions, such as new equity capital,
the Company expects that its cash flow will not be sufficient in all years to
pay distributions at expected levels and to repay all such maturing debt.
Furthermore, if prevailing interest rates or other factors at the time of
refinancing (such as the possible reluctance of lenders to make commercial real
estate loans) result in higher interest rates upon refinancing, the interest
expense relating to such refinanced indebtedness would increase, which would
adversely affect the Company's cash flow and the amount of distributions it can
make to shareholders. If a Property is mortgaged to secure payment of
indebtedness and the Company is unable to meet mortgage payments, the Property
could be foreclosed by or otherwise transferred to the mortgagee with a
consequent loss of income and asset value to the Company. The Company's
mortgages contain customary negative covenants limiting, among other things, the
Company's ability, without the prior consent of the lender, to enter into new or
materially modify existing leases of a material nature, to transfer interests in
the mortgagor entity (including mortgage interests) and to discontinue insurance
coverage.
    
 
   
     No Limitations on Indebtedness.  Upon completion of the Offering, the
Company's Debt to Market Capitalization Ratio (as defined below) is expected to
be approximately 33.7%. Upon completion of the Offering, the Company will adopt
a policy of incurring debt, either directly or through the Operating
Partnership, only if upon such incurrence the Company's Debt to Market
Capitalization Ratio (that is, the total consolidated and unconsolidated debt of
the Company as a percentage of the market value of outstanding Common Shares and
Units plus total consolidated and unconsolidated debt, but excluding (i) all
nonrecourse consolidated debt in excess of the Company's proportionate share of
such debt and (ii) all nonrecourse unconsolidated debt of partnerships in which
the Company is a limited partner) would be approximately 50% or less. However,
the organizational documents of the Company and the Operating Partnership will
not contain any limitation on the amount of indebtedness that may be incurred.
Accordingly, the Board of Trustees could alter or eliminate this policy and
would do so, for example, if it were necessary for the Company to continue to
qualify as a REIT. If this policy were changed, the Company could become more
highly leveraged, resulting in an increase in debt service that could adversely
affect the Company's Funds from Operations and, consequently, the amount of Cash
Available for Distribution to shareholders and could increase the risk of
default on the Company's indebtedness. The Company will limit its debt based on
total market capitalization because it believes that the book value of its
assets does not accurately reflect its ability
    
 
                                       15
<PAGE>   24
 
to borrow and to meet debt service requirements. The market capitalization of
the Company, however, is expected to be more variable than book value and will
not necessarily reflect the fair market value of the underlying assets of the
Company.
 
   
     Risk of Rising Interest Rates and Variable Rate Debt.  Upon consummation of
the Offering, the Company, through the Operating Partnership, expects to enter
into a $600 million Line of Credit. Advances under the Line of Credit are
expected to bear interest at a variable rate based upon LIBOR. The Company has
entered into interest rate hedging agreements for substantially all of its
floating rate debt. The Company, which expects to incur indebtedness through the
Operating Partnership, may incur other variable rate indebtedness in the future.
Increases in interest rates on such indebtedness could increase the Company's
interest expense, which would adversely affect the Company's cash flow and its
ability to pay expected distributions to shareholders. Accordingly, the Company
may in the future engage in other transactions to further limit its exposure to
rising interest rates as appropriate and cost effective. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
    
 
   
FEDERAL INCOME TAX RISKS
    
 
     Adverse Consequences of the Company's Failure to Qualify as a REIT.  The
Company intends to operate so as to qualify as a REIT under the Code, commencing
with its taxable year ending December 31, 1997. Although management believes
that the Company will be organized and will operate in such a manner, no
assurance can be given that the Company will be organized or will be able to
operate in a manner so as to qualify or remain so qualified. Qualification as a
REIT involves the satisfaction of numerous requirements (some on an annual and
quarterly basis) established under highly technical and complex Code provisions
for which there are only limited judicial and administrative interpretations,
and involves the determination of various factual matters and circumstances not
entirely within the Company's control. For example, in order to qualify as a
REIT, at least 95% of the Company's gross income in any year must be derived
from qualifying sources, and the Company must pay distributions to shareholders
aggregating annually at least 95% of its REIT taxable income (excluding capital
gains). The complexity of these provisions and of the applicable Treasury
regulations that have been promulgated under the Code is greater in the case of
a REIT, such as the Company, that holds its assets in partnership form. No
assurance can be given that legislation, new regulations, administrative
interpretations or court decisions will not significantly change the tax laws
with respect to qualification as a REIT or the Federal income tax consequences
of such qualification. The Company, however, is not aware of any pending tax
legislation that would adversely affect the Company's ability to operate as a
REIT.
 
     Hogan & Hartson L.L.P., special tax counsel to the Company, has rendered an
opinion to the effect that the Company is organized in conformity with the
requirements for qualification as a REIT and its proposed method of operation
will enable it to meet the requirements for qualification and taxation as a
REIT. See "Federal Income Tax Considerations -- Taxation of the Company." Such
legal opinion, however, is based on various assumptions and factual
representations by the Company regarding the Company's ability to meet the
various requirements for qualification as a REIT, and no assurance can be given
that actual operating results will meet these requirements. Such legal opinion
is not binding on the Internal Revenue Service ("IRS") or any court. Moreover,
the Company's qualification and taxation as a REIT will depend upon the
Company's ability to meet (through actual annual operating results, distribution
levels and diversity of stock ownership) the various qualification tests imposed
under the Code, the result of which will not be reviewed by special tax counsel
to the Company.
 
     If the Company were to fail to qualify as a REIT in any taxable year, the
Company would be subject to Federal income tax (including any applicable
alternative minimum tax) on its taxable income at regular corporate rates.
Moreover, unless entitled to relief under certain statutory provisions, the
Company also would be disqualified from treatment as a REIT for the four taxable
years following the year during which qualification was lost. This treatment
would significantly reduce the net earnings of the Company available for
investment or distribution to shareholders because of the additional tax
liability to the Company for the years
 
                                       16
<PAGE>   25
 
involved. In addition, distributions to shareholders would no longer be required
to be made. See "Federal Income Tax Considerations -- Taxation of the
Company -- Failure of the Company to Qualify as a REIT."
 
     Other Tax Liabilities.  Even if the Company qualifies as a REIT, it will be
subject to certain Federal, state and local taxes on its income and property. In
addition, the net taxable income, if any, from the activities conducted through
the Management Corp. will be subject to Federal and state income tax. See
"Federal Income Tax Considerations -- Other Tax Consequences for the Company,
Its Shareholders and the Management Corp."
 
   
     Adverse Consequences if ZML REITs are Not Qualified as REITs.  If one or
more of the ZML REITs has failed to qualify as a REIT throughout the duration of
its existence, then it might have undistributed "C corporation earnings and
profits" that, if not distributed by the Company prior to the end of its first
taxable year, could prevent the Company from qualifying as a REIT. The Company
and the ZML REITs believe that each of the ZML REITs has qualified as a REIT
throughout the duration of its existence and that, in any event, no ZML REIT
should be considered to have any undistributed "C corporation earnings and
profits" at the time of the Merger. In addition, if a ZML REIT has failed to
qualify as a REIT throughout the duration of its existence, that ZML REIT would
recognize taxable gain on the Merger (and the Company would be liable for the
tax thereon), even though the Merger otherwise qualifies as a "tax-free
reorganization" for tax purposes, unless the Company makes a special election
that is available under current law. The Company intends to make such an
election as a protective matter with respect to each of the ZML REITs, which
would have the effect of requiring the Company to pay corporate income tax with
respect to the existing gain on assets acquired from a ZML REIT that has not
qualified as a REIT if such assets are sold within 10 years after the
Consolidation. Finally, if one or more of the ZML REITs were to fail to qualify
as a REIT, the Company could be precluded from electing REIT status for up to
four years after the year in which the ZML REIT lost its REIT status if the
Company were determined to be a "successor" to that ZML REIT. See "Federal
Income Tax Considerations -- Taxation of the Company" and "-- Requirements for
Qualification."
    
 
   
LIMITATIONS ON CHANGES IN CONTROL AND OF OWNERSHIP LIMIT
    
 
   
     Limitations on Changes in Control Contained in the Declaration of Trust and
Bylaws.  Certain provisions of the Company's Declaration of Trust and Bylaws may
have the effect of delaying, deferring or preventing a change in control of the
Company or other transaction that could provide the holders of Common Shares
with the opportunity to realize a premium over the then-prevailing market price
of such Common Shares. The Ownership Limit (described under "-- Possible Adverse
Consequences of Ownership Limit") also may have the effect of delaying,
deferring or preventing a change in control of the Company or other transaction
even if such a change in control or transaction were in the best interests of
some, or a majority, of the Company's shareholders. The Board of Trustees will
consist of nine members as of the Closing of the Offering who will be classified
into three classes with each class serving a three-year term. The staggered
terms of the members of the Board of Trustees may adversely affect the
shareholders' ability to effect a change in control of the Company, even if a
change in control were in the best interests of some, or a majority, of the
Company's shareholders. See "Management -- Trustees and Executive Officers." The
Declaration of Trust authorizes the Board of Trustees to cause the Company to
issue additional authorized but unissued Common Shares or up to 100 million
preferred shares of beneficial interest, $.01 par value per share ("Preferred
Shares"), and to classify or reclassify any unissued Common Shares or Preferred
Shares, and to establish the preferences, rights and other terms of any such
classified or unclassified shares. See "Shares of Beneficial Interest." Although
the Board of Trustees has no such intention at the present time, it could
establish a series of Preferred Shares that could delay, defer or prevent a
change in control of the Company or other transaction that might involve a
premium price for the Common Shares or otherwise be in the best interest of the
shareholders. The Declaration of Trust and Bylaws of the Company also contain
other provisions that may delay, defer or prevent a change in control of the
Company or other transaction that might involve a premium price for the Common
Shares or otherwise be in the best interest of the shareholders. See "Certain
Provisions of Maryland Law and the Company's Declaration of Trust and Bylaws."
    
 
     Possible Limitations on Changes in Control Pursuant to Maryland Law.  Under
provisions (which are not currently applicable to the Company) of the Maryland
General Corporation Law, as amended
 
                                       17
<PAGE>   26
 
("MGCL"), as applicable to real estate investment trusts, certain "business
combinations" (including certain issuances of equity securities) between a
Maryland real estate investment trust and any person who beneficially owns ten
percent or more of the voting power of the trust's then outstanding shares or an
affiliate of the trust who, at any time within the two-year period prior to the
date in question, was the beneficial owner of ten percent or more of the voting
power of the then outstanding voting shares of beneficial interest of the trust
(an "Interested Shareholder"), or an affiliate of the Interested Shareholder,
are prohibited for five years after the most recent date on which the Interested
Shareholder becomes an Interested Shareholder. Thereafter, any such business
combination must be approved by two super-majority shareholder votes unless,
among other conditions, the trust's common shareholders receive a minimum price
(as defined in the MGCL) for their shares and the consideration is received in
cash or in the same form as previously paid by the Interested Shareholder for
its common shares. As permitted by the MGCL, the Board of Trustees of the
Company has opted out of the business combination provisions of the MGCL.
Consequently, the five-year prohibition and the super-majority vote requirements
will not apply to a business combination involving the Company; however, the
Company's Board of Trustees may repeal (except with respect to a shareholder who
becomes an Interested Shareholder as a result of Common Shares received in the
Merger) this opt-out and cause the Company to become subject to these provisions
in the future.
 
   
     Possible Adverse Consequences of Ownership Limit.  To maintain its
qualification as a REIT for Federal income tax purposes, not more than 50% in
value of the outstanding shares of beneficial interest of the Company may be
owned, directly or indirectly, by five or fewer individuals (as defined in the
Code, to include certain entities). See "Federal Income Tax
Considerations -- Taxation of the Company -- Requirements for Qualification." To
facilitate maintenance of its qualification as a REIT for Federal income tax
purposes, the Company generally will prohibit ownership, directly or by virtue
of the attribution provisions of the Code, by any single shareholder of more
than 9.9% (in value or number of shares, whichever is more restrictive) of the
issued and outstanding Common Shares and generally will prohibit ownership,
directly or by virtue of the attribution provisions of the Code, by any single
shareholder of more than 9.9% (in value or number of shares, whichever is more
restrictive) of the issued and outstanding shares of any class or series of the
Company's Preferred Shares (collectively, the "Ownership Limit"). The Board of
Trustees is required to waive or modify the Ownership Limit with respect to one
or more persons who would not be treated as "individuals" for purposes of the
Code if it is satisfied, based upon information required to be provided by the
party seeking the waiver, that ownership in excess of this limit will not cause
a person who is an individual to be treated as owning Common Shares or Preferred
Shares in excess of the Ownership Limit, applying the applicable constructive
ownership rules, and will not otherwise jeopardize the Company's status as a
REIT for Federal income tax purposes. The Board of Trustees has granted such an
exception for the sole ZML Investor that is not an "individual" that would own
more than 9.9% of the Common Shares immediately following the Consolidation as a
result of receiving such Common Shares in the Consolidation. Absent any such
exemption or waiver, Common Shares or Preferred Shares acquired or held in
violation of the Ownership Limit will be transferred to a trust for the benefit
of a designated charitable beneficiary, with the person who acquired such Common
Shares and/or Preferred Shares in violation of the Ownership Limit not entitled
to receive any distributions thereon, to vote such Common Shares or Preferred
Shares, or to receive any proceeds from the subsequent sale thereof in excess of
the lesser of the price paid therefor or the amount realized from such sale. A
transfer of Common Shares and/or Preferred Shares to a person who, as a result
of the transfer, violates the Ownership Limit may be void under certain
circumstances. See "Shares of Beneficial Interest -- Restrictions on Ownership
and Transfer." The Ownership Limit may have the effect of delaying, deferring or
preventing a change in control and, therefore, could adversely affect the
shareholder's ability to realize a premium over the then-prevailing market price
for the Common Shares in connection with such transaction.
    
 
IMMEDIATE AND SUBSTANTIAL DILUTION
 
   
     As set forth more fully under "Dilution," the pro forma net tangible book
value per share of the assets of the Company after the Offering will be
substantially less than the estimated initial public offering price per share in
the Offering. Accordingly, purchasers of the Common Shares offered hereby will
experience immediate and substantial dilution of $5.68 in the net tangible book
value of the Common Shares from the estimated offering price. See "Dilution."
    
 
                                       18
<PAGE>   27
 
   
MANAGED PROPERTY BUSINESS AND NON-REIT SERVICES
    
 
   
     Contract Termination. Risks associated with the management of properties
which are not controlled by the Operating Partnership and properties owned by
parties other than the Company (including affiliates of the Equity Group Owners)
include the risk that management contracts will be terminated by the entity
controlling the property or in connection with sale of such property, that
contracts may not be renewed upon expiration or may not be renewed on terms
consistent with current terms, and that the rental revenues upon which
management fees are based will decline as a result of general real estate market
conditions or specific market factors resulting in decreased management fee
income. Although the Management Corp. will have property management contracts
with respect to the Managed Properties, there can be no assurance that these
management contracts will not be terminated in the future. The management
contracts are terminable by the owner on either 30 or 60 days notice.
    
 
   
     Lack of Control Over Management Corp. and Service Corp.  To facilitate
maintenance of the Company's qualification as a REIT for Federal income tax
purposes, management of any properties that are not wholly owned by the
Operating Partnership and its subsidiaries will be conducted through the
Management Corp. The Operating Partnership will own all of the non-voting stock
(representing a 95% equity interest) and the Equity Group will own all of the
voting stock (representing a 5% equity interest) of the Management Corp. The
initial board of directors of the Management Corp. will consist of Messrs. Zell
and Callahan and Ms. Rosenberg. The Equity Group will retain the ability to
elect the directors of the Management Corp. The Company will not control the
timing or amount of dividends paid by the Management Corp. nor will the Company
have the authority to control the management and operation of the Management
Corp. As a result, decisions relating to the declaration and payment of
dividends and the business policies and operations of the Management Corp. could
be adverse to the interests of the Company or could lead to adverse financial
results, which could adversely affect the Company's financial condition and
results of operations. Also, certain services for the Company's tenants that may
not be permissibly undertaken by a REIT will be conducted through a service
corporation owned entirely by affiliates of the Equity Group Owners. The Company
will have no control over, or ownership interest in, such service corporation,
which will operate as an independent contractor. The Company may terminate its
services at any time upon 30-days notice.
    
 
   
POSSIBLE ENVIRONMENTAL LIABILITIES
    
 
     Under federal, state and local laws and regulations relating to protection
of the environment ("Environmental Laws"), a current or previous owner or
operator of real estate may be required to investigate and clean up hazardous or
toxic substances or petroleum product releases at such property and may be held
liable to a governmental entity or to third parties for property damage and for
investigation and clean-up costs incurred by such parties in connection with the
contamination. Such laws typically impose clean-up responsibility and liability
without regard to whether the owner or operator knew of or caused the presence
of the contaminants, and the liability under such laws has been interpreted to
be joint and several unless the harm is divisible and there is a reasonable
basis for allocation of responsibility. In addition, the owner or operator of a
site may be subject to claims by third parties based on damages and costs
resulting from environmental contamination emanating from a site.
 
     Environmental Laws also govern the presence, maintenance and removal of
asbestos-containing building materials ("ACBM"). Such laws require that ACBM be
properly managed and maintained, that those who may come into contact with ACBM
be adequately apprised or trained and that special precautions, including
removal or other abatement, be undertaken in the event ACBM would be disturbed
during renovation or demolition of a building. Such laws may impose fines and
penalties on building owners or operators for failure to comply with these
requirements and may allow third parties to seek recovery from owners or
operators for personal injury associated with exposure to asbestos fibers.
 
     Independent environmental consultants have conducted or updated
comprehensive environmental assessments at the Properties. These assessments
have included, at a minimum, a visual inspection of the Properties and the
surrounding areas, an examination of current and historical uses of the
Properties and the surrounding areas and a review of relevant state, federal and
historical documents. Where appropriate, on a property by
 
                                       19
<PAGE>   28
 
property basis, additional testing has been conducted, including sampling for
asbestos, for lead in drinking water, for soil contamination where underground
storage tanks are or were located or where other past site usages create a
potential for site impact, and for contamination in groundwater.
 
   
     These environmental assessments have not revealed any environmental
liabilities that the Company believes would have a material adverse effect on
the Company's business, assets, financial condition or results of operations
taken as a whole, nor is the Company aware of any such material environmental
liability. ACBM has been detected through sampling in approximately half of the
Office Properties. Most of these buildings contain only minor amounts of ACBM in
good condition and nearly all of it is non-friable. All ACBM is currently being
properly managed and maintained and other requirements relating to ACBM are
being followed. The presence of ACBM should not present a significant risk as
long as compliance with these requirements continues. For a few of the
Properties, potential offsite sources of contamination, such as underground
storage tanks ("USTs"), are noted. For some of the Properties, previous uses,
such as the former presence of USTs, have been noted; in these cases, follow-up
soil and/or groundwater sampling has not identified evidence of significant
contamination.
    
 
     The Company believes that the Properties are in compliance in all material
respects with applicable Environmental Laws. The Company believes that the
issues identified in the environmental reports will not have a material adverse
effect on the Company if it continues to comply with Environmental Laws and with
the recommendations set forth in these reports.
 
ABSENCE OF PRIOR PUBLIC MARKET FOR COMMON SHARES
 
   
     Prior to the completion of the Offering, there has been no public market
for the Common Shares and there can be no assurance that an active trading
market will develop or be sustained or that Common Shares will be resold at or
above the initial public offering price. The offering price of the Common Shares
will be determined by agreement among the Company and the underwriters and may
not be indicative of the market price for the Common Shares after the completion
of the Offering. The market value of the Common Shares could be substantially
affected by general market conditions, including changes in interest rates.
Moreover, numerous other factors, such as governmental regulatory action and
changes in tax laws, could have a significant impact on the future market price
of the Common Shares.
    
 
   
OWNERSHIP OF COMMON SHARES
    
 
   
     Effect on Price of Common Shares Available for Future Sale.  Sales of a
substantial number of Restricted Common Shares, or the perception that such
sales could occur, could adversely affect prevailing market prices of the Common
Shares. Subsequent to the Offering, a substantial majority of the Company's
outstanding equity will be Restricted Common Shares or Units which may be
converted into Restricted Common Shares. Common Shares issued upon redemption of
Units may be sold in the public market pursuant to registration rights (subject
to the terms and conditions thereof) that the Company has granted to certain ZML
Investors, the ZML Partners and the Equity Group, pursuant to Rule 144 under the
Securities Act of 1933, as amended, or other available exemptions from
registration. In addition, the Company intends to reserve a number of Common
Shares for issuance pursuant to the Company's Employee Plan, and these Common
Shares will be available for sale from time to time pursuant to exemptions from
registration requirements or upon registration. Options to purchase additional
Common Shares will be granted to certain executive officers, employees, trustees
and consultants upon the completion of the Offering. See "Management." No
prediction can be made about the effect that future sales of Common Shares will
have on the market prices of the Common Shares. See "Shares Available for Future
Sale."
    
 
     Effect on Common Share Price of Market Conditions.  As with other publicly
traded equity securities, the value of the Common Shares will depend upon
various market conditions, which may change from time to time. Among the market
conditions that may affect the value of the Common Shares are the following: the
extent to which a secondary market develops for the Common Shares following the
completion of the Offering; the extent of institutional investor interest in the
Company; the general reputation of REITs and the attractiveness of their equity
securities in comparison to other equity securities (including securities issued
by
 
                                       20
<PAGE>   29
 
   
other real estate-based companies); the Company's financial performance; and
general stock and bond market conditions. Although the offering price of the
Common Shares has been determined by the Company in consultation with the
Underwriters, there can be no assurance that the Common Shares will not trade
below the offering price following the completion of the Offering.
    
 
     Effect on Common Share Price of Earnings and Cash Distributions.  It is
generally believed that the market value of the equity securities of a REIT is
based primarily upon the market's perception of the REIT's growth potential and
its current and potential future cash distributions, whether from operations,
sales or refinancings, and is secondarily based upon the real estate market
value of the underlying assets. For that reason, Common Shares may trade at
prices that are higher or lower than the net asset value per Common Share. To
the extent the Company retains operating cash flow for investment purposes,
working capital reserves or other purposes, these retained funds, while
increasing the value of the Company's underlying assets, may not correspondingly
increase the market price of the Common Shares. The failure of the Company to
meet the market's expectation with regard to future earnings and cash
distributions likely would adversely affect the market price of the Common
Shares. If the market price of the Common Shares declined significantly, the
Company might breach certain covenants with respect to future debt obligations
which breach might adversely affect the Company's liquidity and the Company's
ability to make future acquisitions.
 
   
     Effect on Common Share Price of Market Interest Rates.  One of the factors
that will influence the price of the Common Shares will be the distribution
yield on the Common Shares (as a percentage of the price of the Common Shares)
relative to market interest rates. Thus, an increase in market interest rates
may lead prospective purchasers of Common Shares to expect a higher distribution
yield, which would adversely affect the market price of the Common Shares.
    
 
     Dependence on External Sources of Capital.  In order to qualify as a REIT
under the Code, the Company generally is required each year to distribute to its
shareholders at least 95% of its net taxable income (excluding any net capital
gain). See "Federal Income Tax Considerations -- Taxation of the Company --
Annual Distribution Requirements." Because of these distribution requirements,
it is unlikely that the Company will be able to fund all future capital needs,
including capital needs in connection with acquisitions, from cash retained from
operations. As a result, to fund future capital needs, the Company likely will
have to rely on third-party sources of capital, which may or may not be
available on favorable terms or at all. The Company's access to third-party
sources of capital will depend upon a number of factors, including the market's
perception of the Company's growth potential and its current and potential
future earnings and cash distributions and the market price of the Common
Shares. Moreover, additional equity offerings may result in substantial dilution
of shareholders interests in the Company, and additional debt financing may
substantially increase the Company's leverage. See "Policies with Respect to
Certain Activities -- Financing Policies."
 
POTENTIAL LITIGATION RELATED TO THE CONSOLIDATION
 
     Over the last several years, business reorganizations involving the
conversion of partnerships into REITs, the combination of several partnerships
into a single entity and the combination of multiple finite life REITs into a
single REIT occasionally have given rise to investor lawsuits. These lawsuits
have involved claims against the general partners of the participating
partnerships, the partnerships themselves, and related persons involved in the
structuring of, or benefiting from, the conversion or reorganization, as well as
claims against the surviving entity and its directors and officers. If any
lawsuits were filed in connection with the Consolidation, such lawsuits could
delay the closing of the Offering and result in substantial damage claims
against the Operating Partnership, the Company, the Equity Group, the ZML Funds,
the ZML Partners and the boards of trustees and directors of the ZML REITs. The
Operating Partnership will be acquiring the assets, subject to the liabilities,
of the ZML Opportunity Partnerships and the Equity Group pursuant to the
Consolidation and the Company will succeed to the assets and liabilities of the
ZML REITs. The Company, therefore, may become liable with respect to
indemnification obligations of the ZML Opportunity Partnerships to the ZML
Partners or the ZML REITs to their boards of trustees and directors of the ZML
REITs, and of the Equity Group to its directors and officers.
 
                                       21
<PAGE>   30
 
DEPENDENCE ON KEY PERSONNEL
 
     The Company is dependent on the efforts of its executive officers,
particularly Messrs. Zell and Callahan. The loss of their services could have an
adverse effect on the operations of the Company. Neither of these officers will
enter into employment agreements with the Company.
 
CONTINGENT OR UNDISCLOSED LIABILITIES
 
     Under the Contribution Agreement, the Company (through the Operating
Partnership) will acquire all assets of the ZML Opportunity Partnerships and
certain assets of the Equity Group subject to existing liabilities. Each of the
ZML Opportunity Partnerships and the Equity Group will deliver to the Company
financial statements or schedules for such entity disclosing, to the
transferring entity's knowledge, all existing liabilities and reserves, if any,
set aside for contingent liabilities as of the Closing date. Such liabilities
will become the obligations of the Company because the Company will be acquiring
the assets, subject to the liabilities, of the ZML Opportunity Partnerships,
each of which will liquidate over a two-year period following the Offering, and
the Units and other assets (including cash from distributions), net of
liabilities, will be distributed to the ZML Partners and the limited partners of
the ZML Opportunity Partnerships during such time period. The Company's recourse
against the Equity Group with respect to liabilities in connection with the
Management Business existing at the time of the Consolidation will be limited to
$15 million, and the Company will have no recourse against the ZML Opportunity
Partnerships, the ZML Partners and limited partners, or others, with respect to
any unknown liabilities in connection with the contribution of the Properties,
except as described under "Structure and Formation of the Company -- Indemnity
Escrow." Unknown liabilities might include liabilities for cleanup or
remediation of undisclosed environmental conditions, claims of tenants, vendors
or other persons dealing with the entities prior to the Offering (that had not
been asserted prior to the Offering), accrued but unpaid liabilities incurred in
the ordinary course of business, and claims for indemnification by ZML Partners
of the ZML Opportunity Partnerships, the Equity Group, its directors and
officers, and others indemnified by such entities. See "Possible Environmental
Liabilities" as to the possibility of undisclosed environmental conditions
potentially affecting the value of the Properties. Similarly, the Company will
succeed to any liabilities that the ZML REITs may have for periods prior to the
Closing.
 
                                       22
<PAGE>   31
 
                                  THE COMPANY
 
GENERAL
 
   
     Upon completion of the Offering, the Company expects to be the largest
publicly traded full service office company in the United States. The Company
was formed on October 9, 1996. The Company owns and operates 90 institutional
quality Office Properties containing 32.2 million rentable square feet, and owns
14 stand-alone Parking Facilities containing 14,785 parking spaces. The Office
Properties are located throughout the United States in 47 markets in 20 states
and the District of Columbia. Through the Management Corp., the Company will
manage an additional 37 office properties, containing 4.1 million rentable
square feet, owned by certain affiliates of the Equity Group.
    
 
   
     The Company currently has approximately 790 employees providing in-house
expertise in property management, leasing, finance, tax, acquisition,
development, disposition, marketing, accounting, information systems and real
estate law. The five most senior executives have an average tenure of 11 years
with the Company or its affiliates and an average of 23 years experience in the
real estate industry.
    
 
   
     During the past several years, the Company has been among the most active
buyers of institutional quality office properties throughout the United States,
investing in excess of $3.5 billion during the period from 1987 through June,
1997 and averaging $762 million annually in acquisitions (calculated on a cost
basis) for the three years ending June 30, 1997.
    
 
   
     The Company has demonstrated the ability to lease up the space it has
acquired. At the time of acquisition, the Office Properties were, on a weighted
average basis, 79% occupied. During the period from 1988 through 1996, the
Company leased (net of expiring leases) in excess of an additional 4.5 million
rentable square feet of office space. As of April 30, 1997, the Office
Properties were 92.5% occupied by 3,066 tenants.
    
 
   
     As of April 30, 1997, the Office Properties had an average age of 13 years
and contained an average of 358,000 rentable square feet. Of the 3,066 tenants
for the Office Properties, none accounted for more than 2.3% of the Portfolio's
annualized rent.
    
 
     Management believes that larger Properties allow for a higher quality of
tenant services, justify on-site management and facilitate economies of scale.
The Company, therefore, generally will not acquire Office Properties with less
than 200,000 rentable square feet except in connection with a merger, portfolio
acquisition or geographic assemblage of Properties. The Company's view is that,
over the long term, its return on investment in large, institutional quality
Properties will be enhanced where tenants are provided with superior tenant
services, physical improvements and locations. The average size of the Office
Properties is 358,000 (calculated as of the date of this Prospectus) rentable
square feet, compared to an estimated average of 144,000 rentable square feet
for all office buildings owned by publicly traded REITs focusing primarily on
office assets.
 
   
     Management believes that a geographically diverse portfolio minimizes risk
and stabilizes earnings. As a result of its ownership presence in 47 markets,
the Company has local market expertise and knowledge in markets situated
throughout the United States. The Office Properties and the Managed Properties
are located in suburban areas as well as CBDs. Some office tenants are attracted
to suburban locations that may offer proximity to residential housing and the
availability of inexpensive parking. Other tenants, however, have requirements
for transportation, labor, or close physical access to governmental or
institutional offices that attract them to CBDs. The Office Properties, by
number of buildings, are located 32% in CBDs and 68% in suburban markets and, by
rentable square feet, 52% in CBDs and 48% in suburban markets. The Managed
Properties, by number of buildings, are located 11% in CBDs and 89% in suburban
markets and, by rentable square feet, 30% in CBDs and 70% in suburban markets.
    
 
                                       23
<PAGE>   32
 
   
             DISTRIBUTION OF OFFICE PROPERTIES, MANAGED PROPERTIES
    
   
                        AND PARKING FACILITIES BY REGION
    
 
   
<TABLE>
<CAPTION>
                                 OFFICE PROPERTIES      MANAGED PROPERTIES    PARKING FACILITIES
                                --------------------   --------------------   ------------------
                                          RENTABLE               RENTABLE               NUMBER     NUMBER OF
REGION            OFFICE        NUMBER   SQUARE FEET   NUMBER   SQUARE FEET   NUMBER   OF SPACES   EMPLOYEES
- ------            ------        ------   -----------   ------   -----------   ------   ---------   ---------
<S>         <C>                 <C>      <C>           <C>      <C>           <C>      <C>         <C>
Pacific     Los Angeles                                                                                70
  CBD.........................     6      4,238,821      --             --
  Suburban....................    12      2,505,449       5        320,468
Southeast   Atlanta                                                                                   111
  CBD.........................     6      2,887,795       2        388,510
  Suburban....................     8      2,120,652       2        207,664
Northeast   Washington, D.C.                                                                          120
  CBD.........................     6      2,625,458      --             --       6       3,140
  Suburban....................    11      2,537,749       3        598,576
Central     Chicago                                                                                   337(1)
  CBD.........................     7      5,261,555       2        877,889       4       4,181
  Suburban....................     4      1,286,556      19      1,246,907
Southwest   Houston                                                                                    89
  CBD.........................     3      1,423,948      --             --
  Suburban....................     9      3,159,286       3        366,764
West        Denver                                                                                     63
  CBD.........................     1        230,022      --             --       4       7,464
  Suburban....................    17      3,939,450       1        157,311
                                  --     ----------      --      ---------      --      ------        ---
          Total...............    90     32,216,741      37      4,164,089      14      14,785        790
                                  ==     ==========      ==      =========      ==      ======        ===
</TABLE>
    
 
- ---------------
   
(1) 200 of these employees are located at the Company's headquarters.
    
 
   
OPERATIONS
    
 
     The operation of the Properties is under the direction of five regional
managers, each of whom has oversight responsibility for all of the Properties in
his respective region. Each region has strategic and budget planning
responsibility combined with due diligence, property management,
engineering/construction, leasing/marketing, and information systems expertise.
Each regional manager reports to one of two divisional managers at the Company's
headquarters in Chicago who, in turn, report to the Company's Executive Vice
President -- Real Estate Operations.
 
OPERATIONAL STRUCTURE
 
   
     The Operating Partnership is the entity through which the Company will own
the Properties. The ownership and management structure of the Company is
intended to (i) enable the Company to acquire assets in transactions that may
defer some or all of the sellers' tax consequences, including in connection with
the Company's formation and (ii) enable the Company to comply with certain
technical and complex requirements under the federal tax rules and regulations
relating to the assets and income permitted for a REIT.
    
 
   
     The Management Corp. will provide office property and asset management
services (the "Managed Property Business") to the 37 Managed Properties (which
properties will not be acquired by the Operating Partnership in the
Consolidation) and to the Joint Venture Properties described below. The
Management Corp. will collect a property management fee for the performance of
such services. To maintain the Company's qualification as a REIT, the Operating
Partnership will own 100% of the non-voting stock of the Management Corp.,
representing a 95% economic interest, and Equity Office Holdings, L.L.C.
("EOH"), an entity owned by the Equity Group Owners, will own 100% of the voting
stock of the Management Corp., representing a 5% economic interest.
    
 
                                       24
<PAGE>   33
 
   
     Eighteen of the Properties (the "Joint Venture Properties") are held in
partnerships with unaffiliated third parties, 11 of which are Office Properties
and seven of which are Parking Facilities. The Operating Partnership or a
subsidiary will be the managing general partner of each of the Joint Venture
Properties (except for Civic Parking L.L.C., where a subsidiary of the Operating
Partnership will be one of two managing members), subject to various consent
requirements of the third-party partners.
    
 
   
     The Company's acquisition and oversight of its Parking Facilities is
administered through a wholly owned subsidiary, Equity Capital Holdings, L.L.C.
All but one of the Parking Facilities are leased to and operated by third-party
parking garage service companies (the "Service Companies") under leases where
the Service Companies bear the operating expenses. The arrangements with the
Service Companies may be modified in the future if the Company receives a
favorable ruling from the IRS. See "Federal Income Tax Consequences -- Taxation
of the Company -- Income Tests Applicable to REITs."
    
 
                                   * * * * *
 
     The principal executive offices of the Company and the Operating
Partnership are located at Two North Riverside Plaza, 22nd Floor, Chicago,
Illinois 60606, and its telephone number is (312) 466-3300. The Company
maintains regional offices in Los Angeles, Denver, Houston, Chicago, Atlanta and
Washington, D.C.
 
                                       25
<PAGE>   34
 
                         BUSINESS AND GROWTH STRATEGIES
 
     The Company's primary business objective is to achieve sustainable
long-term growth in cash flow per share and to maximize long-term shareholder
value. The Company intends to achieve this objective by owning and operating
institutional quality office buildings and providing a superior level of service
to tenants in CBDs and suburban markets across the United States. The Company
intends to supplement this strategy by the strategic acquisition of Parking
Facilities.
 
     Internal Growth.  Management believes the Company's future internal growth
will come from (i) lease up of vacant space, (ii) tenant roll-over at increased
rents where market conditions permit, (iii) repositioning of certain Properties
which have not yet achieved stabilization, and (iv) increasing economies of
scale.
 
   
     As of April 30, 1997, 2.4 million rentable square feet of Office Property
space was vacant. Of this amount, 737,000 square feet was leased, with occupancy
to commence in whole or in part during 1997. The Company believes that the
current average market rent for this space is $25.12 per square foot. The
Company's average operating expenses for this space are $9.67 per square foot.
The following five Properties account for 50% of the total vacant space as of
April 30, 1997:
    
 
   
<TABLE>
<CAPTION>
                                                                              AMOUNT OF
                                                        VACANT          VACANT SQUARE FOOTAGE
                                                    SQUARE FOOTAGE            LEASED(1)
                                                    --------------      ---------------------
<S>                                                 <C>                 <C>
28 State Street, Boston, MA.......................      519,485                263,761
Two California Plaza, Los Angeles, CA.............      194,773                 18,124
161 North Clark, Chicago, IL......................      324,813                300,730
Bank One Center, Indianapolis, IN.................       79,050                  7,816
BP Tower, Cleveland, OH...........................       94,165                      0
                                                      ---------                -------
                                                      1,212,286                590,431
</TABLE>
    
 
- ---------------
   
(1) Represents the amount of unoccupied space as of April 30, 1997 that was
    subject to an executed lease with a commencement date after April 30, 1997.
    
 
   
     During the period from April 30, 1997, through December 31, 2001, 2,335
leases for 15.5 million rentable square feet of space are scheduled to expire.
As of April 30, 1997, the average rent for this space was $20.14 per square
foot, the current market rent for such space averaged $22.62 per square foot,
and the weighted average operating expenses were $8.23 per square foot. The
Company estimates that average replacement cost rents for this space are $34.64
per square foot. Accordingly, the Company expects that leases expiring through
December 31, 2001 will be renewed, or space re-let, at higher rents. The actual
rental rates at which available space will be relet will depend on prevailing
market factors at the time. There can be no assurance that the Company will
relet such space at an increased, or even at the then current, rental rate.
    
 
   
     As the largest publicly traded full service office company (based on
revenue and square footage) in the United States, the Company expects to benefit
from certain economies of scale. Management intends to maximize the benefits
attributable to its large scale operations by aggressive cash management, bulk
purchasing, national and regional service agreements and utilization of
state-of-the-art information technology (which provides the Company with
extensive operational data, including daily leasing, occupancy and other
property and financial data). Historically, as the portfolio has increased in
size, the Company's general and administrative costs as a percentage of total
revenue have decreased.
    
 
   
     The Company owns a total of approximately 50 acres of undeveloped land
adjacent to 15 Office Properties on which approximately 2.1 million square feet
of office space could be developed. The Company may decide to develop these
properties if significant pre-leasing can be arranged, but does not currently
anticipate other development activities.
    
 
     External Growth.  Management believes that significant opportunities for
external growth will continue to be available through strategic acquisitions of
institutional quality office properties. Management believes that such
properties may be acquired for less than replacement cost in many markets and
that current rents generally do not justify new construction in these markets.
Properties may be acquired separately or as part of
 
                                       26
<PAGE>   35
 
a portfolio, and may be acquired for cash and/or in exchange for equity or debt
securities of the Company, and such acquisitions may be customary real estate
transactions and/or mergers or other business combinations.
 
   
     The real estate industry is in the early stages of a major consolidation
which the Company believes will continue as institutional owners gain increasing
confidence in indirect rather than direct ownership of real estate. The Company
generally has acquired the Office Properties from institutional sellers.
Emerging Trends in Real Estate 1997, published by Equitable Real Estate
Investment Management, Inc. and Real Estate Research Corporation, estimates that
institutions currently have direct investments of approximately $1.3 trillion in
commercial real estate in the United States. The Company believes that given its
size, its UPREIT structure (which enables it to acquire properties in
transactions that may permit sellers to defer tax consequences) and its historic
relationship with many of the major institutional owners of real estate in the
United States, it will be well positioned to benefit from the consolidation that
is occurring in the real estate industry.
    
 
     Parking Facilities.  Management believes that Parking Facilities offer the
Company attractive investment opportunities which will be complementary to
investments in Office Properties. Because the parking industry is highly
fragmented, would benefit from economies of scale and is in the early stages of
consolidation and privatization, management expects there to be future
opportunities to acquire parking facilities from smaller owners who lack capital
for expansion, technological upgrades or repairs. Management also expects
municipalities and other government entities to be a significant source of
properties for acquisition as budget constraints force such entities to consider
nontraditional sources of capital such as privatization of parking facilities.
The Company will focus its acquisition efforts solely on municipal or private
parking facilities that have limited competition, no (or minimal) rental rate
restrictions and/or a superior location proximate to or affiliated with
airports, CBDs, entertainment projects or healthcare facilities.
 
                                USE OF PROCEEDS
 
   
     The net cash proceeds to the Company from the Offering, after deducting the
estimated underwriting discount and estimated Offering expenses of $35.5
million, are estimated to be approximately $464.5 million (approximately $534.6
million if the Underwriters' overallotment option is exercised in full), based
on an assumed initial public offering price of $20.00 per share.
    
 
   
     The net cash proceeds of the Offering, along with cash reserves of
approximately $88.3 million, will be used by the Company to repay approximately
$552.8 million of indebtedness bearing a weighted average interest rate of
8.01%, as of April 30, 1997, with a weighted average life to maturity of 3.9
years.
    
 
   
     If the Underwriters' over-allotment option to purchase 3,750,000 Common
Shares is exercised in full, the Company expects to use the additional net cash
proceeds (which will be approximately $70.1 million, based on the assumed
offering price) to repay indebtedness.
    
 
   
     Pending application of the net proceeds of the Offering, the Company will
invest such portion of the net proceeds in interest-bearing accounts and/or
short-term, interest-bearing securities that are consistent with the Company's
intention to qualify for taxation as a REIT.
    
 
                                       27
<PAGE>   36
 
     The table below summarizes the debt anticipated to be repaid with a
combination of the net proceeds from the Offering and cash on hand:
 
   
<TABLE>
<CAPTION>
                                        DEBT BALANCE                                      YEARS TO
PROPERTY                               AT 03/31/97(1)   INTEREST RATE     MATURITY DATE   MATURITY
- --------                               --------------   -------------     -------------   --------
<S>                                    <C>              <C>               <C>             <C>
2010 Main Street.....................   $ 25,900,000        7.38%(2)        12/13/97         .7
One and Two Paces....................     47,700,000        7.38%(2)        03/21/98        1.0
60 Spear Street......................      9,271,718        9.01%           12/01/99        2.7
500 Marquette Building...............     11,292,096        9.01%           12/01/99        2.7
1111 19th Street.....................     18,690,366        9.01%           12/01/99        2.7
Atrium Towers........................      1,606,203        9.01%           12/01/99        2.7
Cigna Center.........................        730,092        9.01%           12/01/99        2.7
Dominion Tower.......................     23,362,958        9.01%           12/01/99        2.7
First Union..........................     16,548,762        9.01%           12/01/99        2.7
Four Forest..........................     17,011,154        9.01%           12/01/99        2.7
Intercontinental.....................      6,205,786        9.01%           12/01/99        2.7
Northborough.........................      7,008,887        9.01%           12/01/99        2.7
Sarasota.............................     11,681,479        9.01%           12/01/99        2.7
Summit...............................      5,840,739        9.01%           12/01/99        2.7
Tampa................................     14,877,605        9.01%           12/01/99        2.7
University Towers....................     11,170,414        9.01%           12/01/99        2.7
One & Two Stamford Plaza.............     45,692,514        7.50%(2)        03/29/00        3.0
300 Atlantic.........................     29,395,308        7.50%(2)        03/29/00        3.0
One American Center..................     44,250,000        8.50%           10/31/00        3.6
1920 Main Street.....................     30,628,300        7.44%(2)        09/29/01        4.5
850 Third Ave........................     54,200,000        8.79%           03/20/02        5.0
One North Franklin...................     65,150,400        6.69%(2)        12/31/02        5.8
Two California Plaza.................     54,586,987        7.44%(2)        08/21/03        6.4
                                        ------------        ----                            ---
          Total/Weighted Average.....   $552,801,800        8.01%                           3.9
                                        ============
</TABLE>
    
 
- ---------------
 
   
(1) The actual amounts repaid will differ to the extent of any amortization of
    the principal balance of the loans occurring subsequent to March 31, 1997.
    
   
(2) These loans bear interest at a floating rate based on the 30-day LIBOR. The
    rates shown are the interest rates in effect at March 31, 1997.
    
 
                                 DISTRIBUTIONS
 
   
     The Company and the Operating Partnership intend to pay regular quarterly
distributions to holders of Common Shares and Units. The initial distribution,
covering a partial quarter commencing on the date of the closing of the Offering
(the "Closing") and ending on September 30, 1997, is expected to be $
per share, which represents a pro rata distribution based upon a full quarterly
distribution of $.30 per share and an annual distribution of $1.20 per share (or
an annual distribution rate of approximately 6.0%, based upon an assumed
offering price of $20.00). The actual distributions made by the Company will be
affected by a number of factors, including the gross revenues received from its
Properties, the operating expenses of the Company, and the interest expense
incurred in borrowing and unanticipated capital expenditures. No assurance can
be given that the Company's estimates will prove accurate or that any level of
distributions will be made or sustained. The Company anticipates that
distributions will exceed net income determined in accordance with generally
accepted accounting principles due to non-cash expenses, primarily depreciation
and amortization.
    
 
   
     The Company intends initially to distribute annually approximately 89% of
estimated Cash Available for Distribution. The estimate of Cash Available for
Distribution for the 12 months ending March 31, 1998 is based upon pro forma
Funds from Operations for the 12 months ended March 31, 1997, adjusted (i) for
    
 
                                       28
<PAGE>   37
 
   
certain known events and/or contractual commitments that either have occurred or
will occur subsequent to March 31, 1997 or during the 12 months ended March 31,
1997, but were not effective for the full 12 months or will not recur, and (ii)
for certain non-GAAP adjustments consisting of (A) revisions to historical rent
on a straight-line, GAAP basis to amounts currently being paid or due from
tenants based on contractual rents, (B) pro forma amortization of loan discount,
which is not a cash expense, (C) estimates of amounts anticipated for recurring
tenant improvements, leasing commissions and capital expenditures, and (D)
scheduled mortgage loan principal payments. No effect was given to any changes
in working capital resulting from changes in current assets and current
liabilities (which changes are not anticipated to be material) or the amount of
cash estimated to be used for (i) investing activities for acquisition and other
activities (other than a reserve for capital expenditures, tenant improvements
for renewing space and working capital) and (ii) financing activities. The
estimate of Cash Available for Distribution is being made solely for the purpose
of setting the initial distribution and is not intended to be a projection or
forecast of the Company's results of operations or its liquidity, nor is the
methodology upon which such adjustments were made necessarily intended to be a
basis for determining future distributions.
    
 
   
     The Company anticipates that its distributions will exceed earnings and
profits for federal income tax reporting purposes due to non-cash expenses,
primarily depreciation and amortization, to be incurred by the Company.
Therefore, approximately 30% (or $.36 per Common Share) of the distributions
anticipated to be paid by the Company for the 12-month period following the
completion of the Offering will represent a return of capital for federal income
tax purposes and in such event will not be subject to federal income tax under
current law to the extent such distributions do not exceed a shareholder's basis
in his Common Shares. The nontaxable distributions will reduce the shareholder's
tax basis in the Common Shares and, therefore, the gain (or loss) recognized on
the sale of such Common Shares or upon liquidation of the Company will be
increased (or decreased) accordingly. The percentage of shareholder
distributions that represents a nontaxable return of capital may vary
substantially from year to year.
    
 
   
     The Code generally requires that a REIT distribute annually at least 95% of
its net taxable income. See "Federal Income Tax Consequences -- Taxation of the
Company." The amount of distributions on an annual basis necessary to maintain
the Company's REIT status based on pro forma taxable income of the Company for
the 12 months ended December 31, 1996, as adjusted for certain items in the
following table, would have been approximately $118.5 million. The estimated
Cash Available for Distribution is anticipated to be in excess of the annual
distribution requirements applicable to REITs under the Code. Under certain
circumstances, the Company may be required to make distributions in excess of
Cash Available for Distribution in order to meet such distribution requirements.
For a discussion of the tax treatment of distributions to holders of Common
Shares, see "Federal Income Tax Consequences -- Taxation of Taxable U.S.
Shareholders of the Company Generally."
    
 
     The Company believes that its estimate of Cash Available for Distribution
constitutes a reasonable basis for setting the initial distribution, and the
Company intends to maintain its initial distribution rate for the 12-month
period following the completion of the Offering unless actual results of
operations, economic conditions or other factors differ materially from the
assumptions used in its estimate. The Company's actual results of operations
will be affected by a number of factors, including the revenue received from its
properties, the operating expenses of the Company, interest expense, the ability
of tenants of the Company's properties to meet their financial obligations and
unanticipated capital expenditures. Variations in the net proceeds from the
Offering as a result of a change in the initial public offering price or the
exercise of the Underwriters' overallotment option may affect Cash Available for
Distribution, the payout ratio based on Cash Available for Distribution and
available reserves. No assurance can be given that the Company's estimate will
prove accurate. Actual results may vary substantially from the estimate.
 
                                       29
<PAGE>   38
 
   
     The following table describes the calculation of pro forma Funds From
Operations for the 12 months ended March 31, 1997 and the adjustments to pro
forma Funds From Operations for the 12 months ended March 31, 1997 used in
estimating initial Cash Available for Distribution for the 12 months ending
March 31, 1998:
    
 
   
<TABLE>
<CAPTION>
                                                                       (DOLLARS IN THOUSANDS
                                                                         EXCEPT PER SHARE
                                                                             AMOUNTS)
                                                                       ---------------------
<S>                                                           <C>      <C>
  Pro forma net income for the year ended December 31, 1996...........       $134,270
  Less: Pro forma net income for the three months ended March 31,
     1996.............................................................        (37,535)
  Plus: Pro forma net income for the three months ended March 31,
     1997.............................................................         36,565
                                                                             --------
  Pro forma net income for the 12 months ended March 31, 1997.........        133,300
  Less: pro forma gain on sale of real estate for the 12 months ended
     March 31, 1997(1)................................................            (76)
  Plus: pro forma real estate depreciation for the 12 months ended
     March 31, 1997(2)................................................        129,941
  Plus: pro forma real estate depreciation component of investments in
     unconsolidated joint ventures for the 12 months ended March 31,
     1997(3)..........................................................          1,783
  Plus: Pro forma amortization of loan discount(4)....................          4,647
  Plus: pro forma portion of minority interest relating to Operating
     Partnership Units for the 12 months ended March 31, 1997(5)......         10,807
                                                                             --------
Pro forma Funds from Operations of the Operating Partnership for the
  12 months ended March 31, 1997(6)...................................        280,402
Adjustments:
  Net change in contractual rental revenue(7).........................         30,897
  Eliminate other income related to litigation settlement(8)..........         (8,807)
  Reduction in interest income(9).....................................         (8,018)
                                                                             --------
Estimated adjusted pro forma Funds from Operations of the Operating
  Partnership for the 12 months ending March 31, 1998.................        294,474
Adjustments:
  Net effect of straight-line rents(10)...............................        (31,959)
  Estimated annual provision for non-revenue enhancing tenant
     improvements and leasing commissions(11).........................        (28,513)
  Estimated annual provision for recurring capital expenditures(12)...         (6,121)
  Scheduled mortgage loan principal payments(13)......................        (12,101)
                                                                             --------
Estimated Cash Available for Distribution of the Operating Partnership
  for the 12 months ending March 31, 1998(14).........................       $215,780
                                                                             ========
  The Company's share of estimated Cash Available for
     Distribution(15).......................................  $199,597
                                                              ========
  Minority interests' share of estimated Cash Available for
     Distribution...........................................  $ 16,183
                                                              ========
Total estimated initial annual cash distributions to shareholders of
  the Company.........................................................       $177,421
                                                                             ========
  Estimated initial annual cash distributions per share(16)...........       $   1.20
                                                                             ========
  Payout ratio based on estimated Cash Available for
     Distribution(17).................................................             89%
                                                                             ========
</TABLE>
    
 
- ---------------
 
   
 (1) Pro forma gain on sale of real estate for the year ended December 31, 1996
     of $5,338 minus pro forma gain on sale of real estate for the three months
     ended March 31, 1996 of $5,262. There was no pro forma gain on sale of real
     estate for the three months ended March 31, 1997.
    
 
   
 (2) Pro forma real estate depreciation for the year ended December 31, 1996 of
     $128,532 minus pro forma real estate depreciation for the three months
     ended March 31, 1996 of $31,416, plus pro forma real estate depreciation
     for the three months ended March 31, 1997 of $32,825.
    
 
                                       30
<PAGE>   39
 
   
 (3) Pro forma real estate depreciation component of investments in
     unconsolidated joint ventures for the year ended December 31, 1996 of
     $1,759, minus pro forma real estate depreciation component of investments
     in unconsolidated joint ventures for the three months ended March 31, 1996
     of $418, plus pro forma real estate depreciation component of investments
     in unconsolidated joint ventures for the three months ended March 31, 1997
     of $442.
    
 
   
 (4) Represents amortization of the discount included in the pro forma statement
     of operations for the 12 months ended March 31, 1997 anticipated to be
     required to record mortgage debt at fair value based upon the issuance of
     Common Shares and Units in the Offering and the Consolidation.
    
 
   
 (5) Pro forma minority interest relating to Operating Partnership Units for the
     year ended December 31, 1996 of $10,886 minus pro forma minority interest
     relating to Operating Partnership Units for the three months ended March
     31, 1996 of $3,044, plus pro forma minority interest relating to Operating
     Partnership Units for the three months ended March 31, 1997 of $2,965.
    
 
   
 (6) The White Paper on Funds from Operations approved by the Board of Governors
     of NAREIT in March 1995 defines Funds from Operations as net income (loss)
     (computed in accordance with GAAP), excluding gains (or losses) from debt
     restructuring and sales of properties, plus real estate related
     depreciation and amortization and after adjustments for unconsolidated
     partnerships and joint ventures. The Company believes that Funds from
     Operations is helpful to investors as a measure of the performance of an
     equity REIT because, along with cash flow from operating activities,
     financing activities and investing activities, it provides investors with
     an indication of the ability of the Company to incur and service debt, to
     make capital expenditures and to fund other cash needs. The Company
     computes Funds from Operations in accordance with standards established by
     NAREIT which may not be comparable to Funds from Operations reported by
     other REITs that do not define the term in accordance with the current
     NAREIT definition or that interpret the current NAREIT definition
     differently than the Company. Funds from Operations does not represent cash
     generated from operating activities in accordance with GAAP and should not
     be considered as an alternative to net income (determined in accordance
     with GAAP) as an indication of the Company's financial performance or to
     cash flow from operating activities (determined in accordance with GAAP) as
     a measure of the Company's liquidity, nor is it indicative of funds
     available to fund the Company's cash needs, including its ability to make
     cash distributions. For a reconciliation of net income and Funds from
     Operations, see "Management's Discussion and Analysis of Financial
     Condition and Results of Operations -- Funds from Operations."
    
 
   
 (7) The net change in contractual rental revenue represents the difference
     between the contractual rental revenues due under existing leases in effect
     on April 30, 1997 for the 12 months ending March 31, 1998, and the pro
     forma rental revenues for the 12 months ended March 31, 1997 (calculated on
     a cash basis, excluding the portion attributable to the adjustment to
     reflect the effect of straight-line rents). For leases in effect as of
     April 30, 1997 and leases expiring in the 12 months ending March 31, 1998
     which were renewed or released prior to April 30, 1997, the net change
     reflects the contractual rent increases or decreases in the 12 months
     ending March 31, 1998 compared to the 12 months ended March 31, 1997.
     However, this calculation does not include the effect of any leases
     executed subsequent to April 30, 1997. For leases in effect for only part
     of the 12 month periods ended March 31, 1997 or ending March 31, 1998, the
     calculations reflect the contractual rent only for the portion of each such
     period in which the lease was in effect. The contractual rental revenue for
     the 12 months ending March 31, 1998 was calculated for each tenant by
     taking the total of the base rent, including any contractual rent increases
     or decreases, plus the annualized estimated monthly operating expense
     reimbursement currently being paid by the tenant as of April 30, 1997, for
     the 12 months ending March 31, 1998 or a partial year in cases where the
     lease expires during the 12 months ending March 31, 1998. All calculations
     assume that no extension options or lease renewals (except for month to
     month leases) were exercised and that no new leases are entered into after
     April 30, 1997. Leases of approximately 1.9 million square feet of space
     expire during the period from April 1, 1997 to March 31, 1998. The
     annualized revenue from these leases (calculated by multiplying the April
     1997 revenue by 12) is approximately $40.6 million. The amount of
     contractual rental revenue relating to these expiring leases
    
 
                                       31
<PAGE>   40
 
   
     included in the $584.6 million of contractual rental revenues for the 12
     months ending March 31, 1998 (as shown below) is approximately $26.1
     million. Therefore, the $584.6 million of contractual rental revenue
     reflects a reduction of approximately $14.5 relating to leases expiring
     during the 12 months ending March 31, 1998.
    
 
   
     In addition, the contractual rental revenues for the 12 months ending March
31, 1998 of $584.6 million include approximately $14.7 million of revenues
relating to .8 million square feet of new leases executed as of April 30, 1997,
which commence between April 1, 1997 and March 31, 1998. The annualized revenues
from these new leases (calculated by multiplying the March 1998 revenues by 12)
is approximately $19.5 million, or $4.8 million more than the amount reflected
in the contractual revenues of $584.6 million for the 12 months ending March 31,
1998. Below is a summary of the calculation of pro forma rental revenues for the
12 months ended March 31, 1997 and net change in contractual rental revenues:
    
 
   
<TABLE>
     <S>                                                        <C>              <C>
     Contractual rental revenues for the 12 months ending
       March 31, 1998.......................................                     $584,646,039
     Pro forma rental income and tenant reimbursements for
       the year ended December 31, 1996.....................    $ 591,272,000
     Less: pro forma rental income and tenant reimbursements
       for the three months ended March 31, 1996............     (144,692,000)
     Plus: pro forma rental income and tenant reimbursements
       for the three months ended March 31, 1997............      154,604,000
                                                                -------------
     Pro forma rental income and tenant reimbursements for
       the 12 months ended March 31, 1997...................      601,184,000
     Less: pro forma straight-line rent for the 12 months
       ended March 31, 1997.................................      (34,154,772)
     Less: pro forma utility reimbursement income included
       in
       tenant reimbursements for the 12 months ended March
       31, 1997.............................................       (9,823,760)
     Less: pro forma residential income included in rental
       income for the 12 months ended March 31, 1997........       (3,456,495)
                                                                -------------
     Pro forma rental revenues for the 12 months ended March
       31, 1997.............................................                      553,748,973
     Net change in contractual rental revenues..............                     $ 30,897,066
                                                                                 ============
</TABLE>
    
 
   
 (8) Represents payment in settlement of litigation received and recorded as
     other income during the year ended December 31, 1996.
    
 
   
 (9) Represents an estimated reduction in interest income for the 12 months
     ending March 31, 1998 resulting from a decrease in cash invested in short
     term investments.
    
 
   
(10) Represents the effect of adjusting straight-line rental income and ground
     rent expense included in estimated pro forma adjusted Funds from Operations
     for the 12 months ended March 31, 1997 to a cash basis.
    
 
   
(11) Reflects recurring non-revenue enhancing tenant improvements and leasing
     commissions anticipated for the 12 months ending March 31, 1998 based on
     the weighted average tenant improvements and leasing commissions for
     renewed and re-tenanted space at the Properties for the years ended
     December 31, 1994, 1995 and 1996 and the four months ended April 30, 1997
     multiplied by the average annual square feet of space for which leases
     expire during the period from April 30, 1997 to December 31, 1999
     (calculated on a regional basis). The weighted average annual per square
     foot costs of tenant improvements and leasing commissions by region and the
     calculation of the estimated provision for
    
 
                                       32
<PAGE>   41
 
   
     non-revenue enhancing tenant improvements and leasing commissions on an
     annual basis based on lease expirations (rollover) for the period April 30,
     1997 to December 31, 1999 are presented below:
    
 
   
<TABLE>
<CAPTION>
                                                                     JANUARY 1-APRIL 30,    TOTAL WEIGHTED
                                        1994      1995      1996            1997               AVERAGE
                                        -----    ------    ------    -------------------    --------------
     <S>                                <C>      <C>       <C>       <C>                    <C>
     Weighted Average Total Cost of
       Historical Non-Revenue
       Enhancing Tenant Improvements
       and Leasing Commissions Per
       Square Foot..................    $7.58    $10.81    $12.39           $9.33               $10.41
</TABLE>
    
 
   
<TABLE>
<CAPTION>
       HISTORICAL NON-REVENUE ENHANCING                                                  TOTAL WEIGHTED
     WEIGHTED AVERAGE TENANT IMPROVEMENTS       RENEWALS             RE-TENANTED             AVERAGE
         AND LEASING COSTS BY REGION       1994-APRIL 30, 1997   1994-APRIL 30, 1997   1994-APRIL 30, 1997
     ------------------------------------  -------------------   -------------------   -------------------
     <S>                                   <C>                   <C>                   <C>
     Pacific.............................         $5.51                $26.11                $15.96
     Southeast...........................          7.97                 14.83                  9.33
     Northeast...........................          6.28                 21.10                  9.26
     Central.............................          6.83                 12.06                  7.95
     Southwest...........................          7.88                 14.90                 10.02
     West................................          5.21                 13.53                  7.56
                                                 ------               -------               -------
     Total/Weighted Average..............         $6.56                $19.07                $10.41
                                                 ======               =======               =======
</TABLE>
    
 
   
<TABLE>
<CAPTION>
                             AVERAGE ANNUAL
                            LEASE EXPIRATION     RENEWAL    RE-TENANTED
                            BASED ON ROLLOVER    SQUARE       SQUARE       ESTIMATED     ESTIMATED          TOTAL
                             FOR THE PERIOD      FOOTAGE      FOOTAGE       RENEWAL      RE-TENANT       RENEWAL AND
     REGION                 4/30/97-12/31/99      (69%)        (31%)         COSTS         COSTS       RE-TENANT COSTS
     ------                 -----------------   ---------   -----------   -----------   -----------   -----------------
     <S>                    <C>                 <C>         <C>           <C>           <C>           <C>
     Pacific..............        690,414         476,386     214,028     $ 2,624,887   $ 5,588,271      $ 8,213,158
     Southeast............        376,786         259,982     116,804       2,072,057     1,732,203        3,804,260
     Northeast............        363,155         250,577     112,578       1,573,624     2,375,396        3,949,020
     Central..............        332,203         229,220     102,983       1,565,573     1,241,975        2,807,548
     Southwest............        522,872         360,782     162,090       2,842,962     2,415,141        5,258,103
     West.................        575,316         396,968     178,348       2,068,203     2,413,048        4,481,251
                                ---------       ---------     -------     -----------   -----------      -----------
     Total/Weighted
       Average............      2,860,746       1,973,915     886,831     $12,747,306   $15,766,034      $28,513,340
                                =========       =========     =======     ===========   ===========      ===========
</TABLE>
    
 
   
(12) Represents estimated annual provision for recurring capital expenditures
     for the 12 months ending March 31, 1998 based upon an annual cost of $0.19
     per square foot. The Company has calculated this reserve based on the
     weighted average historical recurring capital expenditures for the years
     ended December 31, 1994, 1995 and 1996.
    
 
   
<TABLE>
     <S>                                                           <C>
     Pro forma total square feet.................................  32,216,741
     Cost per square foot........................................  $      .19
                                                                   ----------
     Estimated recurring capital expenditures....................  $6,121,181
                                                                   ==========
</TABLE>
    
 
   
(13) Represents scheduled payments of mortgage loan principal due during the 12
     months ending March 31, 1998.
    
 
   
(14) The Company expects to fund nonrecurring capital expenditures, tenant
     improvements and leasing commissions from cash reserves, borrowings, cash
     flow from operating activities or other working capital sources.
    
 
   
(15) The Company's share of estimated Cash Available for Distribution and
     estimated initial annual cash distributions to shareholders of the Company
     is based on its approximate 92.5% aggregate interest in the Operating
     Partnership.
    
 
   
(16) Based on a total of 147,851,200 Common Shares to be outstanding after the
     Offering (25,000,000 Common Shares to be sold in the Offering, assuming no
     exercise of the Underwriter's over-allotment option, and 126,527,000 Common
     Shares to be issued in the Consolidation).
    
 
   
(17) Calculated as estimated initial annual cash distributions to shareholders
     of the Company divided by the Company's share of estimated Cash Available
     for Distribution for the 12 months ending March 31, 1998. The payout ratio
     based on estimated adjusted pro forma Funds from Operations for the 12
     months ending March 31, 1998 is 66%.
    
 
                                       33
<PAGE>   42
 
                                   CAPITALIZATION
 
   
     The following table sets forth the combined historical capitalization of
Equity Office Predecessors as of March 31, 1997 and as adjusted to give effect
to the Consolidation, the Offering and use of the net proceeds from the Offering
as set forth under "Use of Proceeds." The information set forth in the table
should be read in conjunction with the financial statements and notes thereto,
the pro forma financial information and notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" included elsewhere in this Prospectus.
    
 
   
<TABLE>
<CAPTION>
                                                                   MARCH 31, 1997
                                                              ------------------------
                                                               COMBINED     PRO FORMA
                                                              HISTORICAL   AS ADJUSTED
                                                              ----------   -----------
                                                                   (IN THOUSANDS)
<S>                                                           <C>          <C>
Debt:
  Mortgage Debt(1)..........................................  $1,941,849   $1,358,273
  Line of Credit(1).........................................      54,625      263,221
Minority Interests in Operating Partnership.................          --      239,669
Shareholder's equity:
  Preferred Shares, $.01 par value per share, 100,000,000
     shares authorized;
     none issued and outstanding............................          --           --
  Common Shares, $.01 par value per share, 750,000,000
     shares authorized;
     1,000 issued and outstanding; 147,851,200 issued and
     outstanding, as adjusted(2)............................          --        1,479
  Additional Paid-In Capital................................          --    2,954,439
  Owners' Equity............................................   1,759,340           --
                                                              ----------   ----------
          Total Owners' Equity/Stockholders' Equity.........   1,759,340    2,955,918
                                                              ----------   ----------
          Total Capitalization..............................  $3,755,814   $4,817,081
                                                              ==========   ==========
</TABLE>
    
 
- ---------------
 
(1) See Note 3 of the notes to the combined financial statements of Equity
    Office Predecessors for information relating to the indebtedness.
   
(2) Includes Common Shares to be issued in the Offering and the Consolidation.
    Does not include (i) 11,928,200 Common Shares that may be issued upon the
    exchange of Units issued in connection with the Consolidation, (ii)
    3,750,000 Common Shares subject to the Underwriters' over-allotment option,
    or (iii) approximately 10.9 million Common Shares available for options that
    may be granted under the Company's Employee Plan, of which approximately 4.1
    million are expected to granted upon Closing of the Offering.
    
 
                                       34
<PAGE>   43
 
                                    DILUTION
 
   
     At March 31, 1997, as adjusted for capital contributions made subsequent to
that date, the Company had net tangible book value attributable to continuing
investors of approximately $1.8 billion. After giving effect to (i) the sale of
the Common Shares offered hereby (at an assumed offering price of $20.00 per
Common Share) and the receipt by the Company of approximately $464.5 million in
net proceeds from the Offering after deducting the Underwriters' discounts and
commissions and other estimated expenses of the Offering, (ii) the repayment of
approximately $552.8 million of mortgage indebtedness secured by certain of the
Properties, and (iii) other Consolidation expenses, the pro forma net tangible
book value at March 31, 1997 prior to adjusting the real estate assets and
liabilities to their estimated net equity value would have been approximately
$2.3 billion, or $14.32 per Common Share. This amount represents an immediate
increase in net tangible book value of $.72 per Common Share to the continuing
investors and an immediate dilution in pro forma net tangible book value of
$5.68 per Common Share to new investors. The following table illustrates this
dilution:
    
 
   
<TABLE>
<S>                                                           <C>        <C>
Assumed initial public offering price per share.............             $  20.00
Net tangible book value per share prior to the
  Offering(1)...............................................  $  13.60
Increase in net tangible book value per share attributable
  to the Offering(2)........................................       .72
                                                              --------
Pro forma net tangible book value after the Offering(3).....                14.32
                                                                         --------
Dilution in net tangible book value per Common Share to
  purchasers in the Offering(4).............................             $   5.68
                                                                         ========
</TABLE>
    
 
- ---------------
   
(1) Tangible book value per share prior to the Offering attributable to
    continuing investors is determined by dividing net tangible book value of
    the Company attributable to continuing investors (based on the March 31,
    1997 net book value of the tangible assets, net of liabilities to be assumed
    and increased to reflect subsequent capital contributions) by the sum of the
    number of Common Shares (i) issued and outstanding, and (ii) issuable
    (including upon the exchange of all Units to be issued) to continuing
    investors in the Consolidation.
    
(2) Based on an assumed initial public offering price of $20.00 per Common Share
    and after deducting Underwriters' discounts and commissions and estimated
    expenses of the Offering and the Consolidation.
   
(3) Based on total pro forma net tangible book value of $2.3 billion divided by
    the total number of Common Shares outstanding after the completion of the
    Offering (159,779,400 Common Shares including Common Shares issuable upon
    exchange of Units issued to continuing investors), and excluding Common
    Shares that may be issuable upon exercise of share options. There is no
    impact on dilution attributable to the issuance of Common Shares in exchange
    for Units to be issued to the continuing investors in the Consolidation
    because such Units would be exchanged for Common Shares on a one-for-one
    basis.
    
   
(4) Dilution is determined by subtracting net tangible book value per Common
    Share after the Offering from an assumed offering price of $20.00.
    
 
   
     The following table summarizes, on a pro forma basis giving effect to the
Offering and the Consolidation, the number of Common Shares to be sold by the
Company in the Offering and the number of Common Shares and Units to be issued
to the continuing investors in the Consolidation, the adjusted net tangible book
value as of March 31, 1997 of the net assets contributed by the continuing
investors in the Consolidation and the net tangible book value of the average
contribution per share based on total contributions.
    
 
   
<TABLE>
<CAPTION>
                                         COMMON SHARES/              CASH/BOOK VALUE
                                          UNITS ISSUED              OF CONTRIBUTIONS                BOOK VALUE
                                       ------------------       -------------------------           OF AVERAGE
                                       COMMON                                                      CONTRIBUTION
                                       SHARES/                                                      PER SHARE/
                                        UNITS     PERCENT         AMOUNT          PERCENT              UNIT
                                       -------    -------       ----------        -------          ------------
                                               (IN THOUSANDS EXCEPT PERCENTAGES AND PER SHARE AMOUNTS)
<S>                                    <C>        <C>           <C>        <C>    <C>       <C>    <C>
Purchasers in the Offering.........     25,000      15.6%       $  500,000 (1)      21.4%   (1)       $20.00
Common Shares issued to continuing
  investors........................    122,851      76.9         1,670,293 (2)      71.6    (2)        13.60
Units issued to continuing
  investors........................     11,928       7.5           162,174           7.0               13.60
                                       -------     -----        ----------         -----              ------
          Total....................    159,779       100%       $2,332,467         100.0%             $14.60
                                       =======     =====        ==========         =====              ======
</TABLE>
    
 
- ---------------
(1) Before deducting Underwriters' discounts and commissions and other estimated
    expenses of the Offering and the Consolidation.
   
(2) Based on the March 31, 1997 net book value of the assets, adjusted for the
    capital contributions made subsequent to March 31, 1997.
    
 
                                       35
<PAGE>   44
 
   
                    SELECTED COMBINED FINANCIAL INFORMATION
    
 
   
     The following sets forth selected combined financial and operating
information on a pro forma basis for the Company and on an historical basis for
the Company's predecessors ("Equity Office Predecessors"). The following
information should be read in conjunction with the combined financial statements
and notes thereto of Equity Office Predecessors included elsewhere in this
Prospectus. The selected combined historical financial and operating information
of Equity Office Predecessors at March 31, 1997, and for the three months ended
March 31, 1997 and 1996, has been derived from the historical unaudited combined
financial statements of Equity Office Predecessors. The selected combined
historical financial and operating information of Equity Office Predecessors at
December 31, 1996 and 1995, and for each of the three years in the period ended
December 31, 1996, has been derived from the historical combined financial
statements of Equity Office Predecessors audited by Ernst & Young LLP,
independent auditors, whose report with respect thereto is included elsewhere in
this Prospectus. The selected combined historical financial and operating
information of Equity Office Predecessors at December 31, 1994, 1993 and 1992,
and for each of the two years in the period ended December 31, 1993, has been
derived from the historical unaudited combined financial statements of the
Equity Office Predecessors. Unaudited pro forma operating information for the
three months ended March 31, 1997 and the year ended December 31, 1996 is
presented as if the Offering and the Consolidation occurred on January 1, 1997
and 1996, respectively, and, therefore, incorporates certain assumptions that
are described in the notes to the Pro Forma Condensed Combined Financial
Statements included elsewhere in this Prospectus. The unaudited pro forma
balance sheet data is presented as if the aforementioned transactions had
occurred on March 31, 1997. The pro forma information does not purport to
represent what the Company's financial position or results of operations would
actually have been if these transactions had, in fact, occurred on such date or
at the beginning of the period indicated, or to project the Company's financial
position or results of operations at any future date or for any future period.
    

   
<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED MARCH 31,
                                      ------------------------------------
                                       COMPANY       COMBINED HISTORICAL      COMPANY
                                      PRO FORMA    -----------------------   PRO FORMA
                                         1997         1997         1996         1996
                                      ----------   ----------   ----------   ----------
                                       (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                   <C>          <C>          <C>          <C>
OPERATING DATA:
Revenue:
 Rental, parking and other..........  $  168,425   $  148,471   $  107,645   $  655,256
                                      ==========   ==========   ==========   ==========
       Total Revenue................  $  174,586   $  154,567   $  110,150   $  670,226
                                      ==========   ==========   ==========   ==========
Expenses:
 Interest...........................  $   28,914   $   36,355   $   26,267   $  112,712
 Depreciation and amortization......      34,131       28,081       21,173      133,346
 Property operating expenses(1).....      65,379       58,148       43,820      261,388
 General and administrative.........       7,673        7,073        6,056       25,545
 Provision for value impairment.....           0            0            0            0
                                      ----------   ----------   ----------   ----------
       Total Expenses...............  $  136,097   $  129,657   $   97,316   $  532,991
                                      ==========   ==========   ==========   ==========
Income before (income) loss
 allocated to minority interests,
 income from investments in
 unconsolidated joint ventures, gain
 on sale of real estate, and
 extraordinary items................  $   38,489   $   24,910   $   12,834   $  137,235
Minority interests allocation.......      (3,504)        (529)        (610)     (13,028)
Income from investments in
 unconsolidated joint ventures......       1,580          922          492        4,725
Gain on sale of real estate and
 extraordinary items................           0        5,466        5,262        5,338
                                      ----------   ----------   ----------   ----------
       Net income...................  $   36,565   $   30,769   $   17,978   $  134,270
                                      ==========   ==========   ==========   ==========
       Net income per Common
        Share(2)....................  $      .25                             $      .91
                                      ==========                             ==========
BALANCE SHEET DATA:
 (AT END OF PERIOD)
Investment in real estate after
 accumulated depreciation...........  $4,758,788   $3,377,515           --           --
       Total assets.................   4,924,908    3,966,355           --           --
Mortgage debt and revolving lines of
 credit.............................   1,621,494    1,996,474           --           --
       Total liabilities............   1,719,975    2,197,669           --           --
Minority interests..................     249,015        9,346           --           --
Owners'/Shareholders' equity........   2,955,918    1,759,340           --           --
 
<CAPTION>

                                             EQUITY OFFICE PREDECESSORS (COMBINED HISTORICAL)
                                                         YEARS ENDED DECEMBER 31,
                                      --------------------------------------------------------------
                                         1996         1995         1994         1993         1992
                                      ----------   ----------   ----------   ----------   ----------
                                             (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                   <C>          <C>          <C>          <C>          <C>
OPERATING DATA:
Revenue:
 Rental, parking and other..........  $  493,396   $  356,959   $  230,428   $  150,315   $   96,787
                                      ==========   ==========   ==========   ==========   ==========
       Total Revenue................  $  508,124   $  371,457   $  240,878   $  159,246   $  107,154
                                      ==========   ==========   ==========   ==========   ==========
Expenses:
 Interest...........................  $  119,595   $  100,566   $   59,316   $   36,755   $   25,775
 Depreciation and amortization......      96,237       74,156       46,905       29,752       19,266
 Property operating expenses(1).....     201,067      151,488      107,412       74,028       48,856
 General and administrative.........      23,145       21,987       15,603       12,012        8,720
 Provision for value impairment.....           0       20,248            0            0            0
                                      ----------   ----------   ----------   ----------   ----------
       Total Expenses...............  $  440,044   $  368,445   $  229,236   $  152,547   $  102,617
                                      ==========   ==========   ==========   ==========   ==========
Income before (income) loss
 allocated to minority interests,
 income from investments in
 unconsolidated joint ventures, gain
 on sale of real estate, and
 extraordinary items................  $   68,080   $    3,012   $   11,642   $    6,699   $    4,537
Minority interests allocation.......      (2,086)      (2,129)       1,437        1,772        1,793
Income from investments in
 unconsolidated joint ventures......       2,093        2,305        1,778            0            0
Gain on sale of real estate and
 extraordinary items................       5,338       31,271        1,705            0            0
                                      ----------   ----------   ----------   ----------   ----------
       Net income...................  $   73,425   $   34,459   $   16,562   $    8,471   $    6,330
                                      ==========   ==========   ==========   ==========   ==========
       Net income per Common
        Share(2)....................
 
BALANCE SHEET DATA:
 (AT END OF PERIOD)
Investment in real estate after
 accumulated depreciation...........  $3,291,815   $2,393,403   $1,815,160   $1,220,268   $  820,805
       Total assets.................   3,912,565    2,650,890    2,090,933    1,318,644      912,631
Mortgage debt and revolving lines of
 credit.............................   1,964,892    1,434,827    1,261,156      798,897      526,830
       Total liabilities............   2,174,483    1,529,334    1,350,552      845,315      552,666
Minority interests..................      11,080       31,587        9,283      (15,298)     (14,133)
Owners'/Shareholders' equity........   1,727,002    1,089,969      731,098      488,627      374,098
</TABLE>
    
 
                                       36
<PAGE>   45
   
<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED MARCH 31,
                                      ------------------------------------
                                       COMPANY       COMBINED HISTORICAL      COMPANY
                                      PRO FORMA    -----------------------   PRO FORMA
                                         1997         1997         1996         1996
                                      ----------   ----------   ----------   ----------
                                       (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                   <C>          <C>          <C>          <C>
OTHER DATA:
General and administrative expenses
 as a percentage of total
 revenues...........................         4.4%         4.6%         5.5%         3.8%
Number of Office Properties owned at
 period end(3)(4)(5)................          90           86           74           90
Net rentable square feet of Office
 Properties owned at period end (in
 millions)(3).......................        32.2         29.7         23.8         32.2
Occupancy of Office Properties owned
 at period end(3)...................          93%          91%          88%          93%
Number of Parking Facilities owned
 at period end(6)...................          15           10            3           15
Number of spaces at Parking
 Facilities owned at period
 end(6).............................      15,455        7,321        3,323       15,455
Funds from Operations(7)............  $   73,974   $   52,755   $   33,321   $  274,504
Weighted average number of Common
 Shares outstanding (in
 thousands).........................     147,851           --           --      147,851
Cash flow from operating
 activities.........................          --   $   41,087   $    2,407           --
Cash flow from investing
 activities.........................          --   $ (109,506)  $  (36,116)          --
Cash flow from financing
 activities.........................          --   $   34,120   $   63,900           --
 
<CAPTION>
 
                                             EQUITY OFFICE PREDECESSORS (COMBINED HISTORICAL)
                                                         YEARS ENDED DECEMBER 31,
                                      --------------------------------------------------------------
                                         1996         1995         1994         1993         1992
                                      ----------   ----------   ----------   ----------   ----------
                                             (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                   <C>          <C>          <C>          <C>          <C>
OTHER DATA:
General and administrative expenses
 as a percentage of total
 revenues...........................         4.6%         5.9%         6.5%         7.5%         8.1%
Number of Office Properties owned at
 period end(3)(4)(5)................          83           73           63           48           33
Net rentable square feet of Office
 Properties owned at period end (in
 millions)(3).......................        29.2         23.1         18.5         13.6          9.1
Occupancy of Office Properties owned
 at period end(3)...................          90%          86%          88%          80%          73%
Number of Parking Facilities owned
 at period end(6)...................          10            3            0            0            0
Number of spaces at Parking
 Facilities owned at period
 end(6).............................       7,321        3,323            0            0            0
Funds from Operations(7)............  $  160,460   $   96,104   $   60,372           --           --
Weighted average number of Common
 Shares outstanding (in
 thousands).........................          --           --           --           --           --
Cash flow from operating
 activities.........................  $  165,975   $   93,878   $   73,821           --           --
Cash flow from investing
 activities.........................  $ (924,227)  $ (380,615)  $ (513,965)          --           --
Cash flow from financing
 activities.........................  $1,057,551   $  276,513   $  514,923           --           --
</TABLE>
    
 
- ---------------
(1) Includes Property operating expenses, real estate taxes, insurance, as well
    as repair and maintenance expenses.
   
(2) The pro forma net income per Common Share based solely on the number of
    shares issued in the Offering, the proceeds of which will be used to retire
    debt would be $.28 and $.79 per share for the three months ended March 31,
    1997 and the year ended December 31, 1996, respectively, calculated as
    follows:
    
 
   
<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED      YEAR ENDED
                                                                   MARCH 31, 1997     DECEMBER 31, 1996
                                                                 ------------------   -----------------
                                                                       (ALL AMOUNTS IN THOUSANDS
                                                                       EXCEPT PER SHARE AMOUNTS)
    <S>                                                          <C>                  <C>
    Pro forma Common Shares in the Offering issued to retire
      debt......................................................       147,851             147,851
    Historical net income.......................................      $ 30,769            $ 73,425
    Plus pro forma reduction in interest expense due to
      repayment of indebtedness.................................        11,366              43,041
                                                                      --------            --------
    Pro forma net income........................................      $ 42,135            $116,466
                                                                      ========            ========
    Pro forma net income per Common Share.......................      $    .28            $    .79
                                                                      ========            ========
</TABLE>
    
 
   
(3) The data at the periods ended March 31, 1997, December 31, 1996 and 1995
    includes 28 State Street, a 570,040 square foot Office Property which is
    undergoing major redevelopment and was vacant prior to May 1997. The
    weighted average occupancy, excluding 28 State Street, as of March 31, 1997,
    December 31, 1996 and 1995 was approximately 92%, 92% and 88%, respectively.
    
   
(4) The pro forma number of Office Properties as of March 31, 1997 includes
    Oakbrook Terrace Tower, One Maritime Plaza, 201 Mission Street, Smith Barney
    Tower and 30 N. LaSalle, each of which was acquired after March 31, 1997,
    and the pro forma number of Office Properties as of December 31, 1996
    includes each of the foregoing plus Preston Commons and 177 Broad Street,
    each of which was a 1997 acquisition. The pro forma number of Office
    Properties as of ended December 31, 1996 excludes Barton Oaks Plaza II and
    8383 Wilshire, each of which is a 1997 disposition; the pro forma number of
    Office Properties as of March 31, 1997 excludes 8383 Wilshire, which was
    sold after March 31, 1997.
    
   
(5) The number of Office Properties owned as of December 31, 1996, as reflected
    in the combined historical financial statements, includes Barton Oaks Plaza
    II, an Office Property which was sold in January 1997, and 8383 Wilshire, an
    Office Property which was sold in May, 1997.
    
   
(6) The pro forma number of Parking Facilities and number of spaces include the
    1997 acquisition of a 50% ownership in a portfolio of four parking
    facilities in St. Louis, Missouri containing 7,464 spaces, and the 100%
    ownership of a parking facility in Chicago, Illinois containing 670 spaces,
    which is expected to close after the Closing of the Offering.
    
   
(7) The White Paper on Funds from Operations approved by the Board of Governors
    of NAREIT in March 1995 defines Funds from Operations as net income (loss)
    (computed in accordance with GAAP), excluding gains (or losses) from debt
    restructuring and sales of properties, plus real estate related depreciation
    and amortization and after adjustments for unconsolidated partnerships and
    joint ventures. The Company believes that Funds from Operations is helpful
    to investors as a measure of the performance of an equity REIT because,
    along with cash flow from operating activities, financing activities and
    investing activities, it provides investors with an indication of the
    ability of the Company to incur and service debt, to make capital
    expenditures and to fund other cash needs. The Company computes Funds from
    Operations in accordance with standards established by NAREIT which may not
    be comparable to Funds from Operations reported by other REITs that do not
    define the term in accordance with the current NAREIT definition or that
    interpret the current NAREIT definition differently than does the Company.
    Funds from Operations does not represent cash generated from operating
    activities in accordance with GAAP and should not be considered as an
    alternative to net income (determined in accordance with GAAP) as an
    indication of the Company's financial performance or to cash flow from
    operating activities (determined in accordance with GAAP) as a measure of
    the Company's liquidity, nor is it indicative of funds available to fund the
    Company's cash needs, including its ability to make cash distributions. For
    a reconciliation of net income and Funds from Operations, see "Management's
    Discussion and Analysis of Financial Condition and Results of
    Operations -- Funds from Operations."
    
 
                                       37
<PAGE>   46
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
   
     The following discussion and analysis of the combined financial condition
and results of operations should be read in conjunction with the Combined
Financial Statements of the Equity Office Predecessors and Notes thereto
contained in this Prospectus. All references to the historical activities of the
Company contained in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" refer to the activities of the Equity
Office Predecessors. Statements contained in this "Management's Discussion and
Analysis of Financial Conditions and Results of Operations," which are not
historical facts may be forward-looking statements. Such statements are subject
to certain risks and uncertainties which could cause actual results to differ
materially from those projected. Readers are cautioned not to place undue
reliance on these forward looking statements which speak only as of the date
hereof.
    
 
GENERAL
 
   
     The following discussion is based primarily on the Combined Financial
Statements of the Equity Office Predecessors as of March 31, 1997 and 1996 and
December 31, 1996 and 1995 and the three months ended March 31, 1997 and 1996
and each of the three years ended December 31, 1996.
    
 
   
     The Company receives income primarily from rental revenue from Office
Properties (including reimbursements from tenants for certain operating costs),
parking revenue from Office Properties and stand alone Parking Facilities, and,
to a lesser extent, from fees for management of the Managed Properties.
    
 
   
     As of March 31, 1997, the Company owned 86 Office Properties totaling
approximately 29.7 million square feet, and ten stand alone Parking Facilities
with approximately 7,321 spaces. Forty-seven of these Office Properties totaling
approximately 13.4 million square feet were owned prior to January 1, 1994; 15
Office Properties totaling approximately 5 million square feet were acquired in
1994; ten Office Properties totaling approximately 4.6 million square feet and
three Parking Facilities were acquired in 1995; ten Office Properties totaling
approximately 6.1 million square feet and seven Parking Facilities were acquired
in 1996; and four Office Properties totaling approximately 0.6 million square
feet were acquired during the three months ended March 31, 1997. As a result of
this rapid growth in the size of the Portfolio, the financial data presented
shows large increases in revenues and expenses from year to year. For the
foregoing reasons, the Company does not believe its year to year financial data
are comparable. Therefore, the analysis below shows changes resulting from
Properties that were held during the entire period for both years being
compared, (the "Core Portfolio") and changes due to acquisition and disposition
activity. The Core Portfolio for the comparison between the three months ended
March 31, 1997 and 1996 consists of 72 Office Properties and three Parking
Facilities acquired prior to January 1, 1996; the Core Portfolio for the
comparison between the years ended December 31, 1996 and 1995 consists of the 63
Office Properties acquired prior to January 1, 1995; and the Core Portfolio for
the comparison between the years ended December 31, 1995 and 1994 consists of
the 48 Office Properties acquired prior to January 1, 1994.
    
 
RESULTS OF OPERATIONS
 
   
  Quarters Ended March 31, 1997 and 1996
    
 
   
     Property Income:  Rental income, tenant reimbursements, parking income and
other income ("Property Income") increased by $40.9 million for the three months
ended March 31, 1997, or 38.0%, to $148.5 million as compared to $107.6 million
for the three months ended March 31, 1996. Approximately $7.3 million, or 17.8%,
of this increase was related to the Core Portfolio with the remaining $33.6
million (82.2%) being attributable to Properties acquired in 1996 and 1997 (net
of property sold). The 6.9% growth in Property Income in the Core Portfolio
resulted from a combination of occupancy and rental rate increases. The weighted
average occupancy of the Core Portfolio increased from approximately 88.5% at
January 1, 1996 to 93.5% as of March 31, 1997. This increase represents
approximately 1.0 million square feet of additional occupancy in the Core
Portfolio between January 1, 1996 and March 31, 1997. Approximately $0.2 million
of the total increase in Property Income was related to an increase in the
adjustment to reflect rental income on a
    
 
                                       38
<PAGE>   47
 
   
straight line basis. The straight line rent adjustment for new acquisitions
created a $1.2 million increase offset by a decrease related to the Core
Portfolio of approximately $1.0 million.
    
 
   
     Property Operating Expenses:  Real estate taxes and insurance, repairs and
maintenance and property operating expenses ("Property Operating Expenses")
increased by $14.3 million in total, or 32.6%, to $58.1 million for the three
months ended March 31, 1997, as compared to $43.8 million for the three months
ended March 31, 1996. Approximately $2.4 million of this increase was
attributable to the Core Portfolio, with the remaining $11.9 million
attributable to Properties acquired in 1996 and 1997 (net of property sold). The
Core Portfolio had an increase of approximately $0.7 million in real estate tax
and insurance expense. The other Property Operating Expenses (excluding real
estate taxes and insurance) for the Core Portfolio increased by $1.7 million for
the three months ended March 31, 1997 compared to the same period in 1996.
    
 
   
     Interest Expense:  Interest expense increased by $10.1 million, or 38.4%,
to $36.4 million for the three months ended March 31, 1997, compared to $26.3
million for the three months ended March 31, 1996. Approximately $2.0 million of
this increase was related to the Core Portfolio and $8.1 million was related to
financing on Properties acquired in 1996 and 1997.
    
 
   
     Depreciation and Amortization:  Depreciation and amortization increased by
$6.9 million, or 32.5%, to $28.1 million for the three months ended March 31,
1997, compared to $21.2 million for the three months ended March 31, 1996.
Approximately $1.6 million of this increase relates to the Core Portfolio and
$5.3 million is related to Properties acquired after January 1, 1996. The
increase in these expenses in the Core Portfolio related to depreciation of
capital and tenant improvements made at the Core Portfolio Properties in 1996
and 1997 and amortization of leasing commissions and loan fees paid during that
time period.
    
 
   
     Interest Income:  Interest income increased by $3.2 million to $4.9 million
for the three months ended March 31, 1997, compared to $1.7 million for the
three months ended March 31, 1996. This increase in interest income is due
primarily to having a larger amount of cash invested in short term investments
pending the purchase of new acquisitions.
    
 
   
     General and Administrative Expenses:  General and administrative expenses
increased by approximately $1.0 million, or 16.4%, to $7.1 million for the three
months ended March 31, 1997, compared to $6.1 million for the three months ended
March 31, 1996. Approximately $0.5 million of this increase was due to an
increase in payroll expense. The increase in general and administrative expenses
was related to the growth in the size of the Portfolio from 23.1 million square
feet at January 1, 1996 to 29.7 million square feet at March 31, 1997. While
general and administrative expenses have increased in terms of total dollars,
they have decreased as a percentage of total revenues from 5.5% for the three
months ended March 31, 1996 to 4.6% for the three months ended March 31, 1997.
    
 
  Years Ended December 31, 1996 and 1995
 
   
     Property Income:  Property Income increased by $136.4 million for the year
ended December 31, 1996, or 38.2%, to $493.4 million as compared to $357 million
for the year ended 1995. Approximately $22.6 million, or 16.6%, of this increase
was related to the Core Portfolio with the remaining $113.8 million (83.4%)
being attributable to Properties acquired in 1995 and 1996. The 6.9% growth in
Property Income in the Core Portfolio resulted from a combination of occupancy
and rental rate increases. The weighted average occupancy of the Core Portfolio
increased from 87.5% to 91% in the year ended December 31, 1995 and to 94.3% as
of December 31, 1996. This increase represents approximately 1.3 million square
feet of additional occupancy in the Core Portfolio between January 1, 1995 and
December 31, 1996. Approximately $5.8 million of the total increase in Property
Income was related to an increase in the adjustment to reflect rental income on
a straight line basis. The straight line rent adjustment for new acquisitions
created a $9.7 million increase offset by a decrease related to the Core
Portfolio of approximately $3.9 million. Other income for 1996 also includes
$8.8 million relating to the Company's share of a litigation settlement.
    
 
                                       39
<PAGE>   48
 
   
     Property Operating Expenses:  Property Operating Expenses increased by
$49.6 million in total, or 32.7%, to $201.1 million for the year ended December
31, 1996, as compared to $151.5 million for the year ended December 31, 1995.
Approximately $6.4 million of this increase was attributable to the Core
Portfolio, with the remaining $43.2 million attributable to Properties acquired
in 1995 and 1996. The Core Portfolio had an increase of approximately $3.0
million in real estate tax and insurance expense. A significant portion of this
increase was due to tax refunds received in 1995, with $1.9 million being
related to a single Property, reducing the tax expense in 1995. The other
Property Operating Expenses (excluding real estate taxes and insurance) for the
Core Portfolio increased by $3.4 million for the year ended December 31, 1996
compared to the same period in 1995.
    
 
   
     Interest Expense:  Interest expense increased by $19.0 million, or 18.9%,
to $119.6 for the year ended December 31, 1996, compared to $100.6 million for
the year ended December 31, 1995. Interest expense related to the Core Portfolio
decreased by $0.1 million, while financing related to Properties acquired in
1995 and 1996 added $19.1 million to interest expense.
    
 
     Depreciation and Amortization:  Depreciation and amortization increased by
$22.0 million, or 29.6%, to $96.2 million for the year ended December 31, 1996,
compared to $74.2 million for the year ended December 31, 1995. Approximately
$4.4 million of this increase relates to the Core Portfolio and $17.6 million
was related to Properties acquired after January 1, 1995. The increase in these
expenses in the Core Portfolio was related to depreciation of capital and tenant
improvements made at the Core Portfolio Properties in 1995 and 1996 and
amortization of leasing commissions and loan fees paid during that time period.
 
     Interest Income:  Interest income increased by $1.0 million, or 11.6%, to
$9.6 million for the year ended December 31, 1996, compared to $8.6 million for
the year ended December 31, 1995.
 
   
     Fee Income from Non-Combined Affiliates:  Fee income from the Managed
Properties decreased by approximately $0.8 million, or 13.6%, to $5.1 million
for the year ended December 31, 1996, compared to $5.9 million for the year
ended December 31, 1995. This decrease was primarily the result of disposition
activities in 1995 and 1996 which reduced the number of Managed Properties.
    
 
     General and Administrative Expenses:  General and administrative expenses
increased by approximately $1.1 million, or 5.0%, to $23.1 million for the year
ended December 31, 1996, compared to $22.0 million for the year ended December
31, 1995. Approximately $0.6 million of this increase was due to an increase in
payroll expense. The increase in general and administrative expenses was related
to the growth in the size of the Portfolio from 18.5 million square feet at
January 1, 1995 to 29.2 million square feet at December 31, 1996. While general
and administrative expenses have increased in terms of total dollars, they have
decreased as a percentage of total revenues from 5.9% for the year ended
December 31, 1995, to 4.6% for the year ended December 31, 1996.
 
   
     Provision for Value Impairment:  Rental properties are individually
evaluated for impairment when conditions exist which may indicate that it is
probable that the sum of expected future cash flows (on an undiscounted basis)
from a rental property are less than its historical net cost basis. Upon
determination that a permanent impairment has occurred, rental properties are
reduced to their fair value. As a result of cash deficits at San Felipe Plaza,
during the year ended December 31, 1995, a provision for value impairment of
approximately $20.2 million was recorded, of which $17.5 million related to the
adjustment of investment in real estate and approximately $2.7 million related
to unamortized lease acquisition costs.
    
 
  Years ended December 31, 1995 and 1994
 
   
     Property Income:  Property Income increased by $126.6 million for the year
ended December 31, 1995, or 54.9%, to $357.0 million as compared to $230.4
million for the year ended December 31, 1994. Approximately $27.5 million, or
21.7%, of this increase was related to the Core Portfolio with the remaining
$99.1 million, or 78.3%, increase being attributable to Properties acquired in
1994 and 1995. The 13.2% growth in Property Income in the Core Portfolio from
1994 to 1995 resulted from a combination of occupancy and rental rate increases.
The overall occupancy of the Core Portfolio increased from approximately 79.6%
at January 1, 1994 to approximately 88.9% at December 31, 1994, and to
approximately 92.6% at December 31,
    
 
                                       40
<PAGE>   49
 
1995. This increase represents approximately 1.8 million square feet of
additional occupancy in the Core Portfolio. Approximately $5.8 million of the
total increase in Property Income was related to an increase in the adjustment
to reflect rental income on a straight line basis. Of this amount, approximately
$2.0 million was related to the Core Portfolio.
 
   
     Property Operating Expenses:  Property Operating Expenses increased by
$44.1 million, or 41.1%, to $151.5 million for the year ended December 31, 1995
as compared to $107.4 million for the year ended December 31, 1994. Virtually
all of this increase was attributable to Properties acquired in 1994 and 1995.
The Core Portfolio had an increase of approximately $1.9 million in repair and
maintenance expense that was offset by a $1.9 million decrease in real estate
tax and insurance expense, while other property operating expenses decreased by
0.7 million. The decrease in real estate tax expense was primarily the result of
a real estate tax refund received due to successful appeal of the tax bills at a
single Property. The Company had calculated and billed the real estate tax
reimbursement due from tenants at this Property, assuming that this refund would
be received, so substantially all of the refund was retained by the Company
rather than being refunded to tenants.
    
 
   
     Interest Expense:  Interest expense increased by $41.3 million, or 69.6%,
to $100.6 million for the year ended December 31, 1995 as compared to $59.3
million for the year ended December 31, 1994. Approximately $12.2 million of
this increase was related to the Core Portfolio and $29.1 million was related to
financing on Properties acquired in 1994 and 1995.
    
 
   
     Depreciation and Amortization:  Depreciation and amortization increased by
$27.3 million, or 58.2%, to $74.2 million for the year ended December 31, 1995,
as compared to $46.9 million for the year ended December 31, 1994. Approximately
$11.2 million of this increase relates to the Core Portfolio with the remainder
of $16.1 million being related to Properties acquired after January 1, 1994. The
increase in these expenses in the Core Portfolio was related to depreciation of
capital and tenant improvements made at the Core Portfolio Properties in 1994
and 1995 as well as amortization of leasing commissions and loan fees paid
during that time period.
    
 
   
     Interest Income:  Interest income increased by $4.2 million, or 95.5%, to
$8.6 million for the year ended December 31, 1995 compared to $4.4 million for
the year ended December 31, 1994. This increase was primarily attributable to
higher amounts being invested in short term investments in 1995 as well as
higher interest rates.
    
 
   
     General and Administrative Expenses:  General and administrative expenses
increased by approximately $6.4 million, or 41.0%, to $22.0 million for the year
ended December 31, 1995, as compared to $15.6 million for the year ended
December 31, 1994. Approximately $4.2 million of this increase was due to an
increase in payroll expense. The increase in these expenses was related to the
growth in the size of the Portfolio from 13.6 million square feet at January 1,
1994 to 23.1 million square feet at December 31, 1995. While general and
administrative expenses increased in terms of total dollars, they decreased as a
percentage of total revenues from 6.5% for the year ended December 31, 1994, to
5.9% for the year ended December 31, 1995.
    
 
                                       41
<PAGE>   50
 
   
PARKING FACILITIES
    
 
   
     Following is a summary of the Parking Facilities' rental revenues and total
expenses, which include depreciation, interest, and Property Operating Expenses.
    
 
   
<TABLE>
<CAPTION>
                                                       THREE MONTHS
                                                           ENDED                  YEARS ENDED
                                                     -----------------   ------------------------------
                                                     3/31/97   3/31/96   12/31/96   12/31/95   12/31/94
                                                     -------   -------   --------   --------   --------
                                                                       (IN THOUSANDS)
<S>                                                  <C>       <C>       <C>        <C>        <C>
Total rental revenues..............................  $4,715    $2,512    $10,344     $5,408         --
Total expenses.....................................   2,768     1,483      6,398      3,456         --
                                                     ------    ------    -------     ------     ------
Income before (income) allocated to minority
  interests........................................   1,947     1,029      3,946      1,952         --
(Income) allocated to minority interests...........     (60)     (164)      (252)        --         --
                                                     ------    ------    -------     ------     ------
Net income.........................................  $1,887    $  865    $ 3,694     $1,952         --
                                                     ======    ======    =======     ======     ======
</TABLE>
    
 
   
DISPOSITIONS OF PROPERTY
    
 
   
     The Company has sold two office properties in 1997: Barton Oaks (118,529
net rentable square feet) was sold in January 1997 and 8383 Wilshire (417,463
net rentable square feet) was sold in May 1997. Below is a summary of the
operations of these properties for the three month periods ended March 31, 1997
and 1996 and the years ended December 31, 1996, 1995 and 1994.
    
 
   
<TABLE>
<CAPTION>
                                                      THREE MONTHS
                                                          ENDED                  YEARS ENDED
                                                    -----------------   ------------------------------
                                                    3/31/97   3/31/96   12/31/96   12/31/95   12/31/94
                                                    -------   -------   --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                 <C>       <C>       <C>        <C>        <C>
Total revenues....................................  $2,202    $2,475     $9,959    $ 9,445    $ 9,041
Total expenses....................................   1,445     2,277      8,111     10,240     12,017
Income (loss) before (income) allocated to
  minority interests, gain on sale of real estate
  and extraordinary items.........................     757       198      1,848       (795)    (2,976)
(Income) allocated to minority interest...........    (164)       --         --         --         --
Gain on sale of real estate and extraordinary
  items...........................................   5,466        --         --         --       (224)
                                                    ------    ------     ------    -------    -------
Net income (loss).................................  $6,059    $  198     $1,848    $  (795)   $(3,200)
                                                    ======    ======     ======    =======    =======
</TABLE>
    
 
   
LIQUIDITY AND CAPITAL RESOURCES
    
 
   
     Liquidity: Net cash provided from operations represents the primary source
of liquidity to fund distributions, debt service, recurring capital costs and
non-revenue enhancing tenant improvements. Historically the Company made annual
distributions equal to approximately 100% of taxable income. Cash generated in
excess of taxable income (resulting primarily from non cash items such as
depreciation and amortization) was retained for working capital and to fund
capital improvements and non revenue-enhancing tenant improvements. Upon
completion of the Offering, the Company intends to make regular quarterly
distributions to holders of Common Shares and Units. The Company will establish
its initial distribution based upon its estimate of annualized cash flow that
will be available after the Offering.
    
 
   
     The Company intends to fund recurring capital costs and non-revenue
enhancing tenant improvements from cash from operations and draws under its Line
of Credit. The Company has no contractual obligations for material capital
costs, other than in connection with customary tenant improvements in the
ordinary course of business. The Company also expects that the proposed Line of
Credit will provide for temporary working capital, unanticipated cash needs, and
funding of acquisitions.
    
 
   
     The anticipated size of the Company's distributions will not allow the
Company, using only cash from operations, to retire all of its debt as it comes
due and, therefore, the Company will be required to repay maturing debt with
funds from debt and/or equity financing.
    
 
                                       42
<PAGE>   51
 
   
     Mortgage Financing: The table below summarizes the mortgage debt
outstanding at March 31, 1997 and December 31, 1996 and 1995:
    
   
<TABLE>
<CAPTION>
                                          WEIGHTED                                         WEIGHTED
                         BALANCE AT        AVERAGE                        BALANCE AT        AVERAGE
                          3/31/97       INTEREST RATE   PERCENTAGE OF      12/31/96      INTEREST RATE   PERCENTAGE OF
    DEBT SUMMARY:      (IN THOUSANDS)    AT 3/31/97      TOTAL DEBT     (IN THOUSANDS)    AT 12/31/96     TOTAL DEBT
    -------------      --------------   -------------   -------------   --------------   -------------   -------------
<S>                    <C>              <C>             <C>             <C>              <C>             <C>
Fixed Rate Debt......    $1,398,101         7.81%            70.0%        $1,304,075         7.89%            66.4%
Variable Rate Debt...       598,373         7.19             30.0            660,817         7.33             33.6
                         ----------         ----           ------         ----------         ----           ------
    Total............    $1,996,474         7.62%          100.00%        $1,964,892         7.70%          100.00%
                         ==========         ====           ======         ==========         ====           ======
 
<CAPTION>
                                          WEIGHTED
                         BALANCE AT        AVERAGE
                          12/31/95      INTEREST RATE   PERCENTAGE OF
    DEBT SUMMARY:      (IN THOUSANDS)    AT 12/31/95     TOTAL DEBT
    -------------      --------------   -------------   -------------
<S>                    <C>              <C>             <C>
Fixed Rate Debt......    $  900,913         8.01%            62.8%
Variable Rate Debt...       533,914         7.58             37.2
                         ----------         ----           ------
    Total............    $1,434,827         7.85%          100.00%
                         ==========         ====           ======
</TABLE>
    
 
   
     The variable rate debt shown above bore interest at the 30 day LIBOR-based
floating interest rate. The 30-day LIBOR at March 31, 1997 was 5.69% resulting
in a weighted average spread over LIBOR at March 31, 1997 of 1.50%.
    
 
   
     The Company intends to use the net proceeds of the Offering of
approximately $464.5 million and approximately $88.3 million of cash on hand to
repay $253.7 million of fixed rate debt, and $299.1 million of the variable rate
debt shown in the table above. An additional $14.9 million will be incurred for
prepayment penalties. After such repayment the remaining $1,641.8 million of
debt, excluding a discount of approximately $20.3 million expected to be
recorded in connection with the Offering and Consolidation, will mature as
follows:
    
 
   
<TABLE>
<CAPTION>
                                                      $ IN THOUSANDS
                                                      --------------
<S>                                                   <C>
1997................................................    $  217,544
1998................................................        45,142
1999................................................       255,588
2000................................................       142,107
2001................................................       192,023
2002................................................        60,278
Thereafter..........................................       729,114
                                                        ----------
                                                        $1,641,796
                                                        ==========
</TABLE>
    
 
   
     In order to limit market risk associated with the variable interest rate
debt, the Company entered into two interest rate cap agreements in August, 1993,
a $100 million, 7% interest rate cap based on the 3-month LIBOR which expires in
August, 1998 and a $73 million, 8% interest rate cap based on the 3-month LIBOR
which expires in August, 2000. The effect of these agreements is to effectively
cap the interest rate on $100 million of the variable rate debt at a maximum
rate of approximately 9.2% through August, 1998, and to cap an additional $73
million at a maximum rate of approximately 10.2% through August, 2000. In
addition, the Company entered into an interest rate swap agreement in October,
1995, which effectively fixed the interest rate on a $93.6 million loan at 6.94%
through the maturity of the loan on June 30, 2000. This loan is therefore
reflected as part of the fixed rate debt in the table above.
    
 
   
     The instruments encumbering the Company's Properties contain customary
restrictions and requirements such as transferability restrictions, payment of
taxes on the Property, maintenance of the Property in good condition,
maintenance of insurance on the Property, prohibition on liens, and obtaining
lender consent to leases with material tenants.
    
 
   
     Lines of Credit. ZML Fund IV entered into an acquisition/term loan facility
(the "ZML IV Credit Facility") in September 1996. As of March 31, 1997, there
were $54.6 million of outstanding six-month borrowings under this line of
credit, all of which was unsecured. Current borrowings bear interest at a rate
equal to 30-day LIBOR plus 1.625%, which was equal to 7.13% as of March 31,
1997. In April, 1997, ZML Fund IV amended and restated the ZML IV Credit
Facility to provide for borrowings of up to $475 million. As of June 12, 1997,
ZML Fund IV has drawn an additional $218 million under the ZML IV Credit
Facility bringing the total amount drawn to $272.6 million.
    
 
                                       43
<PAGE>   52
 
   
     The Company is currently negotiating the terms of a $600 million Line of
Credit to be available concurrently with the Closing for future acquisitions and
general corporate purposes. At Closing, the Company expects to draw, from the
Line of Credit, an amount (expected to be approximately $273 million) equal to
the outstanding balance under the ZML IV Credit Facility and, in so doing, to
retire that facility.
    
 
   
     In addition to the foregoing, the Company intends to issue, within 90 days
of Closing, senior unsecured notes in the aggregate amount of approximately $700
million (the "Senior Notes Offering"). Proceeds from this Senior Notes Offering
are expected to be utilized to retire certain existing mortgage financing in the
aggregate principal amount of approximately $427 million and to pay off the $273
million referenced in the prior paragraph as having been drawn under the Line of
Credit. The Company expects that the notes issued in connection with the Senior
Notes Offering will contain a number of "tranches" of varying terms and rates of
interest, some of which are expected to be fixed at Closing based upon an agreed
spread over U.S. Treasury rates and others of which are expected to float at an
agreed spread over LIBOR.
    
 
   
     Although the Company is currently negotiating the terms of both the Line of
Credit and the Senior Notes Offering and believes that they will both be
realized as contemplated, a currently binding commitment does not exist for
either of them. The Company does not currently anticipate that there will be
commitments for the Senior Notes Offering in effect as of Closing. In the event
that these commitments are not obtained prior to December 31, 1997, the Company
would be required to obtain the consent of the existing mortgage lenders whose
$293 million in mortgage indebtedness is expected to be satisfied from the
proceeds of the Senior Notes Offering to the transfers implemented in connection
with the Closing. The Company believes that, inasmuch as most of the mortgage
instruments given to secure this indebtedness contemplated these transfers, such
consents could be obtained on reasonable terms and, in instances where such
consents could not be obtained, such loans could be refinanced.
    
 
   
     In anticipation of the Senior Notes Offering and the expectation that its
interest terms will be tied to U.S. Treasury rates, the Company has entered into
hedge agreements for $700 million of indebtedness. As a result of this
arrangement, the Company has essentially "locked into" U.S. Treasury rates in
effect as of June 4, 1997, for the expected Senior Notes Offering (or, were such
offering not to occur, for $700 million in other indebtedness). The benefit or
burden of these hedging arrangements will be transferred to the Company in
connection with the Closing. The Company intends to terminate certain of such
hedge agreements at such time as it incurs its contemplated fixed rate
indebtedness. Upon the occurrence of such termination, the Company will either
owe money or be entitled to receive money depending on whether U.S. Treasury
rates have increased (resulting in a payment to the Company) or decreased
(resulting in a payment obligation of the Company) subsequent to the date of the
hedge, June 4, 1997. The counterparties to these arrangements are major U.S.
financial institutions.
    
 
   
     The ZML IV Credit Facility contains, and the Line of Credit and notes
issued in the Senior Notes Offering are expected to contain, certain customary
restrictions and requirements such as total debt to assets ratios, secured debt
to total assets ratios, debt service coverage ratios, minimum ratios of
unencumbered assets to unsecured debt, and other limitations.
    
 
   
CASH FLOWS
    
 
   
  Quarters ended March 31, 1997 and 1996
    
 
   
     Cash and cash equivalents decreased by approximately $34.3 million, to
approximately $376.1 million at March 31, 1997, compared to $410.4 million at
December 31, 1996. This decrease was the result of $41.1 million of cash
generated by operations, $34.1 million generated from financing activities
reduced by $109.5 million invested in new acquisitions, capital and tenant
improvements, and payment of leasing commissions, net of proceeds from sale of
real estate. Net cash provided by operating activities increased by $38.7
million from $2.4 million to $41.1 million primarily due to the additional cash
flow generated by the increase in the number of Properties owned. Net cash used
for investing activities increased by $73.4 million from $36.1 million to $109.5
million mainly due to an increase in the amount of real estate assets purchased
during 1997 compared to 1996. Net cash provided by financing activities
decreased by $29.8 million from $63.9 million to $34.1 million due to an
increase in capital distributions offset in part by an increase in capital
    
 
                                       44
<PAGE>   53
 
   
contributions, a decrease in distributions to minority interest partners, an
increase in proceeds from mortgage notes and a decrease in principal payments on
mortgage notes and revolving lines of credit.
    
 
   
  Years ended December 31, 1996 and 1995
    
 
   
     Cash and cash equivalents increased by approximately $299.3 million, to
approximately $410.4 million at December 31, 1996, compared to $111.1 million at
December 31, 1995. This increase was the result of $166 million of cash
generated by operations, $1,057.5 million generated from financing activities,
reduced by $924.2 million invested in new acquisitions, capital and tenant
improvements, and payment of leasing commissions net of proceeds from sale of
real estate. Net cash provided by operating activities increased by $72.1
million from $93.9 million to $166.0 million primarily due to the additional
cash flow generated by the increase in the number of Properties owned. Net cash
used for investing activities increased by $543.6 million from $380.6 million to
$924.2 million mainly due to an increase in the amount of real estate assets
purchased during 1996 compared to 1995. Net cash provided by financing
activities increased by $781.1 million from $276.5 million to $1,057.6 million
due to an increase in capital contributions, an increase in proceeds received on
mortgage notes, and a net decrease in principal payments on mortgage notes and
revolving lines of credit offset in part by distributions to minority interest
partners.
    
 
   
  Years ended December 31, 1995 and 1994
    
 
   
     The decrease in cash and cash equivalents of approximately $10.2 million
from December 31, 1994 to December 31, 1995 was the result of $380.6 million
invested in new acquisitions, capital and tenant improvements, and payment of
leasing commissions net of $93.9 million of cash generated by operations and
$276.5 million generated from financing activities. Net cash provided by
operating activities increased by $20.1 million from $73.8 million to $93.9
million primarily due to the additional cash flow generated by the increase in
the number of Properties owned. Net cash used for investing activities decreased
by $133.4 million from $514.0 million to $380.6 million mainly due to a decrease
in escrow deposits and restricted cash in 1995 and investment in an
unconsolidated joint venture in 1994. Net cash provided by financing activities
decreased by $238.4 million from $514.9 million to $276.5 million primarily due
to principal payments on mortgage notes and revolving lines of credit, offset in
part by increased capital contributions.
    
 
   
INFLATION
    
 
     Substantially all of the office leases require the tenant to pay, as
additional rent, a portion of any increases in real estate taxes and operating
expenses over a base amount. In addition, many of the office leases provide for
fixed increases in base rent or indexed escalations (based on the Consumer Price
Index or other measures). The Company believes that inflationary increases in
expenses will be offset, in part, by the expense reimbursements and contractual
rent increases described above.
 
FUNDS FROM OPERATIONS
 
   
     Management of the Company believes Funds from Operations, as defined by
NAREIT, to be an appropriate measure of performance for an equity REIT. While
Funds from Operations is a relevant and widely used measure of operating
performance of equity REITs, it does not represent cash flow from operations or
net income as defined by GAAP, and it should not be considered as an alternative
to these indicators in evaluating liquidity or operating performance of the
Company.
    
 
                                       45
<PAGE>   54
 
   
     The following table reflects the calculation of the Company's Funds from
Operations for the three months ended March 31, 1997 and 1996 and the years
ended December 31, 1996, 1995 and 1994:
    
 
   
<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED
                                              MARCH 31,              YEARS ENDED DECEMBER 31,
                                         --------------------   ----------------------------------
                                           1997        1996        1996        1995        1994
                                         ---------   --------   ----------   ---------   ---------
<S>                                      <C>         <C>        <C>          <C>         <C>
Income before income from investment in
  unconsolidated joint ventures, gain
  on sale of real estate, extraordinary
  items and minority interest..........  $  24,910   $ 12,834   $   68,080   $   3,012   $  11,642
Add back (deduct):
  (Income) loss allocated to minority
     interests.........................       (529)      (610)      (2,086)     (2,129)      1,437
  Income from investment in
     unconsolidated joint ventures.....        922        492        2,093       2,305       1,778
  Provision for value impairment.......         --         --           --      20,248          --
  Depreciation and amortization (real
     estate related)...................     27,452     20,605       92,373      72,668      45,515
                                         ---------   --------   ----------   ---------   ---------
Funds from Operations(1):..............  $  52,755   $ 33,321   $  160,460   $  96,104   $  60,372
                                         =========   ========   ==========   =========   =========
  Effect of adjusting straight-line
     rental income and ground rent
     expense included in Funds from
     Operations to a cash basis........     (3,350)    (3,710)     (17,639)    (12,663)     (6,883)
                                         ---------   --------   ----------   ---------   ---------
  Funds from Operations excluding
     straight-line rent adjustment.....  $  49,405   $ 29,611   $  142,821   $  83,441   $  53,489
                                         =========   ========   ==========   =========   =========
Cash Flow Provided By (Used For):
  Operating Activities.................  $  41,087   $  2,407   $  165,975   $  93,878   $  73,821
  Investing Activities.................  $(109,506)  $(36,116)  $ (924,227)  $(380,615)  $(513,965)
  Financing Activities.................  $  34,120   $ 63,900   $1,057,551   $ 276,513   $ 514,923
</TABLE>
    
 
- ---------------
 
   
(1) The White Paper on Funds from Operations approved by the Board of Governors
    of NAREIT in March 1995 defines Funds from Operations as net income (loss)
    (computed in accordance with GAAP), excluding gains (or losses) from debt
    restructuring and sales of properties, plus real estate related depreciation
    and amortization and after adjustments for unconsolidated partnerships and
    joint ventures. The Company believes that Funds from Operations is helpful
    to investors as a measure of the performance of an equity REIT because,
    along with cash flow from operating activities, financing activities and
    investing activities, it provides investors with an indication of the
    ability of the Company to incur and service debt, to make capital
    expenditures and to fund other cash needs. The Company computes Funds from
    Operations in accordance with standards established by NAREIT which may not
    be comparable to Funds from Operations reported by other REITs that do not
    define the term in accordance with the current NAREIT definition or that
    interpret the current NAREIT definition differently than the Company. Funds
    from Operations does not represent cash generated from operating activities
    in accordance with GAAP and should not be considered as an alternative to
    net income (determined in accordance with GAAP) as an indication of the
    Company's financial performance or to cash flow from operating activities
    (determined in accordance with GAAP) as a measure of the Company's
    liquidity, nor is it indicative of funds available to fund the Company's
    cash needs, including its ability to make cash distributions.
    
 
                                       46
<PAGE>   55
 
                                 THE PROPERTIES
 
GENERAL
 
   
     Upon completion of the Offering, the Company expects to control the largest
portfolio of office properties of any publicly traded, full service office
company in the United States. Management believes that the Properties are
generally well located in markets that exhibit strong growth characteristics,
are well maintained and professionally managed, and are generally capable of
attracting and retaining high quality tenants while maintaining high rent,
occupancy and tenant retention rates.
    
 
   
     All Property data is as of April 30, 1997, except for information relating
to 30 N. LaSalle, which represents Property data as of June 13, 1997, the date
of acquisition.
    
 
   
     None of the Property data includes 8383 Wilshire which was sold May 12,
1997.
    
 
                                       47
<PAGE>   56
 
                          OFFICE PROPERTIES BY REGION
   
<TABLE>
<CAPTION>
                                                         PERCENTAGE
                                                          OF TOTAL                                                     ANNUALIZED
                                                           OFFICE                               PERCENTAGE            NET EFFECTIVE
                                                         PORTFOLIO                                  OF                  RENT PER
                                NUMBER      RENTABLE      RENTABLE                 ANNUALIZED   PORTFOLIO    NUMBER     OCCUPIED
                                  OF         SQUARE        SQUARE     PERCENTAGE      RENT      ANNUALIZED     OF        SQUARE
           REGION             PROPERTIES      FEET          FEET       OCCUPIED    ($00S)(1)       RENT      LEASES      FOOT(2)
           ------             ----------   -----------   ----------   ----------   ----------   ----------   ------   -------------
<S>                           <C>          <C>           <C>          <C>          <C>          <C>          <C>      <C>
Pacific......................     18        6,744,270       20.9%        93.5%      $144,322       24.4%       562       $12.61
Southeast....................     14        5,008,447       15.5         96.0         91,834       15.5        397        10.93
Northeast....................     17        5,163,207       16.0         87.0        106,696       18.0        404        12.52
Central......................     11        6,548,111       20.3         90.1        119,654       20.2        505         9.22
Southwest....................     12        4,583,234       14.2         94.4         69,429       11.7        559         7.48
West.........................     18        4,169,472       12.9         95.4         60,431       10.2        639         7.64
                                  --       ----------      -----                    --------      -----      -----
    Total/Weighted Average...     90       32,216,741      100.0%        92.5%      $592,366      100.0%     3,066       $10.25
                                  ==       ==========      =====                    ========      =====      =====
 
<CAPTION>
                                 ANNUALIZED
                                  RENT PER
                                  OCCUPIED       ANNUALIZED   MARKET     ESTIMATED
                                 SQUARE FOOT      RENT PER     RENT     REPLACEMENT
                               AS OF 1/1/93 OR    OCCUPIED      PER      COST RENT
                                 ACQUISITION       SQUARE     SQUARE    PER SQUARE
           REGION                  DATE(3)        FOOT(1)     FOOT(4)     FOOT(5)
           ------              ---------------   ----------   -------   -----------
<S>                            <C>               <C>          <C>       <C>
Pacific......................      $22.79          $22.89     $26.74      $43.66
Southeast....................       17.91           19.11      21.64       31.01
Northeast....................       20.30           23.76      27.30       40.95
Central......................       20.30           20.28      22.82       38.73
Southwest....................       15.37           16.04      18.03       28.73
West.........................       14.51           15.20      19.98       27.57
    Total/Weighted Average...      $19.00          $19.87     $23.12      $36.05
</TABLE>
    
 
- ---------------
 
   
(1) Annualized Rent is the monthly contractual rent under existing leases as of
    April 30, 1997, multiplied by 12. This amount reflects total rent before any
    rent abatements and includes expense reimbursements, which may be estimates
    as of such date. Total rent abatements for leases in effect as of April 30,
    1997, for the 12 months ending April 30, 1998 are approximately $5.8
    million.
    
   
(2) Annualized Net Effective Rent is calculated for leases in effect as of April
    30, 1997 as follows: Annualized Rent, calculated as described above, was
    reduced to reflect the annualized costs of tenant improvements and leasing
    commissions, if any, paid or payable by the Company with respect to leases
    entered into subsequent to the later of 1991 or the date of acquisition of
    the relevant Property (calculated by dividing the total tenant improvements
    and leasing commissions for a given lease by the term of that lease in
    months and multiply the result by 12). Finally, the result of this
    calculation was reduced by the estimated operating expenses per square foot,
    based on 1996 actual operating expense for Properties owned as of January 1,
    1996 and based on the Company's estimate of annual operating expense for
    Properties acquired subsequent to January 1, 1996.
    
   
(3) Represents the gross rental rate per occupied square foot as of the later of
    January 1, 1993, or the date of acquisition (for Properties acquired after
    January 1, 1993) calculated by annualizing the rent under existing leases as
    of that date.
    
   
(4) Represents the average asking gross rental rate per rentable square foot for
    buildings of comparable size, class, location and age based upon information
    obtained from CB Commercial Real Estate Group, Inc./Torto Wheaton Research
    as of March 31, 1997.
    
   
(5) Represents the Company's weighted average estimate of the gross rent that
    would be required to justify construction of a building which would be
    competitive with the respective Office Properties. An estimate of the
    replacement cost to build a property similar to the subject Property was
    calculated utilizing the Marshall and Swift (February 1997) Commercial
    Estimator 5.0 Software Program. The replacement cost rent is calculated
    under the assumption that a net effective return of 12% would be required to
    justify new construction and that occupancy would stabilize at 95% as
    follows: Replacement Cost Rent equals (estimated replacement cost per square
    foot times 12% plus the estimated operating expenses per square foot of the
    subject Property) divided by 95%. The estimated replacement costs and the
    estimated replacement cost rents are based on constructing a building
    similar to the subject Property in terms of the quality of construction and
    amenities. The actual cost to construct a building that would be competitive
    with the subject Property and required investor returns, could be more or
    less than these estimates. The Company believes that the spread between
    current market rents and replacement cost rents are an indication of the
    likelihood of new construction which could increase competition to the
    Office Properties.
    
 
                                       48
<PAGE>   57
                 OFFICE PROPERTY MARKET SECTORS AND SUBMARKETS
                           OFFICE PROPERTY STATISTICS
   
<TABLE>
<CAPTION>
                                                                 PERCENTAGE
                                                                  OF TOTAL
                                                                   OFFICE                               PERCENTAGE
                                                                 PORTFOLIO                                  OF
                                         NUMBER      RENTABLE     RENTABLE                 ANNUALIZED   PORTFOLIO    NUMBER
          OFFICE PROPERTIES                OF         SQUARE       SQUARE     PERCENTAGE      RENT      ANNUALIZED     OF
         (MARKET, SUBMARKET)           PROPERTIES      FEET         FEET       OCCUPIED    ($000S)(1)      RENT      LEASES
         -------------------           ----------   ----------   ----------   ----------   ----------   ----------   ------
<S>                                    <C>          <C>          <C>          <C>          <C>          <C>          <C>
PACIFIC REGION
Los Angeles
 Downtown............................       1        1,329,809       4.1%        85.4%      $ 23,908        4.0%        28
 Pasadena............................       2          439,367       1.4         84.4         10,070        1.7         30
Orange County
 Central Orange......................       2          657,512       2.0         94.9         11,059        1.9         79
 Irvine/Airport......................       2          586,544       1.8         88.2         10,758        1.8         78
San Diego
 La Jolla............................       6          822,026       2.6         98.3         17,972        3.0        110
San Francisco
 Downtown............................       5        2,909,012       9.0         98.0         70,555       11.9        237
                                            -       ----------     -----        -----       --------      -----      -----
       Pacific Region
       Total/Weighted Average........      18        6,744,270      20.9%        93.5%      $144,322       24.4%       562
SOUTHEAST REGION
Ft. Lauderdale
 Downtown............................       1          225,500       0.7%        99.0%      $  5,826        1.0%        21
Orlando
 Downtown............................       1          640,385       2.0         92.2         14,293        2.4         43
Palm Beach County, FL
 West Palm Beach.....................       1          215,104       0.7         97.4          4,027        0.7         36
Sarasota
 Downtown............................       1          247,891       0.8         93.9          4,148        0.7         35
Tampa
 Westshore...........................       2          470,331       1.5         98.8          7,928        1.3         59
Atlanta
 Midtown.............................       1          770,840       2.4         90.0         15,131        2.6         23
 North Central.......................       2          612,733       1.9         97.8         11,867        2.0         74
 Northwest...........................       2          641,263       2.0         98.0         13,058        2.2         40
Charlotte
 Downtown............................       1          581,666       1.8        100.0          6,953        1.2          9
Raleigh/Durham
 Durham..............................       1          181,221       0.6         96.5          3,161        0.5         36
Nashville
 Downtown............................       1          421,513       1.3         96.8          5,441        0.9         21
                                            -       ----------     -----        -----       --------      -----      -----
       Southeast Region/Total
         Weighted Average............      14        5,008,447      15.5%        96.0%      $ 91,834       15.5%       397
 
<CAPTION>
                                                         ANNUALIZED
                                        ANNUALIZED        RENT PER
                                       NET EFFECTIVE      OCCUPIED       ANNUALIZED   MARKET     ESTIMATED
                                         RENT PER        SQUARE FOOT      RENT PER     RENT     REPLACEMENT
                                         OCCUPIED      AS OF 1/1/93 OR    OCCUPIED      PER      COST RENT
          OFFICE PROPERTIES               SQUARE         ACQUISITION       SQUARE     SQUARE    PER SQUARE
         (MARKET, SUBMARKET)              FOOT(2)          DATE(3)        FOOT(1)     FOOT(4)     FOOT(5)
         -------------------           -------------   ---------------   ----------   -------   -----------
<S>                                    <C>             <C>               <C>          <C>       <C>
PACIFIC REGION
Los Angeles
 Downtown............................     $11.29           $22.08          $21.06     $25.72      $42.88
 Pasadena............................      17.70            27.79           27.15      25.17       34.38
 
<CAPTION>
Orange County
 Central Orange......................       8.95            20.35           17.73      19.59       32.98
 Irvine/Airport......................      13.07            20.78           20.79      23.82       37.68
San Diego
 La Jolla............................      13.19            20.13           22.25      23.75       38.32
San Francisco
 Downtown............................      13.03            24.07           24.75      30.48       50.54
                                          ------           ------          ------     ------      ------
       Pacific Region
       Total/Weighted Average........     $12.61           $22.79          $22.89     $26.74      $43.66
SOUTHEAST REGION
Ft. Lauderdale
 Downtown............................     $14.96           $17.45          $26.09     $25.22      $42.88
Orlando
 Downtown............................      14.82            23.99           24.22      24.57       38.94
Palm Beach County, FL
 West Palm Beach.....................       6.58            18.90           19.22      25.50       31.51
Sarasota
 Downtown............................       8.93            17.47           17.83      15.50       27.54
Tampa
 Westshore...........................       8.44            18.79           17.06      20.53       27.32
Atlanta
 Midtown.............................      13.44            21.98           21.80      21.66       35.94
 North Central.......................      11.90            19.07           19.81      24.48       30.47
 Northwest...........................      13.48            18.83           20.78      22.94       27.35
Charlotte
 Downtown............................       6.73            11.04           11.95      17.05       26.32
Raleigh/Durham
 Durham..............................       9.63            13.37           18.08      19.62       30.11
Nashville
 Downtown............................       6.19             8.58           13.34      19.16       22.78
                                          ------           ------          ------     ------      ------
       Southeast Region/Total
         Weighted Average............     $10.93           $17.91          $19.11     $21.64      $31.01
</TABLE>
    
 
                                       49
<PAGE>   58
   
<TABLE>
<CAPTION>
                                                                 PERCENTAGE
                                                                  OF TOTAL
                                                                   OFFICE                               PERCENTAGE
                                                                 PORTFOLIO                                  OF
                                         NUMBER      RENTABLE     RENTABLE                 ANNUALIZED   PORTFOLIO    NUMBER
OFFICE PROPERTIES                          OF         SQUARE       SQUARE     PERCENTAGE      RENT      ANNUALIZED     OF
(MARKET, SUBMARKET)                    PROPERTIES      FEET         FEET       OCCUPIED    ($000S)(1)      RENT      LEASES
- -------------------                    ----------   ----------   ----------   ----------   ----------   ----------   ------
<S>                                    <C>          <C>          <C>          <C>          <C>          <C>          <C>
NORTHEAST REGION
Fairfield County, CT
 Shelton.............................       1          159,848       0.5%        94.1%      $  2,106        0.4%        12
 Stamford............................       7        1,651,856       5.1         97.2         39,157        6.6        120
Washington, D.C.
 Downtown............................       2          408,286       1.3         93.6         11,055        1.9         44
Boston
 Downtown............................       1          570,040       1.8          8.9          1,643        0.3          1
New York
 Midtown.............................       1          562,567       1.7        100.0         15,220        2.6         29
Philadelphia
 Downtown............................       1          681,289       2.1         93.7         13,303        2.2         68
Norfolk
 Downtown............................       1          403,276       1.3         97.9          6,395        1.1         52
Northern Virginia
 Reston..............................       3          726,045       2.3         97.3         17,818        3.0         78
                                            -       ----------     -----        -----       --------      -----      -----
       Northeast Region
       Total/Weighted Average........      17        5,163,207      16.0%        87.0%      $106,696       18.0%       404
CENTRAL REGION
Chicago
 Downtown............................       3        2,554,062       7.9%        85.9%      $ 46,017        7.8%       221
 O'Hare..............................       1          133,876       0.4         98.1          2,139        0.4         15
 East-West Corridor..................       1          772,928       2.4         94.4         19,125        3.2         60
Indianapolis
 Downtown............................       2        1,057,877       3.3         92.5         19,027        3.2         82
Cleveland
 Downtown............................       1        1,242,144       3.9         92.4         18,243        3.1         34
Columbus
 Downtown............................       1          407,472       1.3         89.5          8,524        1.4         30
 Worthington.........................       2          379,752       1.2         93.1          6,578        1.1         63
                                            -       ----------     -----        -----       --------      -----      -----
       Central Region
       Total/Weighted Average........      11        6,548,111      20.3%        90.1%      $119,654       20.2%       505
SOUTHWEST REGION
New Orleans
 Metairie............................       3        1,192,828       3.7%        93.4%      $ 16,586        2.8%       187
Austin
 Downtown............................       3        1,423,948       4.4         95.5         25,786        4.4        135
Houston
 Galleria............................       1          959,466       3.0         93.0         14,282        2.4        128
 North/Airport.......................       2          402,709       1.2         95.6          5,184        0.9         25
 
<CAPTION>
                                                         ANNUALIZED
                                        ANNUALIZED        RENT PER
                                       NET EFFECTIVE      OCCUPIED       ANNUALIZED   MARKET     ESTIMATED
                                         RENT PER        SQUARE FOOT      RENT PER     RENT     REPLACEMENT
                                         OCCUPIED      AS OF 1/1/93 OR    OCCUPIED      PER      COST RENT
OFFICE PROPERTIES                         SQUARE         ACQUISITION       SQUARE     SQUARE    PER SQUARE
(MARKET, SUBMARKET)                       FOOT(2)          DATE(3)        FOOT(1)     FOOT(4)     FOOT(5)
- -------------------                    -------------   ---------------   ----------   -------   -----------
<S>                                    <C>             <C>               <C>          <C>       <C>
NORTHEAST REGION
Fairfield County, CT
 Shelton.............................     $ 5.33           $14.11          $14.00     $23.99      $26.38
 Stamford............................      12.66            24.37           24.38      27.26       42.47
Washington, D.C.
 Downtown............................      16.18            23.22           28.93      30.29       41.60
Boston
 Downtown............................      15.79               --           32.50      35.50       49.44
New York
 Midtown.............................      12.39            28.01           27.05      36.02       42.97
Philadelphia
 Downtown............................      12.22            20.14           20.85      18.57       34.21
Norfolk
 Downtown............................       6.83            14.19           16.20      16.40       33.44
Northern Virginia
 Reston..............................      15.08            24.29           25.22      27.49       42.63
                                          ------           ------          ------     ------      ------
       Northeast Region
       Total/Weighted Average........     $12.52           $20.30          $23.76     $27.30      $40.95
CENTRAL REGION
Chicago
 Downtown............................     $ 6.28           $23.72          $20.96     $24.15      $41.79
 O'Hare..............................       5.94            21.52           16.28      18.74       33.04
 East-West Corridor..................      17.46            26.21           26.21      27.24       36.76
Indianapolis
 Downtown............................       9.25            15.94           19.44      19.47       38.99
Cleveland
 Downtown............................       8.09            13.18           15.89      21.29       40.37
Columbus
 Downtown............................      15.10            22.96           23.38      22.92       31.27
 Worthington.........................       9.28            17.48           18.61      20.51       26.12
                                          ------           ------          ------     ------      ------
       Central Region
       Total/Weighted Average........     $ 9.22           $20.30          $20.28     $22.82      $38.73
SOUTHWEST REGION
New Orleans
 Metairie............................     $ 8.01           $13.25          $14.89     $17.64      $25.53
Austin
 Downtown............................       8.68            17.84           18.97      21.05       30.72
Houston
 Galleria............................       7.16            17.24           16.01      16.82       33.51
 North/Airport.......................       4.99            12.86           13.46      15.12       24.76

</TABLE>
    
 
                                       50
<PAGE>   59
   
<TABLE>
<CAPTION>
                                                                 PERCENTAGE
                                                                  OF TOTAL
                                                                   OFFICE                               PERCENTAGE
                                                                 PORTFOLIO                                  OF
                                         NUMBER      RENTABLE     RENTABLE                 ANNUALIZED   PORTFOLIO    NUMBER
OFFICE PROPERTIES                          OF         SQUARE       SQUARE     PERCENTAGE      RENT      ANNUALIZED     OF
(MARKET, SUBMARKET)                    PROPERTIES      FEET         FEET       OCCUPIED    ($000S)(1)      RENT      LEASES
- -------------------                    ----------   ----------   ----------   ----------   ----------   ----------   ------
<S>                                    <C>          <C>          <C>          <C>          <C>          <C>          <C>
San Antonio
 Airport.............................       1          194,398       0.6         96.8          2,499        0.4         19
 Northwest...........................       2          409,885       1.3         94.8          5,092        0.9         65
                                            -       ----------     -----        -----       --------      -----      -----
       Southwest Region
       Total/Weighted Average........      12        4,583,234      14.2%        94.4%      $ 69,429       11.7%       559
WEST REGION
Phoenix
 Midtown.............................       1          586,403       1.8%       100.0%      $  7,317        1.2%         1
Denver
 Southeast/Denver Tech Center........       3          671,659       2.1         97.0         10,934        1.8         65
St. Louis
 Clayton.............................       1          339,163       1.1        100.0          7,347        1.2         36
Albuquerque
 Downtown............................       1          230,022       0.7         95.6          3,288        0.6         33
Oklahoma City
 Northwest...........................       3          261,324       0.8         97.4          2,280        0.4        117
Dallas
 LBJ Corridor........................       2          740,899       2.3         94.4         10,021        1.7         98
 North Central.......................       1          379,556       1.2         92.2          4,596        0.8         81
 Preston Center......................       4          721,351       2.2         90.3         11,994        2.0        145
Ft. Worth
 West/Southwest......................       2          239,095       0.7         93.7          2,656        0.4         63
                                            -       ----------     -----        -----       --------      -----      -----
       West Region
       Total/Weighted Average........      18        4,169,472      12.9%        95.4%      $ 60,431       10.2%       639
                                            -       ----------     -----        -----       --------      -----      -----
       Total.........................      90       32,216,741     100.0%        92.5%      $592,366      100.0%     3,066
                                           ==       ==========     =====                    ========      =====      =====
<CAPTION>
                                                         ANNUALIZED
                                        ANNUALIZED        RENT PER
                                       NET EFFECTIVE      OCCUPIED       ANNUALIZED   MARKET     ESTIMATED
                                         RENT PER        SQUARE FOOT      RENT PER     RENT     REPLACEMENT
                                         OCCUPIED      AS OF 1/1/93 OR    OCCUPIED      PER      COST RENT
OFFICE PROPERTIES                         SQUARE         ACQUISITION       SQUARE     SQUARE    PER SQUARE
(MARKET, SUBMARKET)                       FOOT(2)          DATE(3)        FOOT(1)     FOOT(4)     FOOT(5)
- -------------------                    -------------   ---------------   ----------   -------   -----------
<S>                                    <C>             <C>               <C>          <C>       <C>
San Antonio
 Airport.............................       5.22            11.55           13.28      15.51       25.15
 Northwest...........................       6.04            12.88           13.11      15.51       25.51
                                          ------           ------          ------     ------      ------
       Southwest Region
       Total/Weighted Average........     $ 7.48           $15.37          $16.04     $18.03      $28.73

WEST REGION
Phoenix
 Midtown.............................     $ 9.45           $12.38          $12.48     $18.39      $22.40
Denver
 Southeast/Denver Tech Center........       7.82            15.41           16.79      22.65       29.97
St. Louis
 Clayton.............................      12.46            19.81           21.66      24.19       32.27
Albuquerque
 Downtown............................       5.39            16.47           14.96      17.09       30.26
Oklahoma City
 Northwest...........................       2.77             8.41            8.95      12.14       22.23
Dallas
 LBJ Corridor........................       5.41            14.72           14.32      21.01       27.16
 North Central.......................       4.42            11.74           13.14      18.22       28.39
 Preston Center......................      11.37            17.03           18.41      22.82       29.49
Ft. Worth
 West/Southwest......................       4.02            10.59           11.86      12.72       24.23
                                          ------           ------          ------     ------      ------
       West Region
       Total/Weighted Average........     $ 7.64           $14.51          $15.20     $19.98      $27.57
                                          ------           ------          ------     ------      ------
       Total.........................     $10.25           $19.00          $19.87     $23.12      $36.05

</TABLE>
    
 
                                       51
<PAGE>   60
 
- ---------------
 
   
(1) Annualized Rent is the monthly contractual rent under existing leases as of
    April 30, 1997 multiplied by 12. This amount reflects total rent before any
    rent abatements and includes expense reimbursements, which may be estimates
    as of such date. Total rent abatements for leases in effect as of April 30,
    1997 for the 12 months ending April 30, 1998 are approximately $5.8 million.
    
   
(2) Annualized Net Effective Rent is calculated for leases in effect as of April
    30, 1997 as follows: Annualized Rent, calculated as described above, was
    reduced to reflect the annualized costs of tenant improvements and leasing
    commissions, if any, paid or payable by the Company with respect to leases
    entered into subsequent to the later of 1991 or the date of acquisition of
    the relevant Property (calculated by dividing the total tenant improvements
    and leasing commissions for a given lease by the term of that lease in
    months and multiplying the result by 12). Finally, the result of this
    calculation was reduced by the estimated operating expenses per square foot,
    based on 1996 actual operating expense for Properties owned as of January 1,
    1996 and based on the Company's estimate of annual operating expense for
    Properties acquired subsequent to January 1, 1996.
    
(3) Represents the gross rental rate per occupied square foot as of the later of
    January 1, 1993 or the date of acquisition, for Properties acquired after
    January 1, 1993, calculated by annualizing the rent under existing leases as
    of that date.
   
(4) Represents the average asking gross rental rate per rentable square foot for
    buildings of comparable size, class, location and age based upon information
    obtained from CB Commercial Real Estate Group, Inc./Torto Wheaton Research,
    as of March 31, 1997.
    
   
(5) Represents the Company's weighted average estimate of the gross rent that
    would be required to justify construction of a building which would be
    competitive with the respective Office Properties. An estimate of the
    replacement cost to build a Property similar to the subject property was
    calculated utilizing the Marshall and Swift (February 1997) Commercial
    Estimator 5.0 Software Program. The replacement cost rent is calculated
    under the assumption that a net effective return of 12% would be required to
    justify new construction and that occupancy would stabilize at 95% as
    follows: replacement cost rent equals (estimated replacement cost per square
    foot times 12% plus the estimated operating expenses per square foot of the
    subject Property) divided by 95%. The estimated replacement costs and the
    estimated replacement cost rents are based on constructing a building
    similar to the subject Property in terms of the quality of construction and
    amenities. The actual cost to construct a building that would be competitive
    with the subject Property and required investor returns, could be more or
    less than these estimates. The Company believes that the spread between
    current market rents and replacement cost rents are an indication of the
    likelihood of new construction which could increase competition to the
    Office Properties.
    
 
                                       52
<PAGE>   61
 
   
     The following table sets forth certain information relating to each Office
Property as of April 30, 1997 except for 30 N. LaSalle which reflects
information as of June 13, 1997, its date of acquisition.
    
   
<TABLE>
<CAPTION>
 
                                                                        PERCENTAGE                              PERCENTAGE
                                                                         OF TOTAL                                   OF
                                 NUMBER                                  PORTFOLIO                 ANNUALIZED   PORTFOLIO
                                   OF       YEAR BUILT/    RENTABLE      RENTABLE     PERCENTAGE      RENT      ANNUALIZED
          PROPERTY             PROPERTIES    RENOVATED    SQUARE FEET   SQUARE FEET    OCCUPIED    ($000S)(1)      RENT
          --------             ----------   -----------   -----------   -----------   ----------   ----------   ----------
<S>                            <C>          <C>           <C>           <C>           <C>          <C>          <C>
PACIFIC REGION
Los Angeles
  Downtown
    Two California
      Plaza(7)...............       1          1992        1,329,809         4.1%        85.4%      $ 23,908        4.0%
  Pasadena
    Pasadena Towers..........       2        1990-91         439,367         1.4         84.4         10,070        1.7
Orange County
  Central Orange
    500 Orange Tower(8)......       1          1988          290,765         0.9         94.2          5,051        0.9
    1100 Executive Tower.....       1          1987          366,747         1.1         95.5          6,008        1.0
  Irvine/Airport
    1920 Main Plaza..........       1          1988          305,662         0.9         85.9          5,314        0.9
    2010 Main Plaza..........       1          1988          280,882         0.9         90.7          5,444        0.9
San Diego
  La Jolla
    The Plaza at La Jolla
      Village(6).............       5        1987-90         635,419         2.0         98.0         14,351        2.4
    Smith Barney Tower.......       1          1987          186,607         0.6         99.3          3,621        0.6
San Francisco
  Downtown
    201 Mission Street.......       1          1981          483,289         1.5         99.6          9,054        1.5
    580 California...........       1          1984          313,012         1.0         99.9          7,748        1.3
    60 Spear Street
      Building...............       1        1967/87         133,782         0.4         98.5          3,090        0.5
    One Maritime Plaza.......       1        1967/90         523,929         1.6         96.8         15,187        2.6
    One Market...............       1        1976/95       1,455,000         4.5         97.4         35,476        6.0
                                   --                     ----------       -----        -----       --------      -----
        Pacific Region Total/
          Weighted Average...      18                      6,744,270        20.9%        93.5%      $144,322       24.4%
SOUTHEAST REGION
Ft. Lauderdale
  Downtown
    First Union Center(6)....       1          1991          225,500         0.7%        99.0%      $  5,826        1.0%
Orlando
  Downtown
    SunTrust Center..........       1          1988          640,385         2.0         92.2         14,293        2.4
 
<CAPTION>
                                                             ANNUALIZED
                                                              RENT PER
                                            ANNUALIZED        OCCUPIED
                                           NET EFFECTIVE    SQUARE FOOT
                                             RENT PER            AS           ANNUALIZED         MARKET        ESTIMATED
                                             OCCUPIED       OF 1/1/93 OR       RENT PER         RENT PER      REPLACEMENT
                                NUMBER        SQUARE        ACQUISITION        OCCUPIED          SQUARE          COST
          PROPERTY             OF LEASES      FOOT(2)         DATE(3)       SQUARE FEET(1)      FOOT(4)         RENT(5)
          --------             ---------   -------------   --------------   --------------   --------------   -----------
<S>                            <C>         <C>             <C>              <C>              <C>              <C>
PACIFIC REGION
Los Angeles
  Downtown
    Two California
      Plaza(7)...............       28        $11.29           $22.08           $21.06           $25.72         $42.88
  Pasadena
    Pasadena Towers..........       30         17.70            27.79            27.15            25.17          34.38
Orange County
  Central Orange
    500 Orange Tower(8)......       51          9.05            22.61            18.45            19.59          33.47
    1100 Executive Tower.....       28          8.88            18.56            17.16            19.59          32.59
  Irvine/Airport
    1920 Main Plaza..........       41         13.15            20.35            20.23            23.82          36.92
    2010 Main Plaza..........       37         12.99            21.24            21.38            23.82          38.50
San Diego
  La Jolla
    The Plaza at La Jolla
      Village(6).............       91         13.83            20.34            23.05            23.75          37.87
    Smith Barney Tower.......       19         11.06            19.40            19.54            23.75          39.84
San Francisco
  Downtown
    201 Mission Street.......       19          8.19            18.80            18.80            30.26          49.54
    580 California...........       29         14.39            23.02            24.77            30.01          47.68
    60 Spear Street
      Building...............        9         10.63            23.12            23.44            28.29          47.48
    One Maritime Plaza.......       40         19.33            29.81            29.95            30.26          48.24
    One Market...............      140         12.35            24.07            25.02            30.94          52.60
                                 -----        ------           ------           ------           ------         ------
        Pacific Region Total/
          Weighted Average...      562        $12.61           $22.79           $22.89           $26.74         $43.66
SOUTHEAST REGION
Ft. Lauderdale
  Downtown
    First Union Center(6)....       21        $14.96           $17.45           $26.09           $25.22         $42.88
Orlando
  Downtown
    SunTrust Center..........       43         14.82            23.99            24.22            24.57          38.94
</TABLE>
    
 
                                       53
<PAGE>   62
   
<TABLE>
<CAPTION>
 
                                                                        PERCENTAGE                              PERCENTAGE
                                                                         OF TOTAL                                   OF
                                 NUMBER                                  PORTFOLIO                 ANNUALIZED   PORTFOLIO
                                   OF       YEAR BUILT/    RENTABLE      RENTABLE     PERCENTAGE      RENT      ANNUALIZED
          PROPERTY             PROPERTIES    RENOVATED    SQUARE FEET   SQUARE FEET    OCCUPIED    ($000S)(1)      RENT
          --------             ----------   -----------   -----------   -----------   ----------   ----------   ----------
<S>                            <C>          <C>           <C>           <C>           <C>          <C>          <C>
Palm Beach County, FL
  West Palm Beach
    One Clearlake Centre.....       1         1987           215,104         0.7         97.4          4,027        0.7
Sarasota
  Downtown
    Sarasota City Center.....       1         1989           247,891         0.8         93.9          4,148        0.7
Tampa
  Westshore
    Tampa Commons............       1         1985           254,808         0.8         98.3          4,578        0.8
    Westshore Center.........       1         1984           215,523         0.7         99.4          3,350        0.6
Atlanta
  Midtown
    Promenade II.............       1         1990           770,840         2.4         90.0         15,131        2.6
  North Central
    Central Park.............       2         1986           612,733         1.9         97.8         11,867        2.0
  Northwest
    Paces West...............       2         1988           641,263         2.0         98.0         13,058        2.2
Charlotte
  Downtown
    Wachovia Center..........       1        1972/94         581,666         1.8        100.0          6,953        1.2
Raleigh/Durham
  Durham
    University Tower.........       1        1987/92         181,221         0.6         96.5          3,161        0.5
Nashville
  Downtown
    Nations Bank Plaza.......       1        1977/95         421,513         1.3         96.8          5,441        0.9
                                   --                     ----------       -----        -----       --------      -----
        Southeast Region
          Total/ Weighted
          Average............      14                      5,008,447        15.5%        96.0%      $ 91,834       15.5%
 

<CAPTION>
                                                             ANNUALIZED
                                                              RENT PER
                                            ANNUALIZED        OCCUPIED
                                           NET EFFECTIVE    SQUARE FOOT
                                             RENT PER            AS           ANNUALIZED         MARKET        ESTIMATED
                                             OCCUPIED       OF 1/1/93 OR       RENT PER         RENT PER      REPLACEMENT
                                NUMBER        SQUARE        ACQUISITION        OCCUPIED          SQUARE          COST
          PROPERTY             OF LEASES      FOOT(2)         DATE(3)       SQUARE FEET(1)      FOOT(4)         RENT(5)
          --------             ---------   -------------   --------------   --------------   --------------   -----------
<S>                            <C>         <C>             <C>              <C>              <C>              <C>
Palm Beach County, FL
  West Palm Beach
    One Clearlake Centre.....       36          6.58            18.90            19.22            25.50          31.51
Sarasota
  Downtown
    Sarasota City Center.....       35          8.93            17.47            17.83            15.50          27.54
Tampa
  Westshore
    Tampa Commons............       21          9.99            22.16            18.28            20.53          27.88
    Westshore Center.........       38          6.62            14.80            15.64            20.53          26.65
Atlanta
  Midtown
    Promenade II.............       23         13.44            21.98            21.80            21.66          35.94
  North Central
    Central Park.............       74         11.90            19.07            19.81            24.48          30.47
  Northwest
    Paces West...............       40         13.48            18.83            20.78            22.94          27.35
Charlotte
  Downtown
    Wachovia Center..........        9          6.73            11.04            11.95            17.05          26.32
Raleigh/Durham
  Durham
    University Tower.........       36          9.63            13.37            18.08            19.62          30.11
Nashville
  Downtown
    Nations Bank Plaza.......       21          6.19             8.58            13.34            19.16          22.78
                                 -----        ------           ------           ------           ------         ------
        Southeast Region
          Total/ Weighted
          Average............      397        $10.93           $17.91           $19.11           $21.64         $31.01

 
</TABLE>
    
 
                                      54
<PAGE>   63
   
<TABLE>
<CAPTION>
 
                                                                         PERCENTAGE                              PERCENTAGE
                                                                          OF TOTAL                                   OF
                                  NUMBER                                  PORTFOLIO                 ANNUALIZED   PORTFOLIO
                                    OF       YEAR BUILT/    RENTABLE      RENTABLE     PERCENTAGE      RENT      ANNUALIZED
           PROPERTY             PROPERTIES    RENOVATED    SQUARE FEET   SQUARE FEET    OCCUPIED    ($000S)(1)      RENT
           --------             ----------   -----------   -----------   -----------   ----------   ----------   ----------
<S>                             <C>          <C>           <C>           <C>           <C>          <C>          <C>
NORTHEAST REGION
Fairfield County, CT
  Shelton
    Shelton Point.............       1        1985/93         159,848         0.5%        94.1%      $  2,106        0.4%
  Stamford
    One Stamford Plaza........       1        1986/94         212,244         0.7         98.4          5,174        0.9
    Two Samford Plaza.........       1        1986/94         253,020         0.8         98.2          7,266        1.2
    Three Stamford Plaza......       1        1980/94         241,575         0.7         98.0          4,751        0.8
    Four Stamford Plaza.......       1        1979/94         260,581         0.8         95.9          4,774        0.8
    177 Broad Street..........       1         1989           187,573         0.6         96.8          3,950        0.7
    300 Atlantic Street.......       1        1987/96         272,458         0.8         95.1          6,635        1.1
    Canterbury Green(7).......       1         1987           224,405         0.7         98.6          6,606        1.1
Washington, D.C.
  Downtown
    1111 19th Street..........       1        1979/93         252,014         0.8         98.5          7,297        1.2
    1620 L Street.............       1         1989           156,272         0.5         85.6          3,758        0.6
Boston
  Downtown
    28 State Street(9)........       1        1968/97         570,040         1.8          8.9          1,643        0.3
New York
  Midtown
    850 Third Avenue..........       1        1960/96         562,567         1.7        100.0         15,220        2.6
Philadelphia
  Downtown
    1601 Market Street........       1         1970           681,289         2.1         93.7         13,303        2.2
Norfolk
  Downtown
    Dominion Tower(6).........       1         1987           403,276         1.3         97.9          6,395        1.1
Northern Virginia
  Reston
    Reston Town Center........       3         1990           726,045         2.3         97.3         17,818        3.0
                                    --                     ----------       -----        -----       --------      -----
        Northeast Region
          Total/ Weighted
          Average.............      17                      5,163,207        16.0%        87.0%       106,696       18.0%
 
<CAPTION>
                                                              ANNUALIZED
                                                               RENT PER
                                             ANNUALIZED        OCCUPIED
                                            NET EFFECTIVE    SQUARE FOOT
                                              RENT PER            AS           ANNUALIZED         MARKET        ESTIMATED
                                              OCCUPIED       OF 1/1/93 OR       RENT PER         RENT PER      REPLACEMENT
                                 NUMBER        SQUARE        ACQUISITION        OCCUPIED          SQUARE          COST
           PROPERTY             OF LEASES      FOOT(2)         DATE(3)       SQUARE FEET(1)      FOOT(4)         RENT(5)
           --------             ---------   -------------   --------------   --------------   --------------   -----------
<S>                             <C>         <C>             <C>              <C>              <C>              <C>
 
NORTHEAST REGION
 
Fairfield County, CT
 
  Shelton
 
    Shelton Point.............       12        $ 5.33           $14.11           $14.00           $23.99         $26.38
 
  Stamford
 
    One Stamford Plaza........       13         12.44            26.47            24.78            27.26          39.35
 
    Two Samford Plaza.........       20         16.63            32.27            29.23            27.26          39.33
 
    Three Stamford Plaza......       17          8.98            18.66            20.07            27.26          40.00
 
    Four Stamford Plaza.......        9          6.77            19.20            19.11            27.26          40.13
 
    177 Broad Street..........       16         11.51            21.65            21.75            27.26          38.45
 
    300 Atlantic Street.......       25         13.63            22.17            25.62            27.26          49.61
 
    Canterbury Green(7).......       20         18.83            30.59            29.85            27.26          49.02
 
Washington, D.C.
 
  Downtown
 
    1111 19th Street..........       31         16.14            20.85            29.39            31.34          40.72
 
    1620 L Street.............       13         16.26            27.04            28.08            28.60          43.02
 
Boston
 
  Downtown
 
    28 State Street(9)........        1         15.79               --            32.50            35.50          49.44
 
New York
 
  Midtown
 
    850 Third Avenue..........       29         12.39            28.01            27.05            36.02          42.97
 
Philadelphia
 
  Downtown
 
    1601 Market Street........       68         12.22            20.14            20.85            18.57          34.21
 
Norfolk
 
  Downtown
 
    Dominion Tower(6).........       52          6.83            14.19            16.20            16.40          33.44
 
Northern Virginia
 
  Reston
 
    Reston Town Center........       78         15.08            24.29            25.22            27.49          42.63
 
                                  -----        ------           ------           ------           ------         ------
        Northeast Region
 
          Total/ Weighted
 
          Average.............      404        $12.52           $20.30           $23.76           $27.30         $40.95
 
</TABLE>
    
 
                                       55
<PAGE>   64
   
<TABLE>
<CAPTION>
 
                                                                        PERCENTAGE                              PERCENTAGE
                                                                         OF TOTAL                                   OF
                                 NUMBER                                  PORTFOLIO                 ANNUALIZED   PORTFOLIO
                                   OF       YEAR BUILT/    RENTABLE      RENTABLE     PERCENTAGE      RENT      ANNUALIZED
          PROPERTY             PROPERTIES    RENOVATED    SQUARE FEET   SQUARE FEET    OCCUPIED    ($000S)(1)      RENT
          --------             ----------   -----------   -----------   -----------   ----------   ----------   ----------
<S>                            <C>          <C>           <C>           <C>           <C>          <C>          <C>
CENTRAL REGION
Chicago
  Downtown
    161 N. Clark.............       1         1992         1,010,520         3.1%        67.9%      $ 14,370        2.4%
    30 N. LaSalle............       1        1974/90         925,950         2.9         97.0         18,839        3.2
    One North Franklin.......       1         1991           617,592         1.9         98.9         12,808        2.2
  East-West Corridor
    Oakbrook Terrace Tower...       1         1988           772,928         2.4         94.4         19,125        3.2
  O'Hare
    1700 Higgins.............       1         1986           133,876         0.4         98.1          2,139        0.4
Indianapolis
  Downtown
    Bank One Center/Tower....       2         1990         1,057,877         3.3         92.5         19,027        3.2
Cleveland
  Downtown
    BP Tower.................       1         1985         1,242,144         3.9         92.4         18,243        3.1
Columbus
  Downtown
    One Columbus Building....       1         1987           407,472         1.3         89.5          8,524        1.4
  Worthington
    Community Corporate
      Center.................       1         1987           250,169         0.8         89.5          4,517        0.8
    One Crosswoods Center....       1         1984           129,583         0.4        100.0          2,061        0.3
                                   --                     ----------       -----        -----       --------      -----
        Central Region Total/
          Weighted Average...      11                      6,548,111        20.3%        90.1%      $119,654       20.2%
SOUTHWEST REGION
New Orleans
  Metairie
    One Lakeway Center.......       1        1981/96         289,112         0.9%        97.1%      $  4,361        0.7%
    Two Lakeway Center.......       1        1984/96         440,826         1.4         94.5          6,008        1.0
    Three Lakeway Center.....       1        1987/96         462,890         1.4         90.1          6,217        1.0
Austin
  Downtown
    Franklin Plaza...........       1         1987           517,849         1.6         91.1          9,644        1.6
    One American Center(7)...       1         1984           505,770         1.6         98.0          9,142        1.5
    San Jacinto Center.......       1         1987           400,329         1.2         97.9          7,001        1.2
 
<CAPTION>
                                                             ANNUALIZED
                                                              RENT PER
                                            ANNUALIZED        OCCUPIED
                                           NET EFFECTIVE    SQUARE FOOT
                                             RENT PER            AS           ANNUALIZED         MARKET        ESTIMATED
                                             OCCUPIED       OF 1/1/93 OR       RENT PER         RENT PER      REPLACEMENT
                                NUMBER        SQUARE        ACQUISITION        OCCUPIED          SQUARE          COST
          PROPERTY             OF LEASES      FOOT(2)         DATE(3)       SQUARE FEET(1)      FOOT(4)         RENT(5)
          --------             ---------   -------------   --------------   --------------   --------------   -----------
<S>                            <C>         <C>             <C>              <C>              <C>              <C>
CENTRAL REGION
Chicago
  Downtown
    161 N. Clark.............       52        $ 5.44           $21.65           $20.96           $23.06         $43.81
    30 N. LaSalle............      116          7.21            20.95            20.95            25.44          41.58
    One North Franklin.......       53          5.86            31.26            20.97            24.01          38.80
  East-West Corridor
    Oakbrook Terrace Tower...       60         17.46            26.21            26.21            27.24          36.76
  O'Hare
    1700 Higgins.............       15          5.94            21.52            16.28            18.74          33.04
Indianapolis
  Downtown
    Bank One Center/Tower....       82          9.25            15.94            19.44            19.47          38.99
Cleveland
  Downtown
    BP Tower.................       34          8.09            13.18            15.89            21.29          40.37
Columbus
  Downtown
    One Columbus Building....       30         15.10            22.96            23.38            22.92          31.27
  Worthington
    Community Corporate
      Center.................       39         10.13            19.65            20.18            21.00          27.99
    One Crosswoods Center....       24          7.82            13.29            15.91            19.56          22.52
                                 -----        ------           ------           ------           ------         ------
        Central Region Total/
          Weighted Average...      505        $ 9.22           $20.30           $20.28           $22.82         $38.73
SOUTHWEST REGION
New Orleans
  Metairie
    One Lakeway Center.......       49        $ 8.38           $13.74           $15.53           $17.64         $25.41
    Two Lakeway Center.......       88          7.77            13.11            14.42            17.64          25.87
    Three Lakeway Center.....       50          7.99            13.07            14.91            17.64          25.28
Austin
  Downtown
    Franklin Plaza...........       38         10.87            18.43            20.43            21.05          31.26
    One American Center(7)...       46          8.66            18.05            18.44            21.05          30.41
    San Jacinto Center.......       51          6.05            16.81            17.87            21.05          30.42
 

</TABLE>
    
 
                                       56
<PAGE>   65
   
<TABLE>
<CAPTION>
 
                                                                        PERCENTAGE                              PERCENTAGE
                                                                         OF TOTAL                                   OF
                                 NUMBER                                  PORTFOLIO                 ANNUALIZED   PORTFOLIO
                                   OF       YEAR BUILT/    RENTABLE      RENTABLE     PERCENTAGE      RENT      ANNUALIZED
          PROPERTY             PROPERTIES    RENOVATED    SQUARE FEET   SQUARE FEET    OCCUPIED    ($000S)(1)      RENT
          --------             ----------   -----------   -----------   -----------   ----------   ----------   ----------
<S>                            <C>          <C>           <C>           <C>           <C>          <C>          <C>
Houston
  Galleria
    San Felipe Plaza(6)......       1          1984          959,466         3.0         93.0         14,282        2.4
  North/Airport
    Intercontinental Center..       1        1983/91         194,801         0.6        100.0          2,622        0.4
    Northborough Tower(6)....       1        1983/90         207,908         0.6         91.6          2,562        0.4
 
<CAPTION>
                                                             ANNUALIZED
                                                              RENT PER
                                            ANNUALIZED        OCCUPIED
                                           NET EFFECTIVE    SQUARE FOOT
                                             RENT PER            AS           ANNUALIZED         MARKET        ESTIMATED
                                             OCCUPIED       OF 1/1/93 OR       RENT PER         RENT PER      REPLACEMENT
                                NUMBER        SQUARE        ACQUISITION        OCCUPIED          SQUARE          COST
          PROPERTY             OF LEASES      FOOT(2)         DATE(3)       SQUARE FEET(1)      FOOT(4)         RENT(5)
          --------             ---------   -------------   --------------   --------------   --------------   -----------
<S>                            <C>         <C>             <C>              <C>              <C>              <C>
Houston
  Galleria
    San Felipe Plaza(6)......      128          7.16            17.24            16.01            16.82          33.51
  North/Airport
    Intercontinental Center..       13          4.97            13.35            13.46            17.49          24.44
    Northborough Tower(6)....       12          5.02            12.40            13.46            12.90          25.06
    
   
San Antonio
  Airport
    Union Square.............       1          1986          194,398         0.6         96.8          2,499        0.4
  Northwest
    Colonnade I..............       1          1983          168,637         0.5         90.2          2,117        0.4
    Northwest Center.........       1        1984/94         241,248         0.7         98.0          2,975        0.5
                                   --                     ----------       -----        -----       --------      -----
        Southwest Region
          Total/Weighted
          Average............      12                      4,583,234        14.2%        94.4%      $ 69,429       11.7%
WEST REGION
Phoenix
  Midtown
    One Phoenix(10)..........       1          1989          586,403         1.8%       100.0%      $  7,317        1.2%
Denver
  Southeast/Denver Tech
    Center
    Denver Corporate Center II 
      & III..................       2       1981/93-97       358,357         1.1        100.0          5,715        1.0
    The Quadrant.............       1          1985          313,302         1.0         93.5          5,218        0.9
St. Louis
  Clayton
    Interco Corporate Center.       1          1986          339,163         1.1        100.0          7,347        1.2
Albuquerque
  Downtown
    500 Marquette Building...       1          1985          230,022         0.7         95.6          3,288        0.6
Oklahoma City
  Northwest
    Atrium Towers............       2        1980/95         155,865         0.5        100.0          1,360        0.2
    Cigna Center(6)..........       1          1974          105,459         0.3         93.7            920        0.2
 
<CAPTION>
San Antonio
  Airport
    Union Square.............       19          5.22            11.55            13.28            15.51          25.15
  Northwest
    Colonnade I..............       28          7.49            13.76            13.92            15.51          25.94
    Northwest Center.........       37          5.11            12.27            12.58            15.51          25.22
                                 -----        ------           ------           ------           ------         ------
        Southwest Region
          Total/Weighted
          Average............      559        $ 7.48           $15.37           $16.04           $18.03         $28.73
WEST REGION
Phoenix
  Midtown
    One Phoenix(10)..........        1        $ 9.45           $12.38           $12.48           $18.39         $22.40
Denver
  Southeast/Denver Tech
    Center
    Denver Corporate Center II 
      & III..................       27          7.92            15.24            15.95            22.26          27.56
    The Quadrant.............       38          7.70            15.60            17.81            23.10          32.72
St. Louis
  Clayton
    Interco Corporate Center.       36         12.46            19.81            21.66            24.19          32.27
Albuquerque
  Downtown
    500 Marquette Building...       33          5.39            16.47            14.96            17.09          30.26
Oklahoma City
  Northwest
    Atrium Towers............       52          2.63             8.03             8.72            11.41          19.85
    Cigna Center(6)..........       65          2.99             8.96             9.31            13.21          25.75
 

</TABLE>
    
 
                                       57
<PAGE>   66
   
<TABLE>
<CAPTION>
 
                                                                        PERCENTAGE                              PERCENTAGE
                                                                         OF TOTAL                                   OF
                                 NUMBER                                  PORTFOLIO                 ANNUALIZED   PORTFOLIO
                                   OF       YEAR BUILT/    RENTABLE      RENTABLE     PERCENTAGE      RENT      ANNUALIZED
          PROPERTY             PROPERTIES    RENOVATED    SQUARE FEET   SQUARE FEET    OCCUPIED    ($000S)(1)      RENT
          --------             ----------   -----------   -----------   -----------   ----------   ----------   ----------
<S>                            <C>          <C>           <C>           <C>           <C>          <C>          <C>
Dallas
  LBJ Corridor
    Four Forest(6)...........       1         1985           394,324         1.2         96.3          5,441        0.9
    North Central Plaza
      Three..................       1        1986/94         346,575         1.1         92.3          4,580        0.8
  North Central
    9400 NCX.................       1        1981/95         379,556         1.2         92.2          4,596        0.8
  Preston Center
    Preston Commons..........       3         1986           418,604         1.3         85.6          7,067        1.2
    Sterling Plaza...........       1        1984/94         302,747         0.9         96.8          4,926        0.8
Ft. Worth
  West/Southwest
    Summitt Office Park......       2        1974/93         239,095         0.7         93.7          2,656        0.4
                                   --                     ----------       -----        -----       --------      -----
        West Region
          Total/Weighted
          Average............      18                      4,169,472        12.9%        95.4%      $ 60,431       10.2%
                                   --                     ----------       -----        -----       --------      -----
        Total/Weighted
          Average............      90                     32,216,741       100.0%        92.5%      $592,366      100.0%
                                   ==                     ==========       =====                    ========      =====
 


<CAPTION>
                                                             ANNUALIZED
                                            ANNUALIZED        RENT PER
                                           NET EFFECTIVE      OCCUPIED
                                             RENT PER      SQUARE FOOT AS     ANNUALIZED         MARKET        ESTIMATED
                                             OCCUPIED       OF 1/1/93 OR       RENT PER         RENT PER      REPLACEMENT
                                NUMBER        SQUARE        ACQUISITION        OCCUPIED          SQUARE          COST
          PROPERTY             OF LEASES      FOOT(2)         DATE(3)       SQUARE FEET(1)      FOOT(4)         RENT(5)
          --------             ---------   -------------   --------------   --------------   --------------   -----------
<S>                            <C>         <C>             <C>              <C>              <C>              <C>
Dallas
  LBJ Corridor
    Four Forest(6)...........       59          5.59            15.78            14.33            21.01          27.16
    North Central Plaza
      Three..................       39          5.19            13.51            14.32            21.01          27.15
  North Central
    9400 NCX.................       81          4.42            11.74            13.14            18.22          28.39
  Preston Center
    Preston Commons..........       69         14.05            19.42            19.72            22.82          29.87
    Sterling Plaza...........       76          8.10            13.72            16.81            22.82          28.98
Ft. Worth
  West/Southwest
    Summitt Office Park......       63          4.02            10.59            11.86            12.72          24.23
                                 -----        ------           ------           ------           ------         ------
        West Region
          Total/Weighted
          Average............      639        $ 7.64           $14.51           $15.20           $19.98         $27.57
                                 -----        ------           ------           ------           ------         ------
        Total/Weighted
          Average............    3,066        $10.25           $19.00           $19.87           $23.12         $36.05

</TABLE>
    
- ---------------
 
   
 (1) Annualized Rent is the monthly contractual rent under existing leases as of
     April 30, 1997, multiplied by 12. This amount reflects total base rent
     before any rent abatements, but includes expense reimbursements, which may
     be estimates as of such date. Total rent abatements for leases in effect as
     of April 30, 1997, for the 12 months ending April 30, 1998 are
     approximately $5.8 million.
    
 
   
 (2) Annualized Net Effective Rent is calculated for leases in effect as of
     April 30, 1997 as follows: Annualized Rent, calculated as described above,
     was reduced to reflect the annualized costs of tenant improvements and
     leasing commissions, if any, paid or payable by the Company with respect to
     leases entered into subsequent to the later of 1991 or the date of
     acquisition of the relevant Property (calculated by dividing the total
     tenant improvements and leasing commissions for a given lease by the term
     of that lease in months and multiplying the result by 12). Finally, the
     result of this calculation was reduced by the estimated operating expenses
     per square foot, based on 1996 actual operating expense for Properties
     owned as of January 1, 1996 and based on the Company's estimate of annual
     operating expense for Properties acquired subsequent to January 1, 1996.
    
 
 (3) Represents the gross rental rate per occupied square foot as of the later
     of January 1, 1993, or the date of acquisition (for Properties acquired
     after January 1, 1993) calculated by annualizing the base rent and expense
     reimbursements under existing leases as of that date.
 
   
 (4) Represents the average asking gross rental rate per rentable square foot
     for buildings of comparable size, class, location and age based upon
     information obtained from CB Commercial Real Estate Group, Inc./Torto
     Wheaton Research, as of March 31, 1997.
    
 
   
 (5) Represents the Company's estimate of the gross rent that would be required
     to justify construction of a building which would be competitive with the
     respective Office Properties. An estimate of the replacement cost to build
     a property similar to the subject Property was calculated utilizing the
     Marshall and Swift (February 1997) Commercial Estimator 5.0 Software
     Program. The replacement cost rent is calculated under the assumptions that
     a net effective return of 12% would be required to justify new construction
     and that occupancy would stabilize at 95% as follows:
    
 
                                       58
<PAGE>   67
 
   
     replacement cost rent equals (estimated replacement cost per square foot
     times 12% plus the estimated operating expenses per square foot at the
     subject Property) divided by 95%. The estimated replacement costs and the
     estimated replacement cost rents are based on constructing a building
     similar to the subject Property in terms of the quality of construction and
     amenities. The actual cost to construct a building that would be
     competitive with the subject Property, and required investor returns, could
     be more or less than these estimates. The Company believes that the spread
     between current market rents and replacement cost rents are an indication
     of the likelihood of new construction which could increase competition to
     the Office Properties.
    
 
 (6) This Office Property is held in a partnership with an unaffiliated
     third-party (and in the case of San Felipe Plaza, the Property is held in a
     partnership with an affiliated third-party also).
 
   
 (7) This Office Property is held subject to a ground lease. See Note 8 to the
     Combined Financial Statements of Equity Office Predecessors included
     herein.
    
 
 (8) This Office Property is held subject to an interest in the improvements at
     the Property held by an unaffiliated third-party. In addition, the Company
     has a mortgage interest in such improvements. See Note 5 to the Combined
     Financial Statements of Equity Office Predecessors included herein.
 
   
 (9) This Office Property is undergoing major redevelopment.
    
 
(10) This Office Property is 100% leased to a single tenant on a triple net
     basis, whereby the tenant pays for certain operating expenses directly
     rather than reimbursing the Company. The amounts shown above for annualized
     rent include the amounts for reimbursement of expenses paid by the Company
     but do not make any adjustments for expenses paid directly by the tenant.
 
                                       59
<PAGE>   68
 
OFFICE PROPERTY MARKET INFORMATION
 
     The Company operates in most of the top office markets in the United
States. Emerging Trends in Real Estate 1997, Cognetics Real Estate, Inc. in
December 1996, and 1997 Landauer Real Estate Market Forecast have each ranked
the top office markets. Of the 20 markets listed below, the Company owns Office
Properties in 16 of such markets as highlighted in bold, capitalized text.
 
   
<TABLE>
<CAPTION>
                                     LEADING MARKETS FOR PRIMARY OFFICE    TOP 15 CITIES -- LANDAUER MOMENTUM
    MARKETS TO WATCH IN 1997         EMPLOYMENT GROWTH -- 1996 TO 2005      INDEX FOR OFFICE MARKETS -- 1997
- ---------------------------------    ----------------------------------    ----------------------------------
<S>                                  <C>                                   <C>
 1. SAN FRANCISCO, CA                1. LOS ANGELES, CA                    1. PHOENIX, AZ
 2. Seattle, WA                      2. SAN FRANCISCO/OAKLAND, CA          2. ORLANDO, FL
 3. BOSTON, MA                       3. ATLANTA, GA                        3. Minneapolis, MN
 4. CHICAGO, IL                      4. DALLAS/FORT WORTH, TX              4. ATLANTA, GA
 5. DENVER, CO                       5. WASHINGTON, DC                     5. DENVER, CO
 6. SAN DIEGO, CA                    6. CHICAGO, IL                        6. CHARLOTTE, NC
 7. ATLANTA, GA                      7. PHOENIX, AZ                        7. NASHVILLE, TN
 8. LOS ANGELES, CA                  8. NEW YORK, NY                       8. TAMPA, FL
 9. DALLAS/FORT WORTH, TX            9. HOUSTON/GALVESTON, TX              9. Kansas City, KS
10. WASHINGTON, DC                   10. TAMPA/ST. PETERSBURG, FL          10. Miami, FL
11. Minneapolis, MN                  11. Minneapolis, MN                   11. DALLAS, TX
12. NEW YORK, NY                     12. BOSTON, MA                        12. Seattle, WA
13. PHOENIX, AZ                      13. DENVER/BOULDER, CO                13. CHICAGO, IL
14. Miami, FL                        14. Seattle, WA                       14. SAN FRANCISCO, CA
15. HOUSTON, TX                      15. MIAMI/FT LAUDERDALE, FL           15. BOSTON, MA
Source: Emerging Trends in Real      Source: Cognetics Real Estate,        Source: 1997 Landauer Real Estate
Estate 1997 (Equitable Real          Inc.                                  Market Forecast
Estate Management and Real Estate
Research Corporation)
</TABLE>
    
 
   
     The Company's 16 largest markets, based on percentage of annualized rent
and on percentage of rentable square feet, are set forth below.
    
 
   
<TABLE>
<CAPTION>
                                                             PERCENTAGE OF           PERCENTAGE OF
MARKET                                                      ANNUALIZED RENT          RENTABLE AREA
- ------                                                      ---------------          -------------
<S>                                                         <C>                      <C>
San Francisco, CA.........................................       11.9%                    9.0%
Chicago, IL...............................................       11.4                    10.7
Fairfield County (Stamford), CT...........................        7.0                     5.6
Atlanta, GA...............................................        6.8                     6.3
Los Angeles, CA...........................................        5.7                     5.5
Dallas, TX................................................        4.5                     5.7
Austin, TX................................................        4.4                     4.4
Orange County, CA.........................................        3.7                     3.9
Houston, TX...............................................        3.3                     4.2
Indianapolis, IN..........................................        3.2                     3.3
Cleveland, OH.............................................        3.1                     3.9
San Diego, CA.............................................        3.0                     2.6
Northern Virginia.........................................        3.0                     2.3
New Orleans, LA...........................................        2.8                     3.7
Columbus, OH..............................................        2.5                     2.4
Orlando, FL...............................................        2.4                     2.0
                                                                 ----                    ----
          Total...........................................       78.7%                   75.5%
                                                                 ====                    ====
</TABLE>
    
 
                                       60
<PAGE>   69
 
     The Company believes that the current economic environment and lack of new
office space are allowing the office building industry to gradually reestablish
favorable supply and demand fundamentals. Continued office employment growth,
when combined with the continuing disparity between current rental rates and the
rental rates required to support new development, is expected to result in
continuing increases in occupancy, rental rates and profitability.
 
   
    MAJOR U.S. OFFICE MARKET SPACE COMPLETIONS, ABSORPTION AND VACANCY RATES
    
 
<TABLE>
<CAPTION>
         MEASUREMENT PERIOD              VACANCY RATE        TW RENT
        (FISCAL YEAR COVERED)                                 INDEX
<S>                                    <C>               <C>
1988                                             110500            101000
1989                                             109000             88000
1990                                              90000             71000
1991                                              48000             41000
1992                                              35000             37500
1993                                               4200             44000
1994                                               3500             43800
1995                                               5000             40100
1996                                              12000             61000
1ST QTR 1997                                       2500             18000
</TABLE>
 
- ---------------
 
   
Source: CB Commercial Real Estate Group, Inc./Torto Wheaton Research
    
 
                                       61
<PAGE>   70
 
     In the Company's 16 largest office markets, rental rates have begun to
trend upwards as vacancies have decreased. Commercial office buildings in many
markets are experiencing increasing demand for office space accompanied by a
shift in bargaining power in favor of landlords and positive trends in rental
rates and vacancies.
 
   
     THE COMPANY'S 16 LARGEST MARKETS -- VACANCY RATE AND TW RENT INDEX(1)
    
 
<TABLE>
<CAPTION>
         MEASUREMENT PERIOD              VACANCY RATE        TW RENT
        (FISCAL YEAR COVERED)                                 INDEX
<S>                                    <C>               <C>
1988                                               19.8              1988
1989                                               19.5              1989
1990                                               19.9              1990
1991                                               20.1              1991
1992                                               19.9              1992
1993                                               18.5              1993
1994                                               16.6              1994
1995                                               15.0              1995
1996                                               13.4              1996
PROJECTED 1997                                     12.7    PROJECTED 1997
</TABLE>
 
- ---------------
 
   
Source: CB Commercial Real Estate Group, Inc./Torto Wheaton Research
    
 
   
(1) Torto Wheaton Research defines the Torto Wheaton (TW) Rent Index as a
    "statistically computed dollar value for a five year, 10,000 [square] foot
    lease for an existing average building in the statistical average of the
    metro or submarket area." The TW Rent Index and vacancy rate in the chart
    above represents the weighted average of the TW Rent Index for the Company's
    16 largest markets excluding New Orleans which is not covered by Torto
    Wheaton Research.
    
 
   
     Since the early 1990s, the real estate office market has been characterized
by declining new construction completions and continued moderate demand from
tenants. These dynamics have brought about improved rental rates, occupancies
and values. Since the early 1990s, when vacancy for all office space in the
Company's 16 largest office markets peaked at approximately 20%, it has steadily
declined. For these 16 markets, the overall vacancy rate for all office space is
currently approximately 12.7%, and the vacancy rate for Class A office buildings
is 9.5%. The Company believes that over the long term the demand and rental
rates for well located, institutional quality office space will continue to
increase and will remain competitive with new construction.
    
 
                                       62
<PAGE>   71
 
 THE COMPANY'S 16 LARGEST MARKETS -- NET ABSORPTION (1), COMPLETIONS AND VACANCY
                                                                           RATES
 
<TABLE>
<CAPTION>
        MEASUREMENT PERIOD          NET ABSORPTION IN  COMPLETIONS IN SQ    VACANCY RATE
      (FISCAL YEAR COVERED)               SQ FT               FT
<S>                                 <C>                <C>                <C>
1988                                         44494232           39341100               1988
1989                                         37469886           41358514               1989
1990                                         30740028           38430518               1990
1991                                         18881772           23829845               1991
1992                                         11355786           11991415               1992
1993                                         16472643            1852807               1993
1994                                         21599579             835618               1994
1995                                         19428058            1699854               1995
1996                                         21166248            3837222               1996
1ST QTR 1997                                  7381885            1939439       1ST QTR 1997
</TABLE>
 
- ---------------
 
   
Source: CB Commercial Real Estate Group, Inc./Torto Wheaton Research and Jamison
Research, Inc.
    
 
   
(1) CB Commercial Real Estate Group, Inc./Torto Wheaton Research defines net
    absorption as the net change in multi-tenant occupied stock, in square feet,
    during that period.
    
 
                                       63
<PAGE>   72
 
                      FOR THE COMPANY'S 16 LARGEST MARKETS
   
                     VACANCY RATES OF CLASS A OFFICE SPACE
    
   
      COMPARED TO VACANCY RATES FOR ALL OFFICE SPACE AS OF MARCH 31, 1997
    
 
   
<TABLE>
<CAPTION>
                                                              VACANCY RATE FOR
                                                               CLASS A OFFICE    VACANCY RATE FOR
MARKET                                                             SPACE         ALL OFFICE SPACE
- ------                                                        ----------------   ----------------
<S>                                                           <C>                <C>
Los Angeles, CA.............................................        14.3%              17.4%
New Orleans, LA.............................................        12.5               19.5
Fairfield County (Stamford), CT.............................        11.4               14.5
Dallas, TX..................................................        10.6               15.9
Indianapolis, IN............................................        10.3               12.6
Columbus, OH................................................        10.3                9.1
Houston, TX.................................................         9.0               17.3
Chicago, IL.................................................         8.9               13.9
San Diego, CA...............................................         8.7               12.2
Cleveland, OH...............................................         8.7               13.5
Atlanta, GA.................................................         7.8               10.0
Orange County, CA...........................................         7.5               11.8
Austin, TX..................................................         7.3                8.8
San Francisco, CA...........................................         5.8                6.6
Orlando, FL.................................................         5.6                7.5
Northern Virginia, VA.......................................         4.8                6.3
                                                                   -----              -----
All 16 Markets..............................................         9.5%              12.7%
</TABLE>
    
 
- ---------------
 
   
Source: CB Commercial Real Estate Group, Inc./Torto Wheaton Research and Jamison
Research, Inc.
    
 
   
     The Company believes that office markets across the country are in a
recovery. Given prospects for limited new development and continued growth in
office demand, the Company believes that the office market recovery will
continue for the foreseeable future and will lead to increased rental rates and
reduced concessions in most office markets across the country. Based upon
information published by CB Commercial Real Estate Group, Inc./Torto Wheaton
Research, it is estimated that finance, insurance and real estate and
office-based employment account for approximately 70% of the total U.S. primary
office employment. Additionally, employment projections for the years 1996
through 2000 anticipate continued growth in U.S. employment with office-based
employment growing at approximately 2.2% compared to total U.S. employment
growth of approximately 1.4% per annum.
    
 
                                       64
<PAGE>   73
 
PARKING FACILITIES
 
   
     Information concerning the Company's Parking Facilities as of April 30,
1997 is set forth below.
    
 
   
<TABLE>
<CAPTION>
                                                                                               NUMBER
                                               APPROXIMATE                    MANAGEMENT         OF
                                                NUMBER OF                      COMPANY        PARKING
PROPERTY NAME                                    SPACES          CITY        OR LESSEE(1)    FACILITIES
- -------------                                  -----------   ------------  ----------------  ----------
<S>                                            <C>           <C>           <C>               <C>
Boston Harbor Garage..........................    1,380      Boston        Standard Parking       1
1602-34 Chancellor Garage.....................      416      Philadelphia  Central Parking        1
15th & Sansom St. Garage......................      313      Philadelphia  Central Parking        1
Juniper/Locust St. Garage.....................      541      Philadelphia  Central Parking        1
1111 Sansom St. Garage........................      250      Philadelphia  Central Parking        1
1616 Sansom St. Garage........................      240      Philadelphia  Central Parking        1
Milwaukee Center(2)...........................      858      Milwaukee     Standard Parking       1
Capitol Commons Garage(2)(3)..................      943      Indianapolis  Central Parking        1
North Loop Transportation Center(3)...........    1,374      Chicago       Standard Parking       1
Theater District Garage(3)....................    1,006      Chicago       Standard Parking       1
St. Louis Garages(4)..........................    7,464      St. Louis     Central Parking        4
                                                 ------                                          --
          Total...............................   14,785                                          14
                                                 ======                                          ==
</TABLE>
    
 
- ---------------
 
   
(1) With the exception of Capital Commons Garage, all of the named Parking
    Facilities are operated by the designated third-party Service Company under
    a lease agreement whereby the Company and the Service Company share the
    gross receipts from the parking operation or the Company receives a fixed
    payment from the Service Company, and the Company bears none of the
    operational expenses. In the case of the Capital Commons Garage, the
    operating agreement provides for the Company's receipt of a percentage of
    net receipts and, therefore, results in an insignificant amount of
    non-qualifying gross income for REIT qualification purposes relative to the
    total gross income of the Company. See "Federal Income Tax
    Considerations -- Taxation of the Company."
    
   
(2) This Parking Facility is held subject to a ground lease. See Note 8 to the
    Combined Financial Statements of Equity Office Predecessors included herein.
    
(3) Each of these Parking Facilities is held in a partnership with an
    unaffiliated third-party. The Operating Partnership or a Subsidiary will be
    the managing general partner of each such partnership. See Note 6 to the
    Combined Financial Statements of Equity Office Predecessors included herein.
   
(4) The Company has a 50% membership interest in a portfolio of four Parking
    Facilities serving the St. Louis, Missouri area.
    
 
   
     The Company is actively negotiating the purchase of a parking facility in
downtown Chicago and expects to close on this acquisition subsequent to Closing.
The facility contains 670 spaces and 15,000 square feet of retail space. There
can be no assurance that this property will be successfully acquired.
    
 
                                       65
<PAGE>   74
 
   
TENANTS
    
 
   
     The Office Properties are leased to 3,066 tenants. The following table sets
forth the 25 largest tenants based on annualized rent at the Office Properties:
    
 
   
<TABLE>
<CAPTION>
                                                REMAINING   PERCENTAGE OF   AGGREGATE    PERCENTAGE
                                     NUMBER       LEASE       AGGREGATE     RENTABLE    OF AGGREGATE
                                       OF        TERM IN     ANNUALIZED      SQUARE       OCCUPIED
TENANT NAME(1)                      BUILDINGS    MONTHS        RENT(2)        FEET      SQUARE FEET
- --------------                      ---------   ---------   -------------   ---------   ------------
<S>                                 <C>         <C>         <C>             <C>         <C>
Andersen Worldwide................      5           68           2.3%         496,222        1.7%
AT&T..............................      5          147           1.8          508,469        1.8%
Bank One (Indianapolis)...........      3          243           1.6          438,806        1.5%
California Metropolitan Water
  District........................      1           22           1.4          402,194        1.4%
General Services
  Administration(3)...............     11           85           1.4          400,676        1.4%
Chicago Title and Trust...........      6          169           1.3          312,039        1.1%
Mountain States Telephone.........      1           85           1.2          586,403        2.0%
Coopers & Lybrand.................      4           81           1.2          235,259        0.8%
SunTrust..........................      1          135           1.1          257,158        0.9%
City of Chicago...................      1          185           1.1          264,775        0.9%
Home Depot USA, Inc. .............      1           35           1.0          275,373        1.0%
AON Corporation...................      4           85           0.9          183,549        0.6%
Citibank..........................      2           50           0.9          166,278        0.6%
IBM...............................      4           35           0.8          226,888        0.8%
LTV Corporation ..................      1          168           0.7          239,271        0.8%
Brobeck, Phleger, and Harrison....      1           90           0.7          213,526        0.7%
Duke Power Company................      1          104           0.7          318,623        1.1%
Merrill Lynch.....................      8           67           0.7          201,129        0.7%
Smith Barney .....................      9           92           0.7          161,323        0.6%
Reuters America ..................      4           62           0.6          160,048        0.6%
BP America, Inc. .................      1          140           0.6          331,808        1.1%
NationsBank.......................      4          134           0.6          261,659        0.9%
Price Waterhouse..................      3           28           0.6          128,279        0.4%
Graham and James LLP..............      1          160           0.6           92,768        0.3%
First Union Bank..................      6           80           0.6          171,620        0.6%
                                                                ----        ---------       ----
          Total/Weighted
            Average(4)............                 107          25.1%       7,034,143       24.3%
                                                                ====        =========       ====
</TABLE>
    
 
- ---------------
 
(1) Actual tenant may be a subsidiary of or an entity affiliated with the named
    tenant.
   
(2) Annualized Rent is the monthly contractual base rent under existing leases
    as of April 30, 1997 multiplied by 12. This amount reflects the total rent
    before any rent abatements and includes expense reimbursements.
    
   
(3) Represents all leases with a branch or agency of the federal government. The
    leases with General Services Administration are terminable at the option of
    the tenant if the funding for the agency which is the tenant is terminated.
    
   
(4) Weighted Average calculation based on aggregate rentable square footage
    occupied by each tenant.
    
 
                                       66
<PAGE>   75
 
LEASE EXPIRATION BY REGION
 
   
    The following table sets forth a schedule of lease expirations by region for
leases in place as of April 30, 1997, for each of the 10 full and partial
calendar years beginning May 1, 1997, for the Office Properties, on an aggregate
basis, assuming that none of the tenants exercise renewal options and excluding
an aggregate of 2,408,490 square feet of unleased space.
    
   
<TABLE>
<CAPTION>
 
                                                      1997          1998          1999          2000          2001
                                                   -----------   -----------   -----------   -----------   -----------
<S>               <C>                              <C>           <C>           <C>           <C>           <C>
Pacific Region    Square Feet(1).................      317,959       477,931     1,045,214       595,816     1,031,067
 Totals           % Square Feet(2)...............          4.7%          7.1%         15.5%          8.8%         15.3%
                  Annualized Rent(3).............    6,397,259    12,338,519    23,739,339    13,439,706    21,713,512
                  Number of Leases...............           89            94           103            67            73
                  Rent Per Square Foot...........  $     20.12   $     25.82   $     22.71   $     22.56   $     21.06
                  Market Rent(4).................  $     26.74
                  Replacement Cost Rent(5).......  $     43.66
Southeast Region  Square Feet(1).................      209.905       358,528       436,329       888,388       493,235
 Totals           % Square Feet(2)...............          4.2%          7.2%          8.7%         17.7%          9.8%
                  Annualized Rent(3).............    4,064,105     6,701,703     8,014,876    18,132,089    10,642,647
                  Number of Leases...............           47            70            71            74            60
                  Rent Per Square Foot...........  $     19.36   $     18.69   $     18.37   $     20.41   $     21.58
                  Market Rent(4).................  $     21.64
                  Replacement Cost Rent(5).......  $     31.01
Northeast Region  Square Feet(1).................      112,186       420,303       435,924       551,590       677,736
 Totals           % Square Feet(2)...............          2.2%          8.1%          8.4%         10.7%         13.1%
                  Annualized Rent(3).............    2,190,113    10,444,551    10,574,188    14,593,113    16,717,243
                  Number of Leases...............           29            44            56            55            57
                  Rent Per Square Foot...........  $     19.52   $     24.85   $     24.26   $     26.46   $     24.67
                  Market Rent(4).................  $     27.30
                  Replacement Cost Rent(5).......  $     40.95
Central Region    Square Feet(1).................      218,214       394,246       273,415       498,331       411,693
 Totals           % Square Feet(2)...............          3.3%          6.0%          4.2%          7.6%          6.3%
                  Annualized Rent(3).............    4,665,360    11,078,580     5,675,951    11,844,120     9,002,749
                  Number of Leases...............           62            57            55            55            68
                  Rent Per Square Foot...........  $     21.38   $     28.10   $     20.76   $     23.77   $     21.87
                  Market Rent(4).................  $     22.82
                  Replacement Cost Rent(5).......  $     38.73
Southwest Region  Square Feet(1).................      377,233       471,920       545,172       972,339       639,876
 Totals           % Square Feet(2)...............          8.2%         10.3%         11.9%         21.2%         14.0%
                  Annualized Rent(3).............    5,788,134     7,558,326     8,131,789    16,668,082    10,076,469
                  Number of Leases...............          124            97            87           101            67
                  Rent Per Square Foot...........  $     15.34   $     16.02   $     14.92   $     17.14   $     15.75
                  Market Rent(4).................  $     18.03
                  Replacement Cost Rent(5).......  $     28.73
West Region       Square Feet(1).................      342,281       562,611       629,284       622,501       487,631
 Totals           % Square Feet(2)...............          8.2%         13.5%         15.1%         14.9%         11.7%
                  Annualized Rent(3).............    4,663,970     9,748,348     9,790,798     9,444,323     8,266,863
                  Number of Leases...............          153           129           123            97            71
                  Rent Per Square Foot...........  $     13.63   $     17.33   $     15.56   $     15.17   $     16.95
                  Market Rent(4).................  $     19.98
                  Replacement Cost Rent(5).......  $     27.57
Portfolio Totals  Square Feet(1).................    1,577,778     2,685,539     3,365,338     4,128,965     3,741,238
                  % Square Feet(2)...............          4.9%          8.3%         10.4%         12.8%         11.6%
                  Annualized Rent(3).............   27,768,940    57,870,028    65,926,942    84,121,432    76,419,483
                  Number of Leases...............          504           491           495           449           396
                  Rent Per Square Foot...........  $     17.60   $     21.55   $     19.59   $     20.37   $     20.43
                  Market Rent(4).................  $     23.12
                  Replacement Cost Rent(5).......  $     36.05
 
<CAPTION>
                                                                                         2007 AND
                     2002          2003          2004          2005          2006         BEYOND         TOTALS
                  -----------   -----------   -----------   -----------   -----------   -----------   ------------
<S>               <C>           <C>           <C>           <C>           <C>           <C>           <C>
Pacific Region        462,607       360,850       239,870       308,185       238,270     1,228,349      6,306,118
 Totals                   6.9%          5.4%          3.6%          4.6%          3.5%         18.2%          93.5%
                   11,050,267     9,222,025     5,863,289     6,944,151     6,134,594    27,479,763    144,322,425
                           40            24            16            16            14            26            562
                  $     23.89   $     25.56   $     24.44   $     22.53   $     25.75   $     22.37   $      22.89
Southeast Region      333,238       196,418       265,409       386,294       171,920     1,066,416      4,806,080
 Totals                   6.7%          3.9%          5.3%          7.7%          3.4%         21.3%          96.0%
                    6,061,910     4,660,894     3,449,609     5,232,216     4,357,759    20,515,867     91,833,673
                           38             7             8             5             7            10            397
                  $     18.19   $     23.73   $     13.00   $     13.54   $     25.35   $     19.24   $      19.11
Northeast Region      581,412       394,879       428,200       329,450       296,187       263,160      4,491,027
 Totals                  11.3%          7.6%          8.3%          6.4%          5.7%          5.1%          87.0%
                   13,511,290     8,485,273    10,170,737     8,210,570     6,293,497     5,505,783    106,696,359
                           39            42            22            25            23            12            404
                  $     23.24   $     21.49   $     23.75   $     24.92   $     21.25   $     20.92   $      23.76
Central Region        399,874       333,566       427,613       774,803       305,433     1,864,130      5,901,318
 Totals                   6.1%          5.1%          6.5%         11.8%          4.7%         28.5%          90.1%
                    8,552,665     7,030,994     8,679,498    14,853,556     4,415,070    33,855,009    119,653,553
                           52            33            49            26            13            35            505
                  $     21.39   $     21.08   $     20.30   $     19.17   $     14.46   $     18.16   $      20.28
Southwest Region      534,188       248,412       223,987        72,924       127,586       114,085      4,327,772
 Totals                  11.7%          5.4%          4.9%          1.6%          2.8%          2.5%          94.4%
                    9,255,866     3,890,124     4,243,129     1,302,104     1,997,643       517,173     69,428,840
                           49            14             9             5             4             2            559
                  $     17.33   $     15.66   $     18.94   $     17.86   $     15.66   $      4.53   $      16.04
West Region           414,209       160,800       678,599        16,130        25,313        36,627      3,975,986
 Totals                   9.9%          3.9%         16.3%          0.4%          0.6%          0.9%          95.4%
                    6,497,844     2,507,950     8,864,360       265,160       381,510            --     60,431,127
                           35            20             6             2             3            --            639
                  $     15.69   $     15.60   $     13.06   $     16.44   $     15.07   $        --   $      15.20
Portfolio Totals    2,725,528     1,694,925     2,263,678     1,887,786     1,164,709     4,572,767     29,808,251
                          8.5%          5.3%          7.0%          5.9%          3.6%         14.2%          92.5%
                   54,929,842    35,797,260    41,270,623    36,807,757    23,580,072    87,873,595    592,365,975
                          253           140           110            79            64            85          3,066
                  $     20.15   $     21.12   $     18.23   $     19.50   $     20.25   $     19.22   $      19.87
</TABLE>
    
 
- ---------------
 
(1) Total net rentable square feet represented by expiring leases.
(2) Percentage of total net rentable feet represented by expiring leases.
   
(3) Annualized Rent is the monthly contractual rent under existing leases as of
    April 30, 1997, multiplied by 12. This amount reflects total base rent
    before any rent abatements and includes expense reimbursements which may be
    estimates as of such date. Total rent abatements for leases in effect as of
    April 30, 1997, for the 12 months ending April 30, 1998, are approximately
    $5.8 million.
    
   
(4) Represents the average asking gross rent per rentable square feet for
    buildings of comparable size, class, location and age, based upon
    information obtained from CB Commercial Real Estate Group, Inc./Torto
    Wheaton Research as of April 30, 1997.
    
   
(5) Represents the Company's estimate of the gross rent that would be required
    to justify construction of a building which would be competitive with the
    subject Property. As estimate of the replacement cost to build a property
    similar to the subject Property was calculated utilizing the Marshall and
    Swift (February 1997) Commercial Estimator 5.0 Software Program. The
    replacement cost rent is calculated under the assumptions that a net
    effective return of 12% would be required to justify new construction and
    that occupancy would stabilize at 95% as follows: Replacement Cost Rent
    equals (estimated replacement cost per square foot times 12% plus the
    estimated operating expenses per square foot at the subject Property)
    divided by 95%. The estimated replacement cost and the estimated replacement
    cost rent are based on constructing a building similar to the subject
    Property in terms of the quality of construction and amenities. The actual
    cost to construct a building that would be competitive with the subject
    Property and the required investor returns could be more or less than this
    estimate.
    
 
                                       67
<PAGE>   76
 
LEASE EXPIRATIONS -- PORTFOLIO TOTAL
 
   
     The following table sets forth a summary schedule of the lease expirations
for the Office Properties for leases in place as of April 30, 1997, assuming
that none of the tenants exercise renewal options or termination rights, if any,
at or prior to the scheduled expirations:
    
 
   
<TABLE>
<CAPTION>
                                                     PERCENTAGE
                                          SQUARE      OF TOTAL      ANNUALIZED       ANNUALIZED       PERCENTAGE OF
                            NUMBER OF   FOOTAGE OF    OCCUPIED       RENT OF           RENT OF       ANNUALIZED RENT
                             LEASES      EXPIRING      SQUARE        EXPIRING      EXPIRING LEASES     OF EXPIRING
 YEAR OF LEASE EXPIRATION   EXPIRING      LEASES        FEET      LEASES ($000S)   PER SQUARE FOOT      LEASES(1)
 ------------------------   ---------   ----------   ----------   --------------   ---------------   ---------------
<S>                         <C>         <C>          <C>          <C>              <C>               <C>
1997(2)...................      504     1,577,778        5.4%        $ 27,769          $17.60               4.7%
1998......................      491     2,685,539        9.1           57,870           21.55               9.8
1999......................      495     3,365,338       11.5           65,927           19.59              11.1
2000......................      449     4,128,965       14.1           84,121           20.37              14.2
2001......................      396     3,741,238       12.7           76,419           20.43              12.9
2002......................      253     2,725,528        9.3           54,930           20.15               9.3
2003......................      140     1,694,925        5.8           35,797           21.12               6.0
2004......................      110     2,263,678        7.7           41,271           18.23               7.0
2005......................       79     1,887,786        6.4           36,808           19.50               6.2
2006......................       64     1,164,709        4.0           23,580           20.25               4.0
2007......................       32       942,347        3.2           25,048           26.58               4.2
2008......................       21       853,856        2.9           16,781           19.65               2.8
2009......................        9       257,977         .9            5,275           20.45                .9
2010 and beyond...........       23     2,079,559        7.1           40,770           19.61               6.9
                              -----     ----------     -----         --------          ------             -----
        Total/Weighted
          Average.........    3,066     29,369,223(3)   100.0%(3)    $592,366          $19.87             100.0%
                              =====     ==========     =====         ========          ======             =====
</TABLE>
    
 
- ---------------
 
(1) Based on currently payable rent.
   
(2) Represents lease expirations from May 1, 1997 to December 31, 1997 and month
    to month leases.
    
(3) Reconciliation of total net rentable square footage is as follows:
 
   
<TABLE>
<CAPTION>
                                                             SQUARE FOOTAGE   PERCENTAGE OF TOTAL
                                                             --------------   -------------------
        <S>                                                  <C>              <C>
        Square footage occupied by tenants.................    29,369,223             91.2%
        Square footage used for management offices and
          building use, and remeasurement adjustments......       439,028              1.3%
        Square footage vacant..............................     2,408,490              7.5%
                                                               ----------           ------
                  Total net rentable square footage........    32,216,741            100.0%
                                                               ==========           ======
</TABLE>
    
 
LEASE DISTRIBUTIONS
 
   
     The following table sets forth information relating to the distribution of
the Office Property leases, based on rentable square feet under lease, as of
April 30, 1997:
    
 
   
<TABLE>
<CAPTION>
                                                                  PERCENTAGE                                  PERCENTAGE
                                                      TOTAL      OF AGGREGATE                   ANNUALIZED   OF AGGREGATE
                                          PERCENT    OCCUPIED      PORTFOLIO                       RENT       PORTFOLIO
                               NUMBER     OF ALL      SQUARE       OCCUPIED       ANNUALIZED    PER SQUARE    ANNUALIZED
  SQUARE FEET UNDER LEASE     OF LEASES   LEASES       FEET       SQUARE FEET        RENT          FOOT          RENT
  -----------------------     ---------   -------   ----------   ------------    ------------   ----------   ------------
<S>                           <C>         <C>       <C>          <C>             <C>            <C>          <C>
2,500 or Less...............    1,185       38.6%    1,958,598         6.6%      $ 26,726,992     $13.65          4.5%
2,501-5,000.................      672       21.9     2,387,976         8.0         44,960,367      18.83          7.6
5,001-7,500.................      347       11.3     2,115,725         7.1         39,679,385      18.75          6.7
7,501-10,000................      174        5.7     1,506,842         5.1         31,000,480      20.57          5.2
10,001-20,000...............      377       12.3     5,406,133        18.2        106,419,678      19.68         18.0
20,001-40,000...............      189        6.2     5,226,875        17.5        107,683,445      20.60         18.2
40,001-60,000...............       60        2.0     2,926,641         9.8         65,899,540      22.52         11.1
60,001-100,000..............       35        1.1     2,661,218         8.9         63,360,925      23.81         10.7
100,000 or Greater..........       27        0.9     5,618,243        18.8        106,635,163      18.98         18.0
                                -----      -----    ----------       -----       ------------     ------        -----
    Total/Weighted
      Average...............    3,066      100.0%   29,808,251       100.0%      $592,365,975     $19.87        100.0%
                                =====      =====    ==========       =====       ============     ======        =====
</TABLE>
    
 
                                       68
<PAGE>   77
 
TENANT RETENTION AND EXPANSIONS; NATIONAL MARKETING PROGRAM
 
     The Company believes its ability to deliver consistent service to, and
develop relationships with, tenants contribute to its success in attracting,
expanding and retaining a high quality and diverse tenant base. The Company
services tenants primarily through its on-site and regional professional leasing
and management staff.
 
   
     Management believes that tenant satisfaction fosters long-term tenant
relationships and creates renewal and expansion opportunities, which, in turn,
enhance the Company's ability to maintain and increase occupancy rates. The
Company's success in this area is demonstrated in part by the number of existing
tenants who have re-leased their space, leased additional space to support their
expansion needs or moved to other space within the Company's portfolio. During
1994 and 1995, the Company expanded leased space for 510 tenants by a total of
over 1.67 million square feet and during 1996, 292 tenants expanded their leased
space by 951,000 square feet. Examples include Reuters America, which expanded
its space in Stamford Plaza from 12,000 square feet to over 106,000 square feet;
Long Beach Mortgage's expansion in Orange County, California from 22,500 square
feet to almost 100,000 square feet in two buildings; BellSouth's increase from
31,950 square feet to 56,400 square feet at Lakeway Center in New Orleans; and
Encore Media's expansion from 26,285 square feet to over 63,000 square feet at
the Quadrant in Denver. The actual rental rates at which available space will be
relet will depend on prevailing market factors at the time. There can be no
assurance that the Company will relet such space at an increased, or even at the
then current rental rate.
    
 
   
     The Company has developed a National Accounts Program which focuses on
leasing space to the Company's largest tenants. Fast growing companies with
national real estate requirements have embraced the Company's concept of being
the "single point of contact" for their rapidly changing real estate needs. One
of the most important benefits has been the use of a standardized lease for a
multi-site tenant, reducing the expense and time to complete lease transactions.
Through the aggressive implementation of this program, the Company has
accommodated tenants in multiple Office Properties across the country. For
example, Andersen Worldwide has expanded from 111,698 square feet in two
locations to 496,222 square feet in five locations; Coopers & Lybrand has
expanded from 87,351 square feet in two locations to 235,259 square feet in four
locations; Marsh & McLennan has expanded from 14,324 square feet in one location
to 72,325 square feet in four locations; and Price Waterhouse has expanded from
67,020 square feet in one location to 128,279 square feet in three locations.
    
 
   
     As part of its initial repositioning of an Office Property after an
acquisition, the Company frequently pursues a policy of replacing some existing
tenants with more creditworthy tenants with a higher probability of expansion
and renewal. While this may adversely affect tenant retention rates in the early
years of ownership of an Office Property, management believes it is beneficial
to the Company in the long run. The Company's retention rate at the Office
Properties typically continues to increase as each Property is repositioned and
stabilized. The Company's experience is that the net present value of renewed
leases substantially exceeds the net present value of leases with new tenants.
The Company expects this difference to continue as demand outpaces supply.
    
 
CAPITAL IMPROVEMENTS
 
     The Company has a history of acquiring and repositioning undercapitalized
and poorly managed properties, many of which have required significant capital
improvements due to deferred maintenance and/or required substantial renovation
to enable them to compete effectively. A number of the Properties also have had
significant amounts of shell space requiring build out at the time of
acquisition. The Company takes these capital improvements and revenue enhancing
tenant improvements into consideration at the time of acquisition in determining
the amount of equity and debt financing required to purchase the Property and
fund the improvements. Therefore, capital improvements up to the first five
years after acquisition of these Properties are treated separately from typical
recurring capital expenditures and non-revenue enhancing tenant improvements and
leasing commissions required once these Properties have reached stabilized
occupancy and deferred maintenance and renovations planned at the time of
acquisition have been completed. Capital improvements (including tenant
improvements and leasing commissions for shell space) for the years ended
 
                                       69
<PAGE>   78
 
   
December 31, 1994, 1995 and 1996 and the four months ended April 30, 1997 were
$49,675,000, $48,756,000, $100,315,000 and $38,415,000, respectively, or $2.76,
$2.16, $3.49 and $1.19 per square foot, respectively. These amounts include
$16,762,000, $47,268,000 and $18,563,000 for the years ended December 31, 1995
and 1996 and the four months ended April 30, 1997, respectively, for the
redevelopment of the 28 State Street Building.
    
 
   
     The Company considers capital expenditures to be recurring expenditures
relating to the daily maintenance of the Office Properties. The table below
summarizes capital expenditures for the years ended December 31, 1994, 1995 and
1996 and the four months ended April 30, 1997. The capital expenditures set
forth below are not necessarily indicative of future capital expenditures.
    
 
   
<TABLE>
<CAPTION>
                                                                                     1997
                                                                                   (THROUGH
                                                              1994   1995   1996   APRIL 30)
                                                              ----   ----   ----   ---------
<S>                                                           <C>    <C>    <C>    <C>
Number of Office Properties.................................    61     71     81       90
Rentable Square Feet (in millions)..........................  18.0   22.6   28.7     32.2
Annual Capital expenditures
  per square foot...........................................  $.32   $.14   $.16     $.01
</TABLE>
    
 
                                       70
<PAGE>   79
 
TENANT IMPROVEMENT AND LEASING COMMISSION COSTS
 
   
     The Company distinguishes its tenant improvements and leasing commissions
between those that are revenue enhancing (which are required for vacant space at
the time of acquisition or that has been vacant for nine months or more) and
non-revenue enhancing (which are required to maintain the revenue being
generated from currently leased space). The table below summarizes the revenue
enhancing and non-revenue enhancing tenant improvements and leasing commissions
for the years ended December 31, 1994, 1995 and 1996 and the four months ended
April 30, 1997. The tenant improvement and leasing commission costs set forth
below are presented on an aggregate basis and do not reflect significant
regional variations and, in any event, are not necessarily indicative of future
tenant improvement and leasing commission costs:
    
 
   
<TABLE>
<CAPTION>
                                                                                1997
                                                                              (THROUGH           WEIGHTED
                                   1994          1995          1996          APRIL 30)            AVERAGE
                                -----------   -----------   -----------      ----------         -----------
<S>                             <C>           <C>           <C>              <C>                <C>
Number of Office Properties...           61            71            81              90
Rentable Square Feet (in
  millions)...................         18.0          22.6          28.7            32.2
Revenue enhancing tenant
  improvements and leasing
  commissions
  Annual (in thousands).......  $16,975,000   $20,981,000   $31,534,000      $2,774,000          72,264,000
  Per square foot improved....        14.14         22.89         30.26(1)        20.25(2)            21.92
  Per square foot total.......          .94           .93          1.10(1)          .26(2,3)            .71
Non-revenue enhancing tenant
  improvements and leasing
  commissions
  Percentage of Space
    Renewed...................           78%           75%           60%             76%                 69%
  Percentage of Space
    Retenanted................           22%           25%           40%             24%                 31%
Total.........................          100%          100%          100%            100%                100%
  Renewal space
    Annual (in thousands).....   11,095,000    10,008,000    15,486,000       3,825,000          40,414,000
    Per square foot
      improved................         5.41          7.82          6.79(1)         6.98(2)             6.56
    Per square foot total.....          .62           .44           .54(1)          .36(2,3)            .40
  Re-tenanted space
    Annual (in thousands).....    8,966,000     8,446,000    31,987,000       2,876,000          52,275,000
    Per square foot
      improved................        15.08         19.80         20.64(1)        16.93(2)            19.07
    Per square foot total.....          .50           .37          1.11(1)          .27(2,3)            .52
                                -----------   -----------   -----------      ----------         -----------
Total Non-Revenue Enhancing...  $20,061,000   $18,454,000   $47,473,000      $6,701,000          92,689,000
Per square foot improved......         7.58         10.81         12.39            9.33               10.41
Per square foot total.........         1.12           .81          1.65             .63(2,3)            .92
</TABLE>
    
 
- ---------------
   
(1) The per square foot calculations as of December 31, 1996 are calculated
    taking the total dollars anticipated to be expended on tenant improvements
    in process as of December 31, 1996, divided by the total square footage
    being improved or total building square footage. The actual amounts expended
    as of December 31, 1996 for revenue enhancing and non-revenue enhancing
    renewal and re-tenanted space were $22,182,000, $7,863,000 and $12,989,000,
    respectively.
    
 
   
(2) The per square foot calculations as of April 30, 1997 are calculated taking
    the total dollars anticipated to be expended on tenant improvements in
    process as of April 30, 1997, divided by the total square footage being
    improved or total building square footage. The actual amounts expended as of
    April 30, 1997 for revenue enhancing and non-revenue enhancing renewal and
    re-tenanted space were $1,600,000, $1,002,000 and $1,603,000, respectively.
    
 
   
(3) The amounts shown have been annualized to reflect a full year of comparable
    operation. The actual costs per square foot total as of April 30, 1997 for
    revenue enhancing and non-revenue enhancing renewal and re-tenanted space
    were $.09, $.12 and $.09, respectively.
    
 
                                       71
<PAGE>   80
 
OCCUPANCY
 
     The table below sets forth weighted average occupancy rates, based on
square feet occupied, of the Office Properties owned by the Company at the
indicated dates:
 
   
<TABLE>
<CAPTION>
                                                      AGGREGATE          PERCENTAGE OF RENTABLE
DATE                                             RENTABLE SQUARE FEET     SQUARE FEET OCCUPIED
- ----                                             --------------------    ----------------------
<S>                                              <C>                     <C>
December 31, 1992..............................        9,095,684                   73%
December 31, 1993..............................       13,550,553                   80
December 31, 1994..............................       18,505,591                   88
December 31, 1995..............................       23,097,222                   86
December 31, 1996..............................       29,127,289                   90
June 15, 1997..................................       32,216,741                   93(1)
</TABLE>
    
 
- ---------------
   
(1) Percentage of occupied square footage represents occupancy as of April 30,
    1997 for all Office Properties except for 30 N. LaSalle which is represented
    as of June 13, 1997, its date of acquisition.
    
 
DEBT FINANCING
 
   
     As of March 31, 1997, the Company had outstanding existing long-term
indebtedness in an aggregate principal amount of $1.996 billion, of which $598.4
million or 30% had a floating interest rate. The Company's fixed rate debt had a
weighted average interest rate of 7.81% and a weighted average maturity of 73
months. As of such date, the Company's floating rate debt bore interest at a
weighted average rate of 7.19% and had a weighted average maturity of 38 months.
The Company's overall weighted average interest rate as of March 31, 1997 was
7.62%.
    
 
   
     The Company has previously entered into interest rate hedging arrangements
for substantially all of its floating rate debt in order to protect the company
from rising interest rates. In addition to the foregoing, the Company intends to
issue, within 90 days of consummation of the Offering, a Senior Notes Offering.
Excluding the Line of Credit that the Company expects to enter into upon
consummation of the Consolidation, the Company's total debt subsequent to the
Offering will largely consist of (i) fixed rate loans or (ii) floating rate
loans subject to interest rate hedging arrangements that will limit the
Company's exposure to rising interest rates.
    
 
   
REALTY TAXES
    
 
   
     As of March 31, 1997, the Properties were subject to realty tax rates
ranging from approximately 1% to approximately 7.5% of assessed value. For the
year ended December 31, 1996, the Company incurred approximately $52.2 million
in annual realty taxes. The Company does not expect proposed improvements to
materially affect the amount of realty taxes.
    
 
LEGAL PROCEEDINGS
 
   
     Two consolidated subsidiaries of Equity Office Predecessors have been named
as two of several defendants in an action brought on August 15, 1995, in the
Circuit Court of Cook County, Illinois, Chancery Division by an investor in an
unaffiliated entity owning an interest in one of the subsidiaries. The plaintiff
demands rescission of certain transactions related to the acquisition by one of
the subsidiaries of the Theatre District Garage. A sustained judgment in favor
of the plaintiff could result in the loss of the Company's interest in the
Theatre District Garage. This action is in its discovery stage. Although the
outcome cannot be predicted with any certainty, the Company intends to contest
all asserted claims vigorously and the Company believes that it will not incur a
material loss in connection with this action. In addition, the Company's
interests in the Theatre District Garage have the benefit of title insurance
policies insuring the Equity Office Predecessors' interests in this Property up
to the amounts of their respective investments in the Property and
    
 
                                       72
<PAGE>   81
 
   
covering the costs of defense. Furthermore, the Company has the benefit of an
indemnity not limited to the amount of such interests given by certain
principals of the seller of the Property.
    
 
     Except as described above, neither the Company nor any of the Properties is
presently subject to any material litigation nor, to the Company's knowledge, is
any litigation threatened against the Company, or any of the Properties, other
than routine actions for negligence and other claims and administrative
proceedings arising in the ordinary course of business, some of which are
expected to be covered by liability insurance and all of which collectively are
not expected to have a material adverse effect on the liquidity, results of
operations, or business or financial condition of the Company.
 
                                       73
<PAGE>   82
 
                                   MANAGEMENT
 
TRUSTEES, TRUSTEE NOMINEES AND EXECUTIVE AND SENIOR OFFICERS
 
   
     The Board of Trustees of the Company will be expanded upon consummation of
the Offering to include the trustee nominees named below, each of whom has been
nominated for election and has consented to serve, plus three additional trustee
nominees who have not yet been selected. Upon election of the trustee nominees,
two-thirds of the trustees will not be employees or affiliates of the Company or
the Equity Group. Pursuant to the Company's Declaration of Trust, the Board of
Trustees is divided into three classes of trustees. The initial terms of the
first, second and third classes will expire in 1998, 1999 and 2000,
respectively. Beginning in 1998, trustees of each class will be chosen for
three-year terms upon the expiration of their current terms and each year one
class of trustees will be elected by the shareholders. The Company believes that
classification of the Board of Trustees will help to assure the continuity and
stability of the Company's business strategies and policies as determined by the
Board of Trustees. Holders of Common Shares will have no right to cumulative
voting in the election of trustees. Consequently, at each annual meeting of
shareholders, the holders of a majority of the Common Shares will be able to
elect all of the successors of the class of trustees whose terms expire at that
meeting.
    
 
     Information concerning the current trustees, trustee nominees and executive
and senior officers of the Company is set forth below.
 
   
<TABLE>
<CAPTION>
NAME                                   AGE                         OFFICES HELD
- ----                                   ---                         ------------
<S>                                    <C>   <C>
Samuel Zell..........................  55    Chairman of the Board, Trustee
Timothy H. Callahan..................  46    President, Chief Executive Officer, Trustee
Gary A. Beller.......................  50    Executive Vice President -- Parking Facilities
Richard D. Kincaid...................  35    Executive Vice President, Chief Financial Officer
Michael A. Steele....................  50    Executive Vice President -- Real Estate Operations
Stanley M. Stevens...................  48    Executive Vice President, Chief Legal Counsel and
                                             Secretary
Thomas Q. Bakke......................  42    Senior Vice President -- Divisional Manager
David H. Crawford....................  40    Senior Vice President -- Administration and General
                                             Counsel for Property Operations
Sybil J. Ellis.......................  43    Senior Vice President -- Acquisitions
Frank Frankini.......................  42    Senior Vice President -- Design & Construction
Jeffrey L. Johnson...................  37    Senior Vice President -- Investments
Peter D. Johnston....................  39    Senior Vice President -- National Accounts
David H. Naus........................  42    Senior Vice President -- Acquisitions
Michael E. Sheinkop..................  34    Senior Vice President -- Divisional Manager
Sheli Z. Rosenberg...................  55    Trustee
Thomas E. Dobrowski..................  53    Trustee Nominee
James D. Harper, Jr..................  63    Trustee Nominee
Peter Linneman.......................  46    Trustee Nominee
Jerry M. Reinsdorf...................  61    Trustee Nominee
</TABLE>
    
 
   
     Samuel Zell has been a Trustee and Chairman of the Board of the Company
since October, 1996. For more than 5 years Mr. Zell has served as Chairman of
the Board of Directors of Equity Group Investments, Inc. ("EGI"), an owner,
manager and financier of real estate and corporations. For more than 5 years Mr.
Zell has served as Chairman of the Board of Directors of Anixter International
Inc., a provider of integrated network and cabling solutions ("Anixter"),
American Classic Voyages Co., an owner and operator of cruise lines ("ACV"),
Manufactured Home Communities, Inc. ("MHC"), a real estate investment trust
specializing in the ownership and management of manufactured home communities,
and as Chairman of the Board of Directors and Chief Executive Officer of Capsure
Holdings Corp., a holding company whose principal subsidiaries are specialty
property and casualty insurers ("Capsure"). Since February 1993, Mr. Zell has
served as a director of Sealy Corporation, a maker of bedding and related
products ("Sealy"). Since March 1993, Mr. Zell has served as Chairman of the
Board of Trustees of Equity Residential Properties Trust ("EQR"), an owner and
operator of multifamily residential properties. Since January 1995, Mr. Zell has
    
 
                                       74
<PAGE>   83
 
   
served as a director of TeleTech Holdings, Inc., a provider of telephone and
computer based customer care solutions. Since March 1995, Mr. Zell has served as
a director of Quality Food Centers, Inc., an independent supermarket chain
("QFC"). Since April 1996, Mr. Zell has served as a director of Ramco Energy
plc, an independent oil company based in the United Kingdom. Since March 1997,
Mr. Zell has served as a director of Chart House Enterprises, Inc., an owner and
operator of restaurants. Since April 1997, Mr. Zell has served as the Chairman
of the Board of Directors of Jacor Communications, Inc., an owner of radio
stations ("Jacor").
    
 
   
     Timothy H. Callahan has been a Trustee and Chief Executive Officer and
President of the Company since October 1996. Mr. Callahan has served on the
Board of Managers and has been the Chief Executive Officer of Equity Office
Holdings, L.L.C., an asset manager of office buildings ("EOH"), and Equity
Office Properties, L.L.C., a property manager of office buildings ("EOP"), since
August 1996. Mr. Callahan was Executive Vice President and Chief Financial
Officer of EGI from January 1995 until August 1996, was Executive Vice President
of EGI from November 1994, through January 1995 and was Senior Vice President of
EGI from July 1992, until November 1994. Mr. Callahan has been a Director of MHC
since May 1996. Mr. Callahan was Vice President -- Finance of the Edward J.
DeBartolo Corporation, a developer, owner and operator of shopping centers, in
Youngstown, Ohio from July 1988 until July 1992. Mr. Callahan was employed by
Chemical Bank, a commercial bank located in New York City, from July 1973 until
March 1987.
    
 
   
     Gary A. Beller has been Executive Vice President of the Company since March
1997. Mr. Beller has been President of Equity Capital Holdings, L.L.C., an asset
manager of parking facilities, since June 1995. Mr. Beller has been President of
Equity Hotel Properties, Inc., a subsidiary of EGI which manages hotels, since
November 1993. Mr. Beller was Senior Vice President -- Redevelopment of Equity
Assets Management, Inc., a former subsidiary of EGI which provided real estate
asset management services ("EAM") from October 1987 until March 1997.
    
 
   
     Richard D. Kincaid has been Executive Vice President and Chief Financial
Officer of the Company since March 1997 and was Senior Vice President and Chief
Financial Officer of the Company from October 1996 until March 1997. Mr. Kincaid
has been Senior Vice President and Chief Financial Officer of EOH since July
1995. Mr. Kincaid was Senior Vice President of EGI from February 1995 until July
1995. Mr. Kincaid was Senior Vice President of the Yarmouth Group, a real estate
investment company in New York, New York, from August 1994 until February 1995.
Mr. Kincaid was Senior Vice President-Finance for EGI from December 1993 until
July 1994. Mr. Kincaid was Vice President -- Finance for EGI from August 1990
until December 1993. Mr. Kincaid was Vice President for Barclays Bank PLC, a
commercial bank located in Chicago, Illinois from August 1987 until August 1990.
    
 
   
     Michael A. Steele has been Executive Vice President-Real Estate Operations
for the Company since October 1996. Mr. Steele has been President and Chief
Operating Officer of EOP since July 1995. Mr. Steele has been Executive Vice
President of EOH since July 1995. Mr. Steele was President and Chief Operating
Officer of Equity Office Properties, Inc., a subsidiary of EGI which provided
real estate property management services ("EOP Inc."), from November 1993
through October 1995. Mr. Steele was President and Chief Executive Officer of
First Office Management, a former division of Equity Property Management, Inc.
that provided real estate property management services ("FOM"), from June 1992
until October 1993. Mr. Steele was Senior Vice President and regional director
for Rubloff, Inc., a full service real estate company in Chicago, Illinois, from
April 1987 until June 1992.
    
 
     Stanley M. Stevens has been Executive Vice President, Chief Legal Counsel
and Secretary of the Company since October 1996. Mr. Stevens has been Executive
Vice President and General Counsel of EOH since September 1996. Mr. Stevens was
a vice president of Rosenberg & Liebentritt, P.C., a law firm in Chicago,
Illinois, from December 1993 until September 1996. Mr. Stevens was a partner at
Rudnick & Wolfe, a national law firm based in Chicago, Illinois, from October
1987 until December 1993.
 
   
     Thomas Q. Bakke has been Senior Vice President -- Divisional Manager of the
Company since March 1997. Mr. Bakke has been Senior Vice President -- Divisional
Manager of EOH since February 1997. Mr. Bakke has been Senior Vice
President -- Field Operations of EOP since July 1995. Mr. Bakke was Senior
    
 
                                       75
<PAGE>   84
 
   
Vice President -- Marketing and Leasing of EOP Inc. from March 1994 until July
1995. Mr. Bakke was Vice President -- Marketing and Leasing of EOP Inc. from
November 1993 until February 1994. Mr. Bakke was Vice President -- Marketing and
Leasing of FOM from January 1991 until November 1993. Mr. Bakke was a senior
associate with The Staubach Company, a real estate investment company, in
Washington, D.C. from January 1990 until January 1991. Mr. Bakke was an office
leasing specialist with Coldwell Banker Commercial Real Estate, a commercial
real estate company in Norfolk, Virginia from August 1987 until January 1990.
    
 
     David H. Crawford has been Senior Vice President -- Administration, General
Counsel for Property Operations and Assistant Secretary of the Company since
March 1997. Mr. Crawford has been Senior Vice President and Associate General
Counsel of EOH since September 1996. Mr. Crawford has been Senior Vice President
and General Counsel of EOH from July 1995 until September 1996 and of EOP since
September 1996. Mr. Crawford was Of Counsel to Rosenberg & Liebentritt, P.C.
from February 1991 until December 1996. Mr. Crawford was Senior Vice President
and General Counsel of EOP Inc. from November 1993 until July 1995. Mr. Crawford
was Vice President and General Counsel of FOM from February 1991 until November
1993. Mr. Crawford was an associate at Kirkland & Ellis, a national law firm
based in Chicago, Illinois, from June 1988 until February 1991.
 
   
     Sybil J. Ellis has been Senior Vice President -- Acquisitions of the
Company since March 1997. Ms. Ellis has been Senior Vice
President -- Acquisitions of EOH since July 1995. Ms. Ellis was Senior Vice
President -- Acquisitions of EOP Inc. from July 1994 through July 1995 and was
Vice President -- Acquisitions of EOP, Inc. from November 1993 until July 1994.
Ms. Ellis was Vice President -- Acquisitions of EAM from March 1990 until
October 1993.
    
 
   
     Frank Frankini has been Senior Vice President -- Design and Construction of
the Company since March 1997. Mr. Frankini has been Senior Vice
President -- Design and Construction of EOP since July 1995. Mr. Frankini was
Senior Vice President -- Engineering and Operations of EOP Inc. from November
1993 until July 1995. Mr. Frankini was Senior Vice President -- Engineering and
Operations of FOM from October 1990 until October 1993. Mr. Frankini was
National Director of Engineering and Operations for Rubloff, Inc., a full
service real estate company in Chicago, Illinois from October 1984 until October
1990.
    
 
   
     Jeffrey L. Johnson has been Senior Vice President -- Investments for the
Company since March 1997. Mr. Johnson has been Senior Vice President -- Asset
Management for EOH since July 1996. Mr. Johnson was Senior Vice
President -- Acquisitions for EOH from July 1995 until July 1996. Mr. Johnson
was Senior Vice President -- Acquisitions of EOP Inc. from December 1994 until
July 1995 and was Vice President -- Acquisitions of EOP, Inc. from November 1993
until December 1994. Mr. Johnson was Vice President -- Acquisitions of EAM from
September 1990 until October 1993. Mr. Johnson was an Investor and Asset Manager
for Aldrich Eastman Waltch, Inc., a real estate advisor in Boston,
Massachusetts, from August 1987 until August 1990. Mr. Johnson was Senior
Project Manager in the real estate investment group for First Wachovia, Inc., a
commercial bank in Winston-Salem, North Carolina, from July 1983 until August
1987.
    
 
   
     Peter D. Johnston has been Senior Vice President -- National Accounts of
the Company since March 1997. Mr. Johnston has been Senior Vice
President -- National Leasing Director of EOP since July 1995. Mr. Johnston was
Senior Vice President -- Marketing and Leasing of EOP Inc. from November 1993
until July 1995. Mr. Johnston was Senior Vice President -- Marketing and Leasing
of FOM from April 1993 until November 1993. Mr. Johnston was a Vice President of
EAM from October 1991 until April 1993. Mr. Johnston was a partner with Trammell
Crow Company, a full service real estate company, in Cincinnati, Ohio from
January 1991 until July 1991. Mr. Johnston was a partner with Trammell Crow
Company in Columbus, Ohio from January 1990 until December 1990.
    
 
     David H. Naus has been Senior Vice President -- Acquisitions of the Company
since March 1997. Mr. Naus has been Senior Vice President -- Acquisitions for
EOH since December 1995. Mr. Naus was Vice President -- Acquisitions of EOH from
July 1995 until December 1995. Mr. Naus was Vice President -- Acquisitions of
EOP Inc. from November 1993 until July 1995. Mr. Naus was Vice
President -- Acquisitions of EAM from November 1992 until November 1993. Mr.
Naus was Vice President of EAM from October 1988 until November 1992.
 
                                       76
<PAGE>   85
 
   
     Michael E. Sheinkop has been Senior Vice President -- Divisional Manager
for the Company since March 1997. Mr. Sheinkop has been Senior Vice
President -- Divisional Manager of EOH since March 1997. Mr. Sheinkop was Senior
Vice President -- Asset Management of EOH from December 1995 until February
1997. Mr. Sheinkop was Vice President -- Asset Management of EOH from July 1995
until December 1995. Mr. Sheinkop was a Vice President -- Asset Management of
EOP Inc. from November 1993 until July 1995. Mr. Sheinkop was Vice President of
EAM from March 1990 until November 1993.
    
 
   
     Sheli Z. Rosenberg has been a Trustee of the Company since March 1997.
Since November 1994, Ms. Rosenberg has been Chief Executive Officer and
President of EGI. Since 1980, Ms. Rosenberg has been a principal of the law firm
of Rosenberg & Liebentritt, P.C. For more than five years, Ms. Rosenberg has
served on the Board of Directors of each of the following companies: EGI, AVC,
Anixter, and Capsure. Since March 1993, Ms. Rosenberg has been a trustee of EQR.
Since 1994, Ms. Rosenberg has been a director of Jacor and since April 1997, has
served as the Vice Chairman of the Board of Directors of Jacor. Ms. Rosenberg
was a vice president of First Capital Benefit Administrators, Inc., ("FCBA") a
wholly owned indirect subsidiary of Great American Management and Investment,
Inc., which filed a Chapter 7 Bankruptcy petition on January 3, 1995, resulting
in FCBA's liquidation. On November 15, 1995, an order closing the FCBA
bankruptcy case was entered by the Bankruptcy Court for the Central District of
California. Since December 1995, Ms. Rosenberg has been a director of Sealy.
Since March 1996, Ms. Rosenberg has been a director of QFC. Since August 1986,
Ms. Rosenberg has been director of MHC. Since April 1997, Ms. Rosenberg has been
a director of Illinois Power Co., a supplier of electricity and natural gas in
Illinois, the holding company of which is Illinova Corp., of which Ms. Rosenberg
is also a director. Since May 1997, Ms. Rosenberg has been a director of CVS
Corporation, a drugstore chain.
    
 
   
     Thomas E. Dobrowski is a Trustee Nominee of the Company. Since December,
1994, Mr. Dobrowski has been the managing director of real estate and
alternative investments of General Motors Investment Management Corporation, an
investment advisor to several pension funds of General Motors Corporation ("GM")
and its subsidiaries and to several other clients also controlled by GM. Since
March 1993, Mr. Dobrowski has been a director of MHC. Since April 1994, Mr.
Dobrowski has been a director of Red Roofs Inns, Inc., an owner and operator of
hotels. Since May 1997, Mr. Dobrowski has been a director of Taubman Centers
Inc., an equity REIT focused on regional shopping centers.
    
 
   
     James D. Harper, Jr. is a Trustee Nominee of the Company. Since 1982, Mr.
Harper has been president of JDH Realty Co., a real estate development and
investment company. Since 1988, he has been a co-managing partner in AH
Development, S.E. and AH HA Investments, S.E., special limited partnerships
formed to develop over 400 acres of land in Puerto Rico. Since May 1993, Mr.
Harper has been a trustee of EQR. Since 1993, Mr. Harper has been a trustee of
Urban Land Institute. Since 1997, Mr. Harper has been a director of Burnham
Pacific Properties Inc., a REIT that owns, develops and manages commercial real
estate properties in California. Since June 1997, Mr. Harper has been a director
of American Health Properties, Inc., a REIT specializing in health care
facilities.
    
 
   
     Peter Linneman is a Trustee Nominee of the Company. Dr. Linneman has been a
Professor of Finance and Public Policy at the Wharton School of the University
of Pennsylvania since 1979, the Albert Sussman Professor of Real Estate at the
Wharton School since 1989 and a director of the Wharton Real Estate Center since
1986. In addition, he is an Urban Land Institute Research Fellow and a member of
the National Association of Real Estate Investment Trusts. Since 1986, Dr.
Linneman has been a trustee of Universal Health Realty Trust, a REIT that
invests in health care and human service related facilities. Since 1992, Dr.
Linneman has been a trustee of Kranzco Realty Trust, a REIT that owns, develops,
operates, leases, manages, and invests in neighborhood and community shopping
centers and free-standing properties. Since 1993, Dr. Linneman has been a
trustee of Gables Residential Properties Trust, a self-administered, self-
managed residential property REIT. Since 1996, Dr. Linneman has served as a
director of Nevada Investment Holdings, a full service real estate company which
focuses on community shopping centers. From 1993 until 1996, Dr. Linneman was
Chairman of the Board of Directors of Rockefeller Center Properties, Inc., a
REIT which previously held the first mortgage loan relating to Rockefeller
Center in New York City.
    
 
                                       77
<PAGE>   86
 
   
     Jerry M. Reinsdorf is a Trustee Nominee of the Company. For more than five
years, Mr. Reinsdorf has been the Chairman of the Chicago White Sox baseball
team, the Chairman of the Chicago Bulls basketball team, and a partner of Bojer
Financial Ltd., a real estate investment company located in Northbrook,
Illinois. Since 1996, Mr. Reinsdorf has served as a director of LaSalle National
Bank, N.A., a commercial bank in Chicago, Illinois, the holding company of which
is LaSalle National Corporation, of which Mr. Reinsdorf is also a director.
Since 1993, Mr. Reinsdorf has been a trustee of Northwestern University in
Evanston, Illinois.
    
 
COMMITTEES OF THE BOARD OF TRUSTEES
 
     Audit Committee.  The Audit Committee will make recommendations concerning
the engagement of independent public accountants, review with the independent
public accountants the plans and results of the audit engagement, approve
professional services provided by the independent public accountants, review the
independence of the independent public accountants, consider the range of audit
and non-audit fees and review the adequacy of the Company's internal accounting
controls.
 
     Executive Committee.  The Executive Committee will have the authority
within certain parameters to acquire, dispose of and finance investments for the
Company (including the issuance by the Operating Partnership of additional Units
or other equity interests) and approve the execution of contracts and
agreements, including those related to the borrowing of money by the Company,
and generally exercise all other powers of the Board of Trustees except as
prohibited by law.
 
     Compensation Committee.  The Compensation Committee will determine
compensation for the Company's executive officers. The Compensation Committee
will review and make recommendations concerning proposals by management with
respect to compensation, bonus, employment agreements and other benefits and
policies respecting such matters for the executive officers of the Company.
 
     The Board of Trustees will not have a nominating committee and the entire
Board of Trustees will perform the function of such a committee.
 
COMPENSATION OF THE BOARD OF TRUSTEES; PAYMENT IN COMMON SHARES
 
   
     The Company will pay its non-employee trustees an annual fee of $40,000. In
addition, non-employee trustees who serve on the Audit Committee, Executive
Committee or Compensation Committee will receive an additional $1,000 per annum
for each committee on which they serve. Committee chairs will receive an
additional $500 per annum. The Company expects that these fees will generally be
paid in Common Shares payable immediately or, at the option of the trustee, paid
in Units on a deferred basis. Trustees who are employees of the Company will not
be paid any trustees' or committee fees. The Company will reimburse the trustees
for travel expenses incurred in connection with their activities on behalf of
the Company. Following the Offering, each trustee (other than Messrs. Zell and
Callahan and Ms. Rosenberg) will receive a grant of options to purchase 10,000
Common Shares at the offering price. Under the Company's 1997 Employee Share
Option and Award Plan (the "Employee Plan"), each trustee then in office will
receive an annual grant of options to purchase 10,000 Common Shares at the then
current market price on the date of the meeting of the Board of Trustees held
immediately after the annual meeting of the Company's shareholders. These grants
of options to purchase 10,000 Common Shares will vest as follows: options for
3,333 Common Shares will vest six months after the grant date, options for an
additional 3,333 Common Shares will vest one year after the grant date, and
options for the remaining 3,334 Common Shares will vest on the second
anniversary of the grant date. Trustees who perform other functions for the
Company may receive additional options under the Employee Plan.
    
 
                                       78
<PAGE>   87
 
EXECUTIVE COMPENSATION
 
     The following table sets forth the annual base salary levels and options
expected to be granted in 1997 to the Company's Chief Executive Officer and the
Company's four other most highly paid executive officers (the "Named Executive
Officers").
 
<TABLE>
<CAPTION>
                                                                                 1997 BASE     OPTIONS
NAME                                               TITLE                         SALARY(1)   ALLOCATED(2)
- ----                                               -----                         ---------   ------------
<S>                          <C>                                                 <C>         <C>
Timothy H. Callahan........  President and Chief Executive Officer               $600,000      200,000
Gary A. Beller.............  Executive Vice President -- Parking Facilities       300,000      100,000
Richard D. Kincaid.........  Executive Vice President, Chief Financial Officer    235,000      150,000
Michael A. Steele..........  Executive Vice President -- Real Estate              265,000      150,000
                             Operations
Stanley M. Stevens.........  Executive Vice President, Chief Legal Counsel        325,000      150,000
</TABLE>
 
- ---------------
(1) Does not include bonuses that may be paid to the above individuals. See
    "-- Incentive Compensation" below.
(2) Upon the effective date of the Offering, options to purchase Common Shares
    equal to approximately 2.56% of the Company's outstanding Common Shares
    (calculated on a fully diluted basis) will be granted to officers, employees
    and consultants of the Company under the Company's Employee Plan at a price
    equal to the offering price. Such grants will include grants to Mr. Zell and
    Ms. Rosenberg of options to purchase 200,000 and 50,000 Common Shares,
    respectively, at the offering price. See "-- Option and Restricted Share
    Plans" below.
 
                       OPTION GRANTS IN FISCAL YEAR 1997
 
   
<TABLE>
<CAPTION>
                                                                                            POTENTIAL REALIZABLE
                                                                                              VALUE OF ASSUMED
                        NUMBER OF                                                              ANNUAL RATE OF
                        SECURITIES   PERCENT OF TOTAL                                        COMMON SHARE PRICE
                        UNDERLYING    OPTIONS TO BE                                           APPRECIATION FOR
                         OPTIONS        GRANTED TO      EXERCISE PRICE                         OPTION TERM(1)
                          TO BE        EMPLOYEES IN       PER COMMON       EXPIRATION      -----------------------
NAME                    GRANTED(2)     FISCAL YEAR         SHARE(3)           DATE           5%(4)        10%(5)
- ----                    ----------   ----------------   --------------   ---------------   ----------   ----------
<S>                     <C>          <C>                <C>              <C>               <C>          <C>
Timothy H. Callahan...   200,000           4.9%             $20.00          July 2007      $2,516,000   $6,375,000
Gary A. Beller........   100,000           2.4               20.00          July 2007       1,258,000    3,187,000
Richard D. Kincaid....   150,000           3.7               20.00          July 2007       1,887,000    4,781,000
Michael A. Steele.....   150,000           3.7               20.00          July 2007       1,887,000    4,781,000
Stanley M. Stevens....   150,000           3.7               20.00          July 2007       1,887,000    4,781,000
</TABLE>
    
 
- ---------------
 
(1) In accordance with the rules of the Securities and Exchange Commission,
    these amounts are the hypothetical gains or "option spreads" that would
    exist for the respective options based on assumed rates of annual compound
    share price appreciation of 5% and 10% from the date the options were
    granted over the full option term. No gain to the optionee is possible
    without an increase in the price of Common Shares, which would benefit all
    shareholders.
(2) All options are granted at the fair market value of the Common Shares at the
    date of grant. Options granted are for a term of not more than ten years
    from the date of grant and vest in three equal installments (rounded to the
    nearest whole Common Share) over three years.
(3) Based on the assumed initial public offering price. The exercise price per
    share will be the initial public offering price.
   
(4) An annual compound share price appreciation of 5% from the assumed Offering
    price of $20.00 per Common Share yields a price of $32.58 per Common Share.
    
   
(5) An annual compound share price appreciation of 10% from the assumed Offering
    price of $20.00 per Common Share yields a price of $51.87 per Common Share.
    
 
                                       79
<PAGE>   88
 
   
OPTION AND RESTRICTED SHARE PLAN
    
 
   
     Prior to the completion of the Offering, the Company intends to adopt the
Employee Plan for the purpose of attracting and retaining highly qualified
executive officers, trustees, employees and consultants. The Company will
reserve Common Shares for issuance pursuant to the Employee Plan. In connection
with the establishment of the Employee Plan, the Company will grant additional
options to purchase Common Shares to certain officers, trustees, employees and
consultants of the Company at the offering price.
    
 
   
     The Employee Plan will be qualified under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Employee Plan will be
administered by the Compensation Committee and provide for the granting of share
options, share appreciation rights or restricted shares with respect to up to
6.8% of the Company's outstanding Common Shares (calculated on a fully diluted
basis) to executive or other employees of the Company. Share options may be
granted in the form of "incentive stock options" (as defined in Section 422 of
the Code), or non-statutory share options, and are exercisable for up to 10
years following the date of the grant. The exercise price of each option will be
set by the Compensation Committee; provided, however, that the price per share
must be equal to or greater than the fair market value of the Common Shares on
the grant date.
    
 
     The Employee Plan also provides for the issuance of share appreciation
rights which will generally entitle a holder to receive cash or shares, as
determined by the Compensation Committee at the time of exercise, equal to the
difference between the exercise price and the fair market value of the Common
Shares. In addition, the Employee Plan permits the Company to issue restricted
Common Shares to executive or other key employees upon such terms and conditions
as shall be determined by the Compensation Committee in its sole discretion.
 
401(K) PLAN
 
     Effective upon completion of the Offering, the Company intends to establish
the Equity Office Properties Trust Section 401(k) Savings/Retirement Plan (the
"401(k) Plan") to cover eligible employees of the Company and any designated
affiliate.
 
   
     The 401(k) Plan will permit eligible employees of the Company to defer up
to 16% of their annual compensation, subject to certain limitations imposed by
the Code. The employees' elective deferrals are immediately vested and
nonforfeitable upon contribution to the 401(k) Plan.
    
 
   
EMPLOYEE SHARE PURCHASE PLAN
    
 
   
     Prior to the completion of the Offering, the Company intends to adopt its
1997 Non-Qualified Employee Share Purchase Plan (the "Purchase Plan") for the
purpose of attracting and retaining highly qualified executive officers,
trustees and employees. The Company will reserve Common Shares for issuance
pursuant to the Purchase Plan.
    
 
   
     The Purchase Plan will be qualified under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Purchase Plan will be
administered by the Compensation Committee and provide for eligible employees
and trustees to acquire an interest in the Company through the purchase of
Common Shares from the Company at a discount from fair market value. A total of
2,000,000 Common Shares of the Company (subject to adjustment for share splits,
share dividends, recapitalizations or other corporate restructurings) have been
authorized for issuance under the Purchase Plan.
    
 
   
     Common Shares will be offered under the Purchase Plan in semi-annual
offering periods. Eligible employees and trustees who elect to participate in
the Purchase Plan will be able to use funds accumulated through cash
contributions or payroll deductions to purchase Common Shares at a price less
than the fair market value of the Common Shares on the date of purchase.
    
 
                                       80
<PAGE>   89
 
INCENTIVE COMPENSATION
 
     The Company intends to establish an incentive compensation plan for key
officers of the Company and its subsidiaries and affiliates. This plan will
provide for payment of cash bonuses to participating officers after evaluating
the officer's performance and the overall performance of the Company. The Chief
Executive Officer will make recommendations to the Compensation Committee of the
Board of Trustees, which will make the final determination for the award of
bonuses. The Compensation Committee will determine such bonuses, if any, for the
Chief Executive Officer.
 
LIMITATION OF LIABILITY AND INDEMNIFICATION
 
     The Maryland REIT Law permits a Maryland real estate investment trust to
include in its Declaration of Trust a provision limiting the liability of its
trustees and officers to the trust and its shareholders for money damages except
for liability resulting from (a) actual receipt of an improper benefit or profit
in money, property or services or (b) active and deliberate dishonesty
established by a final judgment as being material to the cause of action. The
Declaration of Trust of the Company contains such a provision that eliminates
such liability to the maximum extent permitted by Maryland law.
 
     The Declaration of Trust of the Company authorizes it, to the maximum
extent permitted by Maryland law, to obligate itself to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any present or former trustee or officer or (b) any individual who, while a
trustee of the Company and at the request of the Company, serves or has served
as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or any
other enterprise from and against any claim or liability to which such person
may become subject or which such person may incur by reason of his or her status
as a present or former trustee or officer of the Company. The Bylaws of the
Company obligate it, to the maximum extent permitted by Maryland law, to
indemnify and to pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to (a) any present or former trustee or officer who
is made party to the proceeding by reason of his service in that capacity or (b)
any individual who, while a trustee or officer of the Company and at the request
of the Company, serves or has served another corporation, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a trustee,
director, officer or partner of such real estate investment trust, corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise and
who is made a party to the proceeding by reason of his service in that capacity,
against any claim or liability to which he may become subject by reason of such
status. The Declaration of Trust and Bylaws also permit the Company to indemnify
and advance expenses to any person who served as a predecessor of the Company in
any of the capacities described above and to any employee or agent of the
Company or a predecessor of the Company. The Bylaws require the Company to
indemnify a trustee or officer (or any former trustee or officer) who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he is made a party by reason of his service in that capacity.
 
   
     The Maryland REIT Law permits a Maryland real estate investment trust to
indemnify and advance expenses to its trustees, officers, employees and agents
to the same extent as permitted by the MGCL for directors and officers of
Maryland corporations. The MGCL permits a corporation to indemnify its present
and former directors and officers, among others, against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities unless it is established that (a) the
act or omission of the director or officer was material to the matter giving
rise to the proceeding and (i) was committed in bad faith or (ii) was the result
of active and deliberate dishonesty, (b) the director or officer actually
received an improper personal benefit in money, property or services or (c) in
the case of any criminal proceeding, the director or officer had reasonable
cause to believe that the act or omission was unlawful. However, under the MGCL,
a Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation or for a judgment of liability on the basis that
a personal benefit was improperly received, unless, in either case, a court
orders indemnification and then only for expenses. In accordance with the MGCL,
the Bylaws of the Company permit it to advance expenses upon receiving (a) a
written affirmation by the trustee or officer of his good faith belief that he
has met the standard of conduct
    
 
                                       81
<PAGE>   90
 
   
necessary for indemnification by the Company and (b) a written statement by or
on his behalf to repay the amount paid or reimbursed by the Company if it shall
ultimately be determined that the standard of conduct was not met.
    
 
     The Operating Partnership Agreement also provides for indemnification of
the Company and its officers and trustees to the same extent that
indemnification is provided to officers and trustees of the Company in its
Declaration of Trust, and limits the liability of the Company and its officers
and trustees to the Operating Partnership and its respective partners to the
same extent that the liability of the officers and trustees of the Company to
the Company and its shareholders is limited under the Company's Declaration of
Trust.
 
     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to trustees, officers or persons controlling the registrant
pursuant to the foregoing provisions, the registrant has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
 
                     STRUCTURE AND FORMATION OF THE COMPANY
 
OPERATING ENTITIES OF THE COMPANY
 
   
     The Operating Partnership is the vehicle through which the Company will own
the Properties. The ownership and management structure of the Company is
intended to (i) enable the Company to acquire assets in transactions that may
defer some or all of the sellers' tax consequences, including in connection with
the Company's formation, and (ii) enable the Company to comply with certain
technical and complex requirements under the Federal tax rules and regulations
relating to the assets and income permitted for a REIT.
    
 
   
     The Management Corp. will provide office property and asset management
services to the Managed Properties (which properties will not be acquired by the
Operating Partnership in the Consolidation) and to the Joint Venture Properties
described below. The Management Corp. will collect a property management fee for
the performance of such services. To maintain the Company's qualification as a
REIT, the Operating Partnership will own 100% of the non-voting stock of the
Management Corp., representing a 95% economic interest, and EOH will own 100% of
the voting stock of the Management Corp., representing a 5% economic interest.
    
 
   
     The Joint Venture Properties are held in partnerships, 11 of which are
Office Properties and seven of which are Parking Facilities. The Operating
Partnership or a Subsidiary will be the managing general partner of each of the
Joint Venture Properties (except for Civic Parking L.L.C., where a subsidiary
will be one of the two managing members), subject to various consent
requirements of the third-party partners. The Company's acquisition and
oversight of parking properties will be administered through a wholly owned
subsidiary, Equity Capital Holdings, L.P.
    
 
FORMATION TRANSACTIONS
 
   
     Background.  The Company will be formed pursuant to the consolidation of
the ownership of the Properties owned by the four Zell/Merrill Lynch
institutional real estate investment funds (each a "ZML Fund" and collectively,
the "ZML Funds"), and the Management Business which is owned by the Equity
Group. The ZML Funds were formed during the period from 1988 to 1996 to acquire,
improve, own, manage, operate and dispose of primarily office properties.
    
 
     Each ZML Fund consists of (i) a limited partnership organized under the
laws of the State of Illinois (each a "ZML Opportunity Partnership"), (ii) a
general partner of such ZML Opportunity Partnership (each a "ZML Partner") which
is controlled by Mr. Zell and in which Merrill Lynch & Co. ("Merrill Lynch") is
a limited partner and (iii) a Delaware corporation or Maryland real estate
investment trust (each a "ZML REIT"), as the case may be, that serves as the
majority limited partner in ZML Opportunity Partnerships I and II and the sole
limited partner in ZML Opportunity Partnerships III and IV. There are several
institutional investor limited partners in ZML Opportunity Partnerships I and II
(collectively,
 
                                       82
<PAGE>   91
 
   
"Investor Limited Partners") in addition to ZML REITs I and II. All of the
Investor Limited Partners were given an opportunity to convert their interest
into an interest in the corresponding ZML REIT in connection with the
Consolidation (which will subsequently be converted into Common Shares as
described below), and all but one Investor Limited Partner (in ZML Opportunity
Partnership II) have elected to do so.
    
 
   
     Pre-Formation Transactions
    
 
     - The Company filed its Declaration of Trust with the State Department of
       Assessments and Taxation of Maryland on October 9, 1996.
 
   
     - The Operating Partnership was formed as of November 11, 1996 with the
       Company as its managing general partner and majority limited partner and,
       thereafter, ZML Opportunity Partnership II as its non-managing general
       partner.
    
 
     - The ZML Opportunity Partnerships and the Equity Group have entered into
       the Contribution Agreement with the Operating Partnership pursuant to
       which the ZML Opportunity Partnerships' assets and liabilities and the
       Equity Group's assets and liabilities related to the Management Business
       will be contributed to the Operating Partnership in exchange for Units.
 
     - Each of the ZML REITs has entered into the merger agreement pursuant to
       which each ZML REIT will merge with and into the Company and the Company
       will be the survivor (the "Merger Agreement").
 
   
     Formation Transactions
    
 
     Concurrently with the consummation of the Offering, the Company, the
Operating Partnership, the ZML Funds and the Equity Group will engage in the
following formation transactions.
 
     - The Company will sell Common Shares in the Offering.
 
   
     - The Company will contribute the net proceeds of the Offering to the
       Operating Partnership in exchange for a 15.7% interest therein
       represented by a number of Units equal to the number of Common Shares
       sold in the Offering. Following the Consolidation and Offering, the
       Company will own a 92.5% limited and general partner interest in the
       Operating Partnership.
    
 
   
     - Pursuant to the Contribution Agreement, (i) in exchange for an aggregate
       of 126,294,295 Units, the ZML Opportunity Partnerships will contribute to
       the Operating Partnership substantially all of their assets and
       liabilities and (ii) in exchange for 8,485,105 Units, EOH and EGI, each
       of which is owned by the Equity Group Owners, will contribute their
       interest in the Management Business that relates to the Properties
       (i.e.,exclusive of the Managed Property Business) and EOH will contribute
       that portion of the Management Business that relates to the Managed
       Property Business, to the Operating Partnership. The Operating
       Partnership then will contribute the Managed Property Business to the
       Management Corp., with the Operating Partnership receiving non-voting
       stock representing 95% of the economic value of the Management Corp. EOH
       will receive voting stock representing 5% of the economic value of the
       Management Corp. upon the contribution of $150,000 in cash to the
       Management Corp. As a part of its contribution of the Management
       Business, EOH will also contribute its asset management contracts
       relating to the Office Properties and the Parking Facilities to the
       Operating Partnership.
    
 
   
     - Pursuant to the Merger Agreement, each ZML REIT will merge with and into
       the Company and the Company will issue 122,852,200 Common Shares to the
       ZML REIT shareholders, of which 11,408,240 Common Shares will be
       deposited into the corresponding ZML REIT Escrows, as described below. As
       part of the Consolidation, each ZML Opportunity Partnership will admit
       the Company as its sole managing general partner and each ZML Partner
       will become a non-managing general partner of its ZML Opportunity
       Partnership. As a result, the Company will become the 1% managing general
       partner in each ZML Opportunity Partnership, the sole limited partner in
       ZML Opportunity Partnerships I, III and IV, and the majority limited
       partner (owning 98.8% of the capital interests) in ZML Opportunity
       Partnership II.
    
 
                                       83
<PAGE>   92
 
     - Each ZML Opportunity Partnership will adopt a plan of liquidation ("Plan
       of Liquidation") whereby it will liquidate over a two-year liquidation
       period (the "Liquidation Period"), during which period the Units received
       by the ZML Opportunity Partnership in the Consolidation will be
       distributed as described below.
 
   
     Consequences of the Offering and Consolidation.  Following the consummation
of the Offering and the Consolidation, the Operating Partnership will directly
or indirectly own interests in all of the Properties by virtue of the Operating
Partnership's acquisition of 100% of the interests in the Properties held by the
ZML Opportunity Partnerships. The purchasers of the Common Shares in the
Offering, the investors in the ZML Funds (the "ZML Investors") and Mr. Zell and
the ZML Partners will own all of the outstanding Common Shares of the Company.
Upon completion of the Consolidation, the Company will be the managing general
partner of, and will own, directly or indirectly, 92.5% of the ownership
interests in, the Operating Partnership.
    
 
     Escrow of Common Shares; GP Incentive Distributions; ZML Opportunity
Partnership Liquidation
 
   
     The liquidation of the ZML Opportunity Partnerships and related escrows of
the Escrowed Shares have been structured to assure that obligations for the GP
Incentive Distributions and indemnification by the ZML Funds for representations
and warranties made in connection with the Consolidation (subject to the
limitations described below) will be borne by the current ZML Investors and the
ZML Partners and not by the Company or the purchasers of Common Shares in the
Offering.
    
 
     Pursuant to the Plan of Liquidation, each ZML Opportunity Partnership
initially will retain 100% of the Units received in the Consolidation and then
will distribute those Units in 25% increments within 15 days after the 15-month,
18-month, 21-month and 24-month anniversaries of the Offering (each a "Partial
Liquidation Date"), with such distributions being made in accordance with the
distribution provisions of the applicable ZML Opportunity Partnership
partnership agreement.
 
     GP Incentive Distributions.  Under each of the ZML Opportunity Partnership
partnership agreements, the ZML Partner is entitled to certain preferred
distributions ("GP Incentive Distributions") once the ZML Investors in that ZML
Fund have received a return of their capital plus a specified return thereon.
 
     Escrow of Shares.  Pursuant to the Merger Agreement, each shareholder in
the ZML REITs will deposit into an escrow established for that ZML REIT (a "ZML
REIT Escrow") 5%, in the case of ZML REIT I, and 10%, in the case of ZML REIT
II, III and IV, of the total Common Shares received by such shareholder in the
Consolidation (the "Escrowed Shares"). The Escrowed Shares will be available for
GP Incentive Distributions as described below, and to provide for claims for
indemnification, subject to a limitation for this purpose of 1% of the Common
Shares issued to ZML Investors in the Consolidation, as described in
"-- Indemnity Escrow" below. A former ZML REIT shareholder will be entitled to
receive all distributions with respect to its Escrowed Shares and to vote its
Escrowed Shares unless and until such Escrowed Shares are required to be
transferred to the Company, as described below. Within 15 days following the
second anniversary of the Offering, any Escrowed Shares not required to be
returned to the Company (or, with respect to the Indemnity Escrow, held pending
resolution of any claims then asserted) will be released from the ZML REIT
Escrow to the former ZML REIT shareholders who received such Common Shares in
the Consolidation.
 
   
     Determination of GP Incentive Distributions; Liquidation of the ZML
Opportunity Partnerships; Distributions from the ZML REIT Escrows.  On each of
the four Partial Liquidation Dates each ZML Opportunity Partnership will
determine the value of 25% of the Units that it received in the Consolidation
and will, within 15 days following such Partial Liquidation Date, distribute
those Units (subject to the Indemnity Escrow described below) to its partners in
accordance with the distribution provisions of the applicable ZML Opportunity
Partnership partnership agreement. In the case of ZML Opportunity Partnerships
I, III and IV, the distribution of Units would be made to the Company, as the
sole limited partner of such ZML Opportunity Partnerships, and the applicable
ZML Partner. In the case of ZML Opportunity Partnership II, an Investor Limited
Partner will participate in the distribution together with the Company and the
applicable ZML Partner.
    
 
                                       84
<PAGE>   93
 
     If a ZML Partner is not entitled to a GP Incentive Distribution on a
particular Partial Liquidation Date, then none of the Escrowed Shares for that
ZML Fund would be returned to the Company on that Partial Liquidation Date.
Within 15 days after the fourth Partial Liquidation Date (two years after the
Closing of the Offering), any Escrowed Shares held in a ZML REIT Escrow that
have not been transferred to the Company under the arrangements described above
(or, with respect to the Indemnity Escrow, held pending resolution of any
asserted claims) will be distributed to the former ZML REIT shareholders that
deposited such Shares into that ZML REIT Escrow.
 
     If a ZML Partner is entitled to a GP Incentive Distribution on a particular
Partial Liquidation Date, the Company will compute the number of Units that it
would have received if all of the Units had been distributed in accordance with
the partners' capital interests, rather than some of the Units being distributed
in satisfaction of the GP Incentive Distribution. The ZML REIT Escrow for the
ZML Fund with respect to which the GP Incentive Distribution is made then will
transfer to the Company a number of Escrowed Shares equal to the number of Units
that is the difference between the number it would have received had there been
no GP Incentive Distribution and the number it actually received. For example,
assume that the Company has a 95% capital interest in a particular ZML
Opportunity Partnership and that 100,000 of the Units are distributed to the ZML
Partner as a GP Incentive Distribution. In that case, the Company did not
receive 95,000 Units that it would have received but for the GP Incentive
Distribution (95% times the 100,000 Units distributed as the GP Incentive
Distribution). Accordingly, the ZML REIT Escrow for the ZML Fund with respect to
which that GP Incentive Distribution is made would transfer 95,000 Escrowed
Shares to the Company to compensate the Company for the 95,000 Units that it did
not receive as a result of the GP Incentive Distribution.
 
   
     Through this structure, if and to the extent the Company bears the cost of
a GP Incentive Distribution (by receiving a distribution of Units from a
liquidating ZML Opportunity Partnership that is less than it would receive based
solely on its capital interest), that cost is passed on only to the ZML REIT
Escrow (and the former ZML REIT shareholders) for the particular ZML Fund as to
which the GP Incentive Distribution is made. None of the other shareholders of
the Company (for example, the purchasers of Common Shares in the Offering or the
former ZML REIT shareholders of other ZML REITs) are diluted because Units are
distributed in payment of a GP Incentive Distribution and a corresponding number
of Escrowed Shares are transferred to the Company. Each ZML REIT Escrow in all
events will have enough Escrowed Shares to transfer to the Company to match, on
a Common Share-per-Unit basis, the maximum number of Units that the Company
could be required to forego with respect to the corresponding ZML Fund as a
result of GP Incentive Distributions for that ZML Fund.
    
 
   
     Effect of Class B Shares.  In the case of ZML Funds II and III, the ZML
Partners previously agreed that certain amounts that they otherwise would be
entitled to receive as GP Incentive Distributions would be distributable to
certain Investors (referred to as a "Class B Distribution"). In the case of ZML
Investors who are shareholders in ZML REIT II or ZML REIT III, that entitlement
is evidenced by "Class B" shares, which entitle such shareholders to a pro rata
portion of any such Class B Distribution received by the applicable ZML REIT. In
the Merger, the Company will succeed to such ZML REIT's right to Class B
Distributions. If, but only to the extent that, the Company receives additional
Units from ZML Opportunity Partnership II or ZML Opportunity Partnership III
that are attributable to a Class B Distribution, the Company will issue a number
of Common Shares to the former holders of Class B shares in the applicable ZML
REIT in respect of such Units. These Common Shares in effect will be funded from
the corresponding ZML REIT Escrow by delivery to the Company from such ZML REIT
Escrow of an equivalent number of Common Shares.
    
 
     Indemnity Escrow.  Each ZML Opportunity Partnership will make certain
representations and warranties regarding its Properties in connection with the
contribution of such Properties to the Operating Partnership. These
representations and warranties will include such matters as the maintenance of
adequate casualty and liability insurance at the Properties, the existence of
material leases and other contracts with respect to the Properties and certain
other matters. Each ZML Opportunity Partnership's liability for any losses
incurred by the Operating Partnership as a result of a breach of any such
representations or warranties, however, will be limited to an amount equal to 1%
of the Units received by such ZML Opportunity Partnership in the Consolidation.
If a ZML Opportunity Partnership is liable in respect of its indemnity to the
 
                                       85
<PAGE>   94
 
Operating Partnership, such liability will be satisfied by delivery to the
Operating Partnership of Units equal in value (on the basis of the then current
market value of a corresponding number of Shares) to the amount of the liability
(subject to the 1% cap). Each ZML REIT will also make certain representations
and warranties as to certain corporate and tax matters in connection with the
Merger, and will indemnify the Company for any breach thereof, also subject to a
maximum liability equal to the value of 1% of the Common Shares received in the
Merger by the ZML Investors in the ZML REIT responsible for the indemnification,
less any amount of an indemnification obligation of the ZML Opportunity
Partnership borne by such ZML REIT. To assure that any indemnification
obligation of a ZML REIT, and the Company's portion of any indemnification
obligation of a ZML Opportunity Partnership (as a partner in such ZML
Opportunity Partnership satisfying any such liability) is borne only by the
shareholders of the Company who were ZML Investors in the corresponding ZML
Fund, rather than shareholders who were ZML Investors in another ZML Fund or the
public shareholders of the Company, the Company will receive, out of the
Indemnity Escrows, a number of Common Shares equal to the number of Units it did
not receive in the liquidation of the ZML Opportunity Partnership because of an
indemnification liability of the ZML Opportunity Partnership as well as Common
Shares equal in value to the amount of any indemnification liability of the ZML
REIT. The Indemnity Escrow for each ZML REIT will equal 1% of the Common Shares
issued to shareholders of that ZML REIT in the Merger. The representations and
warranties will survive for a period of one year after the Closing. If any claim
of a breach of any such representation or warranty has been made within one year
after the Closing, or if any third-party claim against a ZML Fund for a
liability not assumed by the Company in the Consolidation has been made within
two years after the Closing, all or a portion of the Indemnity Shares will be
held in the Indemnity Escrow until resolution of such claims, at which time any
Indemnity Shares not utilized in connection with satisfaction of any such claims
will be returned to the former ZML REIT shareholders who would have received
such Common Shares at the time of the Merger.
 
     Benefits of the Consolidation and the Offering to Affiliates of the
Company.  Certain affiliates of the Company will realize certain material
benefits in connection with the Consolidation, including the following:
 
   
     - Through the Equity Group Owners and the ZML Partners (the current general
       partners of the ZML Opportunity Partnerships), Mr. Zell will be deemed to
       be the beneficial owner of an aggregate of approximately 14.9 million
       Units and Common Shares, with a total value of $298.3 million based on
       the assumed offering price of $20.00 per Common Share. Such Units and
       Common Shares will be issued in exchange for the Management Business,
       partnership interests in the ZML Opportunity Partnerships and shares of
       the ZML REITs owned by the ZML Partners. The aggregate book value of the
       foregoing interests as of March 31, 1997 was approximately $91 million.
       The Company does not believe that the book values of the interests and
       assets exchanged (which reflect the depreciated historical cost of such
       interests and assets) are equivalent to the fair market values of such
       interests and assets, but the fair market value of such interests may
       vary from the value of the Common Shares and Units issued in exchange
       therefor.
    
 
   
     - Through the ZML Partners, Mr. Zell may become the deemed beneficial owner
       of up to an additional 11.4 million Units that may be distributed by the
       ZML Opportunity Partnerships to the ZML Partners over the two-year period
       following the Consolidation pursuant to GP Incentive Distributions. Any
       distribution of these Units to the ZML Partners will not dilute the
       interest in the Company of the purchasers of Common Shares in the
       Offering.
    
 
   
     - The Equity Group Owners and the ZML Partners will realize an immediate
       accretion in the net tangible book value of their investment in the
       Company of $.72 per Common Share representing an aggregate accretion
       amount of approximately $10.7 million.
    
 
     - Mr. Zell will serve as Chairman of the Board of Trustees of the Company
       and will participate in the Company's Employee Plan, including grants of
       options to purchase 200,000 Common Shares at the offering price.
 
     - Commencing on the first anniversary of the Offering, the Equity Group
       Owners and the ZML Partners will have registration rights with respect to
       a portion of the Common Shares received in the Consolidation as well as
       the Common Shares that may be issued in exchange for Units received in
       the Consolidation or in liquidation of the ZML Opportunity Partnerships.
 
                                       86
<PAGE>   95
 
                  POLICIES WITH RESPECT TO CERTAIN ACTIVITIES
 
     The following is a discussion of the anticipated policies with respect to
investments, financing and certain other activities of the Operating Partnership
and the Company. Upon consummation of the Offering, these policies will be
determined by the Board of Trustees of the Company and may be amended or revised
from time to time at the discretion of the Board of Trustees without notice to
or a vote of the shareholders of the Company, or the limited partners of the
Operating Partnership, except that changes in certain policies with respect to
conflicts of interest must be consistent with legal requirements.
 
INVESTMENT POLICIES
 
     Investments in Real Estate or Interests in Real Estate.  The Company
currently plans to conduct all of its investment activities through the
Operating Partnership. The Company's investment objectives are to increase cash
flow and the value of the Properties, and to acquire established
income-producing office and parking properties with cash flow growth potential.
Additionally, where prudent and possible, the Company will seek to upgrade the
existing Properties and any newly acquired office properties. The Company's
business will be focused on Office Properties, and will include Parking
Facilities. Where appropriate, and subject to REIT qualification rules, the
Operating Partnership may sell certain of its Properties.
 
   
     The Company expects to pursue its investment objectives through the direct
and indirect ownership of properties and the ownership of interests in other
entities. The Company will focus on properties in those markets where the
Company currently has operations and in new markets targeted by management. See
"Business and Growth Strategies." The Company anticipates that newly acquired
properties will be located in the United States. Future investments, however,
including the activities described below, will not be limited to any geographic
area or to a specified percentage of the Company's assets.
    
 
     The Company also may participate with other entities in property ownership
through joint ventures or other types of co-ownership. Equity investments may be
subject to existing mortgage financing and other indebtedness or such financing
or indebtedness may be incurred in connection with acquiring investments. Any
such financing or indebtedness will have priority over the Company's equity
interest in such property.
 
   
     Investments in Real Estate Mortgages.  While the Company's emphasis will be
on equity real estate investments, it may, in its discretion, invest in
mortgages on office properties and other similar interests. A portion of the
Company's interest in one of its Office Properties, and in two Parking
Facilities, consists of ownership of the mortgage securing such Properties. The
Company does not intend to invest to a significant extent in mortgages or deeds
of trust, but may acquire mortgages as a strategy for acquiring ownership of a
property or the economic equivalent thereof, subject to the investment
restrictions applicable to REITs. See "Federal Income Tax
Considerations -- Taxation of the Company -- Income Tests Applicable to REITs"
and "-- Asset Tests Applicable to REITs." In addition, the Company may invest in
mortgage-related securities and/or may seek to issue securities representing
interests in such mortgage-related securities as a method of raising additional
funds.
    
 
     Securities of or Interests in Persons Primarily Engaged in Real Estate
Activities and Other Issuers. Subject to the gross income and asset tests
necessary for REIT qualification, the Company also may invest in securities of
entities engaged in real estate activities or securities of other issuers,
including for the purpose of exercising control over such entities. The Company
may acquire all or substantially all of the securities or assets of other REITs
or similar entities where such investments would be consistent with the
Company's investment policies. In any event, the Company does not intend that
its investments in securities will require it or the Operating Partnership to
register as an "investment company" under the Investment Company Act of 1940, as
amended.
 
FINANCING POLICIES
 
     In addition to the limitations on indebtedness which are likely to be
imposed on the Company under the Line of Credit, upon the consummation of the
Offering, the Company intends to maintain a Debt to Market Capitalization Ratio
of approximately 50% or less. This policy differs from conventional mortgage
debt-to-equity ratios which are asset-based ratios. The Company's Debt-to-Market
Capitalization Ratio is equal to the
 
                                       87
<PAGE>   96
 
total consolidated and unconsolidated debt of the Company as a percentage of the
market value of outstanding Common Shares and Units (not owned by the Company)
plus total consolidated and unconsolidated debt, but excluding (i) all
nonrecourse consolidated debt in excess of the Company's proportionate share of
such debt and (ii) all nonrecourse unconsolidated debt of partnerships in which
the Company is a limited partner. The Company, however, may from time to time
re-evaluate this policy and decrease or increase such ratio in light of then
current economic conditions, relative costs to the Company of debt and equity
capital, market values of its Properties, growth and acquisition opportunities
and other factors. There is no limit on the Debt to Market Capitalization Ratio
imposed by either the Company's Declaration of Trust or Bylaws or the Operating
Partnership Agreement. To the extent that the Board of Trustees of the Company
determines to obtain additional capital, the Company may issue equity
securities, or cause the Operating Partnership to issue additional Units or debt
securities, or retain earnings (subject to provisions in the Code requiring
distributions of taxable income to maintain REIT status), or a combination of
these methods. As long as the Operating Partnership is in existence, the net
proceeds of all equity capital raised by the Company will be contributed to the
Operating Partnership in exchange for additional interests in the Operating
Partnership, which will dilute the ownership interest, if any, of the Equity
Group and any other holders of Units.
 
   
     It is the Company's policy that Equity Office Properties Trust shall not
incur indebtedness other than short-term trade, employee compensation, dividends
payable or similar indebtedness that will be paid in the ordinary course of
business, and that indebtedness shall instead be incurred by the Operating
Partnership to the extent necessary to fund the business activities conducted by
the Operating Partnership and its subsidiaries. To the extent that the Board of
Trustees determines to obtain debt financing in addition to the existing
mortgage indebtedness, the Company intends to do so generally through mortgages
on its Properties and the Line of Credit; however, the Company may cause the
Operating Partnership to issue additional debt securities in the future. Such
indebtedness may be recourse, non-recourse or cross-collateralized and may
contain cross-default provisions. The net proceeds of any debt securities issued
by the Company will be lent to the Operating Partnership on substantially the
same terms and conditions as are incurred by the Company. The Company does not
have a policy limiting the number or amount of mortgages that may be placed on
any particular property, but mortgage financing instruments usually limit
additional indebtedness on such properties. In the future, the Company may seek
to extend, expand, reduce or renew the Line of Credit, or obtain new credit
facilities or lines of credit, subject to its general policy on debt
capitalization, for the purpose of making acquisitions or capital improvements
or providing working capital or meeting the taxable income distribution
requirements for REITs under the Code.
    
 
LENDING POLICIES
 
     The Company may consider offering purchase money financing in connection
with the sale of Properties where the provision of such financing will increase
the value received by the Company for the property sold.
 
CONFLICT OF INTEREST POLICIES
 
   
     Officers and Trustees of the Company.  Mr. Zell, the Chairman of the Board
of Trustees, through affiliated entities is engaged in certain office real
estate activities, both inside and outside the markets in which the Properties
are located. Mr. Zell, therefore, may be subject to certain conflicts of
interest in fulfilling his responsibilities to the Company and its shareholders.
See "Risk Factors -- Conflicts of Interest." Under Maryland law, transactions
between the Company and a trustee or officer (or an entity in which a trustee or
officer has a material financial interest) may be void or voidable. However, the
MGCL provides that any such contract or transaction will not be void or voidable
if (a) it is authorized, approved or ratified, after disclosure of, or with
knowledge of, the common directorship or interest, by the affirmative vote of a
majority of disinterested directors (even if the disinterested directors
constitute less than a quorum) or by the affirmative vote of a majority of the
votes cast by disinterested shareholders, or (b) it is fair and reasonable to
the corporation. While the Maryland REIT Law does not have a comparable
provision for trustees, a court may apply the principles of the MGCL to
contracts or transactions between the Company and its trustees. The Company
believes that this procedure and Mr. Zell's non-competition agreement will help
to eliminate or minimize certain potential conflicts of interest. Without the
approval of a majority of the disinterested
    
 
                                       88
<PAGE>   97
 
trustees, the Company and its subsidiaries will not (i) acquire from or sell to
any trustee, officer or employee of the Company, or any entity in which a
trustee, officer or employee of the Company owns more than a 1% interest, or
acquire from or sell to any affiliate of any of the foregoing, any assets or
other property of the Company or its subsidiaries, (ii) make any loan to or
borrow from any of the foregoing persons, or (iii) engage in any other material
transaction with any of the foregoing persons. Each transaction of the type
described above will be in all respects on such terms as are, at the time of the
transaction and under the circumstances then prevailing, fair and reasonable to
the Company and its subsidiaries. The foregoing will not apply to the Management
Corp.
 
   
     Policies Applicable to All Trustees.  Under Maryland law, each trustee will
be obligated to offer to the Company any opportunity (with certain limited
exceptions) which comes to him and which the Company could reasonably be
expected to have an interest in developing or acquiring. In addition, under
Maryland law, any contract or other transaction between a corporation and any
director or any other corporation, firm or other entity in which the director is
a director or has a material financial interest may be void or voidable unless
approved as described above.
    
 
     Leased Office Space.  The Company leases office space at Two North
Riverside Plaza, Chicago, Illinois 60606, a building that is owned by a single
purpose entity affiliated with the Equity Group Owners. The Company expects to
pay in the aggregate approximately $1.13 million in base rent and escalations
during 1997. The Company believes it is paying fair market rent for this space.
The disinterested members of the Board of Trustees will annually review and
approve the rates charged to the Company for such office space.
 
POLICIES WITH RESPECT TO OTHER ACTIVITIES
 
     The Company may, but does not presently intend to, make investments other
than as previously described. All investments will be related to the office
property and parking facility business. The Company will make investments only
through the Operating Partnership. The Company will have authority to offer its
Common Shares or other equity or debt securities of the Operating Partnership in
exchange for property and to repurchase or otherwise reacquire its Common Shares
or any other securities and may engage in such activities in the future.
Similarly, the Operating Partnership may offer additional Units or other equity
interests in the Operating Partnership that are exchangeable into Common Shares
or Preferred Shares, in exchange for property. The Operating Partnership also
may make loans to joint ventures in which it may participate in the future.
Neither the Company nor the Operating Partnership will engage in trading,
underwriting or the agency distribution or sale of securities of other issuers.
At all times, the Company intends to cause the Operating Partnership to make
investments in such a manner as to be consistent with the requirements of the
Code to qualify as a REIT unless, because of circumstances or changes in the
Code (or the regulations promulgated thereunder), the Board of Trustees
determines that it is no longer in the best interests of the Company to continue
to qualify as a REIT. The Company's policies with respect to such activities may
be reviewed and modified from time to time by the Company's trustees without
notice to or the vote of its shareholders.
 
   
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
 
     In addition to the transactions that occurred in connection with the
organization of the Company, which are described in the section entitled
"Structure and Formation of the Company -- Formation Transactions" above, the
following transactions have occurred or will occur simultaneously with the
Closing of the Offering.
 
SALE OF COMMON SHARES TO MR. ZELL
 
   
     Prior to the Offering, the Company sold 1,000 unregistered Common Shares to
Mr. Zell for a purchase price of $25.00 per Common Share. In addition, pursuant
to certain option agreements, ZFT Partnership, a partnership comprised of
certain trusts established for the benefit of the family of Mr. Zell, will
acquire for cash from certain unaccredited investors in the ZML REITs the
interests owned by them in such ZML REITs. Such affiliate will pay approximately
$32,500 for such interests which, upon consummation of the Offering, will
represent approximately 1,625 Common Shares.
    
 
                                       89
<PAGE>   98
 
LEASES AND PARKING OPERATIONS
 
   
     The Company leases office space owned by Two North Riverside Plaza Joint
Venture, a partnership comprised of trusts, established for the benefit of the
families of Mr. Zell and Mr. Lurie, at Two North Riverside Plaza, Chicago,
Illinois 60606. In addition, EGI, an entity owned by the Equity Group Owners,
and its affiliates have in the past provided the Company and its predecessors
with certain administrative, office facility services and other services with
respect to certain aspects of the Company's business, including, but not limited
to, financial and accounting services, tax services, investor relations, and
other services. The Company paid approximately $12,786,000 during the year ended
December 31, 1996 and expects to pay in the aggregate approximately $9,600,000
to EGI and its affiliates during 1997 for such office space and services, which
amount is calculated to approximate a market rental rate for the office space
and the actual cost of providing these services. See Note 9 of the Notes to
Combined Financial Statements of Equity Office Predecessors included elsewhere
in this Prospectus. The independent members of the Board of Trustees will
annually review and approve the rates charged by EGI for services rendered to
the Company.
    
 
   
     EQR and certain other affiliates of the Company lease space in certain of
the Office Properties. The terms of the leases are consistent with terms of
unaffiliated tenants' leases. Total rents and other amounts paid by affiliates
under their respective leases were approximately $1,063,400, $744,000,
$3,471,500 and $2,657,500 for the three months ended March 31, 1997 and 1996,
and the years ended December 31, 1996 and 1995, respectively.
    
 
   
     SZ Parking Limited Partnership, an affiliate of the Equity Group Owners,
has an indirect 10% limited partnership interest in Standard Parking Limited
Partnership ("SPLP") which manages the parking operations of certain Office
Properties. Management believes amounts paid to SPLP are equivalent to market
rates for such services.
    
 
   
     The Company entered into various lease agreements with SPLP or affiliates
of SPLP whereby SPLP or its affiliates leased the North Loop Transportation
Center Parking Facility, the Milwaukee Center Parking Garage, the Theater
District Garage and the Boston Harbor from the Company. Certain of these lease
agreements provide SPLP or its affiliates with annual successive options to
extend the term of the lease through various dates. The rent paid in the three
months ended March 31, 1997 and 1996, and in the years ended December 31, 1996
and 1995 under these lease agreements was approximately $2,176,800, $753,700,
$3,161,500 and $1,691,600, respectively. The annual rent to be paid to the
Company for 1997 is approximately $10,102,800. In addition, the Company may
receive additional rent based upon actual gross revenues generated by these
Parking Facilities. In accordance with certain of these leases, the Company may
be obligated to make an early termination payment if agreement is not reached as
to rent amounts to be paid.
    
 
   
EQUITY GROUP DISTRIBUTIONS AND FEES
    
 
   
     The partners of the ZML Partners, affiliates of the Equity Group Owners,
have received distributions and fees from the Company through their ownership
interests in the ZML Partners of approximately $8,603,600 for the year ended
December 31, 1996 and are expected to receive fees of approximately $10,374,000
for the year ended December 31, 1997.
    
 
   
MISCELLANEOUS
    
 
     As described under "Federal Income Tax Considerations -- Taxation of the
Company -- Closing Agreements with the IRS with Respect to ZML REITs I and II,"
in March 1997 the ZML Partners of ZML Opportunity Partnerships I and II made
certain payments to the IRS in connection with closing agreements pursuant to
which the IRS agreed that neither ZML REIT I nor ZML REIT II would be
disqualified as a REIT as a result of certain technical violations of the REIT
provisions of the Code. The amounts of such payments were $15,000 and
$5,270,000, respectively, for ZML REITs I and II.
 
                                       90
<PAGE>   99
 
   
     Management Corp. will enter into third-party management contracts, on terms
equivalent to third-party transactions, with respect to properties not owned by
the Company but that are owned or controlled by the Equity Group. See "Risk
Factors -- Conflicts of Interest." Income recognized for similar services
rendered for the three months ended March 31, 1997 and 1996 and the years ended
December 31, 1996 and 1995 was approximately $1,200,000, $772,000, $5,120,000,
and $5,899,000, respectively.
    
 
   
     Rosenberg & Liebentritt, P.C., a law firm in which Ms. Rosenberg, a trustee
of the Company, is a principal, received legal fees from the Company of
$273,400, $827,100, $3,480,500 and $3,230,100 for the three months ended March
31, 1997 and 1996 and the years ended December 31, 1996 and 1995, respectively.
    
 
   
     Certain services for the Company's tenants that may not be permissibly
undertaken by a REIT will be conducted through a service corporation owned
entirely by affiliates of the Equity Group Owners. The Company will pay such
service corporation cost plus ten percent for such services. The Company will
have no control over, or ownership interest in, such service corporation, which
will operate as an independent contractor. The Company may terminate such
services at any time upon 30-days notice.
    
 
                             PRINCIPAL SHAREHOLDERS
 
     The following table sets forth certain information regarding the beneficial
ownership of Common Shares (or Common Shares for which Units are exchangeable)
by (i) each trustee (and trustee nominee) of the Company, (ii) each executive
officer of the Company, (iii) all trustees (including trustee nominees) and
officers of the Company as a group, and (iv) each person or entity which is
expected to be the beneficial owner of 5% or more of the outstanding Common
Shares immediately following the completion of the Offering. Except as indicated
below, all of such Common Shares are owned directly, and the indicated person or
entity has sole voting and investment power. The extent to which a person will
hold Common Shares as opposed to Units is set forth in the footnotes below.
 
   
<TABLE>
<CAPTION>
                                               NUMBER OF COMMON
                                               SHARES AND UNITS    PERCENTAGE OF ALL   PERCENTAGE OF ALL
NAME OF BENEFICIAL OWNER                      BENEFICIALLY OWNED   COMMON SHARES(1)    COMMON SHARES(2)
- ------------------------                      ------------------   -----------------   -----------------
<S>                                           <C>                  <C>                 <C>
Allstate(3).................................        7,532,000              5.1%                4.7%
State Street Bank & Trust Co., as
  trustee(4)................................       19,789,400             13.4                12.4
Minnesota State Investment Board(5).........        9,249,500              6.3                 5.8
Samuel Zell(6)(7)...........................       14,917,000              9.4                 9.3
ANDA Partnership(6)(8)......................       14,917,000              9.4                 9.3
Timothy H. Callahan(6)......................              332                *                   *
Gary A. Beller(6)...........................              250                *                   *
Richard D. Kincaid(6).......................              146                *                   *
Michael A. Steele(6)........................              124                *                   *
Stanley M. Stevens(6).......................              280                *                   *
Sheli Z. Rosenberg(6).......................              396                *                   *
Thomas E. Dobrowski(9)......................                0                *                   *
James D. Harper(10).........................                0                *                   *
Peter Linneman(11)..........................                0                *                   *
Jerry M. Reinsdorf(12)......................                0                *                   *
All trustees, trustee nominees and executive
  officers as a group (14 persons)..........       14,918,528              9.4                 9.3
</TABLE>
    
 
- ---------------
   
 (1) Assumes 147,851,200 Common Shares outstanding immediately following
     completion of the Offering. Assumes that all Units beneficially held by the
     identified person (and no other person) are redeemed for Common Shares.
    
   
 (2) Assumes a total of 159,779,400 Common Shares and Units Outstanding
     immediately following completion of the Offering (147,851,200 Common Shares
     and 11,928,220 Units). Assumes that all outstanding Units are redeemed for
     Common Shares.
    
   
 (3) Includes 7,201,900 Common Shares held by Allstate Insurance Company,
     150,100 Common Shares held by CTC Illinois Trust Company as Trustee for the
     Agents' Pension Plan and 180,000 Common Shares held by CTC Illinois Trust
     Company as Trustee for the Allstate Retirement Plan. The business address
     of these shareholders is Allstate Insurance Company, 3075 Sanders Road,
     Suite G5B, Northbrook, Illinois 60062.
    
 
                                       91
<PAGE>   100
 
   
 (4) Includes 19,789,400 Common Shares held as trustee of three BellSouth
     Corporation employee benefit plans. The business address of this
     shareholder is Master Trust Dept., Solomon Willard Bldg., W5C, One
     Enterprise Drive, North Quincy, MA 02171.
    
 (5) The business address of this shareholder is MEA Building, Suite 105, 55
     Sherburne Avenue, St. Paul, MN 55155.
 (6) The business address for this shareholder is Two North Riverside Plaza,
     Chicago, Illinois 60606.
   
 (7) Includes 14,917,000 Common Shares (assuming exchange of 11,628,100 Units)
     held by the ZML Partners EOH and EGI which may be deemed to be beneficially
     owned by Mr. Zell; however Mr. Zell disclaims beneficial ownership of
     7,458,500 Common Shares, including Units exchangeable for Common Shares.
    
   
 (8) Includes 14,917,000 Common Shares (assuming exchange of 11,628,100 Units)
     held by EOH and EGI which may be deemed to be beneficially owned by ANDA
     Partnership and various trusts, each of which was established for the
     benefit of the family of Mr. Lurie, the now deceased former partner of Mr.
     Zell; however ANDA Partnership disclaims beneficial ownership of 7,458,500
     Common Shares, including Units exchangeable for Common Shares.
    
   
 (9) The business address for this trustee nominee is General Motors Investment
     Corp., 767 5th Avenue, 16th Floor, New York, New York 10153.
    
   
(10) The business address for this trustee nominee is J.D.H. Realty Company,
     3250 Mary Street, Suite 206, Coconut Grove, Florida 33133.
    
   
(11) The business address for this trustee nominee is The Wharton School of The
     University of Pennsylvania, 56 South 37th Street, Lauder-Fischer Hall,
     Philadelphia, Pennsylvania 19104.
    
   
(12) The business address for this trustee nominee is Chicago White Sox, 333 W.
     35th Street, Chicago, Illinois 60616.
    
   
 *  Less than 1%.
    
 
                                       92
<PAGE>   101
 
                         SHARES OF BENEFICIAL INTEREST
 
     The summary of the terms of the shares of beneficial interest of the
Company set forth below does not purport to be complete and is subject to and
qualified in its entirety by reference to the Declaration of Trust and Bylaws of
the Company, copies of which are exhibits to the Registration Statement of which
this Prospectus is a part.
 
GENERAL
 
   
     The Declaration of Trust of the Company provides that the Company may issue
750 million Common Shares, and 100 million Preferred Shares. As of June 1, 1997,
1,000 Common Shares were issued and outstanding.
    
 
   
     Under the Maryland REIT Law, a shareholder is not liable for obligations of
the Company solely as a result of his status as a shareholder. The Declaration
of Trust provides that no shareholder shall be liable for any debt or obligation
of the Company by reason of being a shareholder nor shall any shareholder be
subject to any personal liability in tort, contract or otherwise to any person
in connection with the property or affairs of the Company by reason of being a
shareholder. The Company's Bylaws further provide that the Company shall
indemnify each present or former shareholder against any claim or liability to
which the shareholder may become subject by reason of being or having been a
shareholder and that the Company shall reimburse each shareholder for all
reasonable expenses incurred by him in connection with any such claim or
liability. However, with respect to tort claims, contractual claims where
shareholder liability is not so negated, claims for taxes and certain statutory
liability, the shareholders may, in some jurisdictions, be personally liable to
the extent that such claims are not satisfied by the Company. Inasmuch as the
Company carries public liability insurance which it considers adequate, any risk
of personal liability to shareholders is limited to situations in which the
Company's assets plus its insurance coverage would be insufficient to satisfy
the claims against the Company and its shareholders.
    
 
COMMON SHARES
 
     All Common Shares offered hereby will be duly authorized, fully paid and
nonassessable. Subject to the preferential rights of any other shares of
beneficial interest and to the provisions of the Declaration of Trust regarding
restrictions on transfers of shares of beneficial interest, holders of Common
Shares are entitled to receive distributions if, as and when authorized and
declared by the Board of Trustees out of assets legally available therefor and
to share ratably in the assets of the Company legally available for distribution
to its shareholders in the event of its liquidation, dissolution or winding-up
after payment of, or adequate provision for, all known debts and liabilities of
the Company. The Company currently intends to pay regular quarterly
distributions.
 
     Subject to the provisions of the Company's Declaration of Trust regarding
restrictions on transfer of shares of beneficial interest, each outstanding
Common Share entitles the holder to one vote on all matters submitted to a vote
of shareholders, including the election of trustees, and, except as provided
with respect to any other class or series of shares of beneficial interest, the
holders of Common Shares will possess the exclusive voting power. There is no
cumulative voting in the election of trustees, which means that the holders of a
majority of the outstanding Common Shares can elect all of the trustees then
standing for election and the holders of the remaining shares of beneficial
interest, if any, will not be able to elect any trustees.
 
     Holders of Common Shares have no preferences, conversion, sinking fund,
redemption rights or preemptive rights to subscribe for any securities of the
Company. Subject to the exchange provisions of the Company's Declaration of
Trust regarding restrictions on transfer, Common Shares have equal distribution,
liquidation and other rights.
 
   
     Pursuant to the Maryland REIT Law, a Maryland real estate investment trust
generally cannot dissolve, amend its declaration of trust or merge, unless
approved by the affirmative vote or written consent of shareholders holding at
least two-thirds of the shares entitled to vote on the matter unless a lesser
percentage (but not less than a majority of all of the votes entitled to be cast
on the matter) is set forth in the trust's Declaration of Trust. The Company's
Declaration of Trust contains such a provision providing for a lesser
percentage, a majority of outstanding shares, with respect to transactions
pursuant to which the Company's
    
 
                                       93
<PAGE>   102
 
   
assets will be combined with those of one or more other entities (whether by
merger, sale or other transfer of assets, consolidation or share exchange).
However, amendments relating to changes in the number of authorized shares of
beneficial interest of the Company require the approval of holders of a majority
of all votes cast at a meeting of shareholders at which a quorum is present.
Under the Maryland REIT Law, a declaration of trust may permit the trustees by a
two-thirds vote to amend the declaration of trust from time to time to qualify
as a REIT under the Code or the Maryland REIT Law without the affirmative vote
or written consent of the Shareholders. The Company's Declaration of Trust
permits such action by the Board of Trustees.
    
 
   
     The Declaration of Trust authorizes the Board of Trustees to reclassify any
unissued Common Shares into other classes or series of beneficial interest and
to establish the number of shares in each class or series and to set the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications or terms or
conditions of redemption for each such class or series.
    
 
PREFERRED SHARES
 
     The Declaration of Trust authorizes the Board of Trustees to issue 100
million Preferred Shares, to classify any unissued Preferred Shares and to
reclassify any previously classified but unissued Preferred Shares of any series
from time to time, in one or more series, as authorized by the Board of
Trustees. Prior to issuance of shares of each series, the Board of Trustees is
required by the Maryland REIT Law and the Declaration of Trust of the Company to
set, subject to the provisions of the Declaration of Trust regarding the
restriction on transfer of shares of beneficial interest, the terms,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms or
conditions of redemption for each such series. Thus, the Board could authorize
the issuance of Preferred Shares with terms and conditions which could have the
effect of delaying, deferring or preventing a transaction or a change in control
of the Company that might involve a premium price for holders of Common Shares
or otherwise be in their best interest. As of the date hereof, no Preferred
Shares are outstanding and the Company has no present plans to issue any
Preferred Shares.
 
POWER TO ISSUE ADDITIONAL COMMON SHARES AND PREFERRED SHARES
 
     The Company believes that the power of the Board of Trustees to issue
additional authorized but unissued Common Shares or Preferred Shares and to
classify or reclassify unissued Common Shares or Preferred Shares and thereafter
to cause the Company to issue such classified or reclassified shares of
beneficial interest will provide the Company with increased flexibility in
structuring possible future financings and acquisitions and in meeting other
needs which might arise. The additional classes or series, as well as the Common
Shares, will be available for issuance without further action by the Company's
shareholders, unless such action is required by applicable law or the rules of
any stock exchange or automated quotation system on which the Company's
securities may be listed or traded. Although the Board of Trustees has no
intention at the present time of doing so, it could authorize the Company to
issue a class or series that could, depending upon the terms of such class or
series, delay, defer or prevent a transaction or a change in control of the
Company that might involve a premium price for holders of Common Shares or
otherwise be in their best interest.
 
RESTRICTIONS ON OWNERSHIP AND TRANSFER
 
     For the Company to qualify as a REIT under the Code, no more than 50% in
value of its outstanding shares of beneficial interest may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code to include
certain entities) during the last half of a taxable year (other than the first
year for which an election to be treated as a REIT has been made) or during a
proportionate part of a shorter taxable year. In addition, if the Company, or an
owner of 10% or more of the Company, actually or constructively owns 10% or more
of a tenant of the Company (or a tenant of any partnership in which the Company
is a partner), the rent received by the Company (either directly or through any
such partnership) from such tenant will not be qualifying income for purposes of
the REIT gross income tests of the Code. A REIT's shares also must be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year of twelve months or during a proportionate part of a shorter taxable year
(other than the first year for which an election to be treated as a REIT has
been made).
 
     Because the Board of Trustees believes it is desirable for the Company to
qualify as a REIT, the Declaration of Trust, subject to certain exceptions,
provides that no holder may own, or be deemed to own by
 
                                       94
<PAGE>   103
 
   
virtue of the attribution provisions of the Code, more than the Ownership Limit.
The ownership attribution rules under the Code are complex and may cause Common
Shares owned actually or constructively by a group of related individuals and/or
entities to be owned constructively by one individual or entity. As a result,
the acquisition of less than 9.9% of the Common Shares (or the acquisition of an
interest in an entity that owns, actually or constructively, Common Shares) by
an individual or entity, could, nevertheless cause that individual or entity, or
another individual or entity, to own constructively in excess of 9.9% of the
outstanding Common Shares and thus subject such Common Shares to the Ownership
Limit. The Board of Trustees shall grant an exemption from the Ownership Limit
with respect to one or more persons who would not be treated as "individuals"
for purposes of the Code if such person submits to the Board information
satisfactory to the Board, in its reasonable discretion, demonstrating that (i)
such person is not an individual for purposes of the Code, (ii) such ownership
will not cause a person who is an individual to be treated as owning Common
Shares in excess of the Ownership Limit, applying the applicable constructive
ownership rules, and (iii) such ownership will not otherwise jeopardize the
Company's status as a REIT. As a condition of such waiver, the Board of Trustees
may, in its reasonable discretion, require undertakings or representations from
the applicant to ensure that the conditions in clauses (i), (ii) and (iii) of
the preceding sentence are satisfied and will continue to be satisfied as long
as such person owns shares in excess of the Ownership Limit. Under certain
circumstances, the Board of Trustees may, in its sole and absolute discretion,
grant an exemption for individuals to acquire Preferred Shares in excess of the
Ownership Limit, provided that certain conditions are met and any
representations and undertakings that may be required by the Board of Trustees
are made. The Board of Trustees has granted such an exemption for the sole ZML
Investor that would own more than 9.9% of the Common Shares immediately
following the Consolidation as a result of receiving such Common Shares in the
Consolidation.
    
 
     The Board of Trustees of the Company will have the authority to increase
the Ownership Limit from time to time, but will not have the authority to do so
to the extent that after giving effect to such increase, five beneficial owners
of Common Shares could beneficially own in the aggregate more than 49.5% of the
outstanding Common Shares.
 
     The Declaration of Trust further prohibits (a) any person from actually or
constructively owning shares of beneficial interest of the Company that would
result in the Company being "closely held" under Section 856(h) of the Code or
otherwise cause the Company to fail to qualify as a REIT and (b) any person from
transferring shares of beneficial interest of the Company if such transfer would
result in shares of beneficial interest of the Company being owned by fewer than
100 persons.
 
     Any person who acquires or attempts or intends to acquire actual or
constructive ownership of shares of beneficial interest of the Company that will
or may violate any of the foregoing restrictions on transferability and
ownership is required to give notice immediately to the Company and provide the
Company with such other information as the Company may request in order to
determine the effect of such transfer on the Company's status as a REIT.
 
     If any purported transfer of shares of beneficial interest of the Company
or any other event would otherwise result in any person violating the Ownership
Limit or the other restrictions in the Declaration of the Trust, then any such
purported transfer will be void and of no force or effect with respect to the
purported transferee (the "Prohibited Transferee") as to that number of shares
that exceeds the Ownership Limit (referred to as "excess shares") and the
Prohibited Transferee shall acquire no right or interest (or, in the case of any
event other than a purported transfer, the person or entity holding record title
to any such shares in excess of the Ownership Limit (the "Prohibited Owner")
shall cease to own any right or interest) in such excess shares. Any such excess
shares described above will be transferred automatically, by operation of law,
to a trust, the beneficiary of which will be a qualified charitable organization
selected by the Company (the "Beneficiary"). Such automatic transfer shall be
deemed to be effective as of the close of business on the Business Day (as
defined in the Declaration of Trust) prior to the date of such violating
transfer. Within 20 days of receiving notice from the Company of the transfer of
shares to the trust, the trustee of the trust (who shall be designated by the
Company and be unaffiliated with the Company and any Prohibited Transferee or
Prohibited Owner) will be required to sell such excess shares to a person or
entity who could own such shares without violating the Ownership Limit, and
distribute to the Prohibited Transferee an amount equal to the lesser of the
price paid by the Prohibited Transferee for such excess shares or the sales
proceeds
 
                                       95
<PAGE>   104
 
received by the trust for such excess shares. In the case of any excess shares
resulting from any event other than a transfer, or from a transfer for no
consideration (such as a gift), the trustee will be required to sell such excess
shares to a qualified person or entity and distribute to the Prohibited Owner an
amount equal to the lesser of the fair market value of such excess shares as of
the date of such event or the sales proceeds received by the trust for such
excess shares. In either case, any proceeds in excess of the amount
distributable to the Prohibited Transferee or Prohibited Owner, as applicable,
will be distributed to the Beneficiary. Prior to a sale of any such excess
shares by the trust, the trustee will be entitled to receive, in trust for the
Beneficiary, all dividends and other distributions paid by the Company with
respect to such excess shares, and also will be entitled to exercise all voting
rights with respect to such excess shares. Subject to Maryland law, effective as
of the date that such shares have been transferred to the trust, the trustee
shall have the authority (at the trustee's sole discretion and subject to
applicable law) (i) to rescind as void any vote cast by a Prohibited Transferee
prior to the discovery by the Company that such shares have been transferred to
the trust and (ii) to recast such vote in accordance with the desires of the
trustee acting for the benefit of the Beneficiary. However, if the Company has
already taken irreversible corporate action, then the trustee shall not have the
authority to rescind and recast such vote. Any dividend or other distribution
paid to the Prohibited Transferee or Prohibited Owner (prior to the discovery by
the Company that such shares had been automatically transferred to a trust as
described above) will be required to be repaid to the trustee upon demand for
distribution to the Beneficiary. If the transfer to the trust as described above
is not automatically effective (for any reason) to prevent violation of the
Ownership Limit, then the Declaration of Trust provides that the transfer of the
excess shares will be void.
 
     In addition, shares of beneficial interest of the Company held in the trust
shall be deemed to have been offered for sale to the Company, or its designee,
at a price per share equal to the lesser of (i) the price per share in the
transaction that resulted in such transfer to the trust (or, in the case of a
devise or gift, the market value at the time of such devise or gift) and (ii)
the market value of such shares on the date of the Company, or its designee,
accepts such offer. The Company shall have the right to accept such offer until
the trustee has sold the shares of beneficial interest held in the Trust. Upon
such a sale to the Company, the interest of the Beneficiary in the shares sold
shall terminate and the trustee shall distribute the net proceeds of the sale to
the Prohibited Owner.
 
   
     The foregoing restrictions on transferability and ownership will not apply
if the Board of Trustees determines that they are no longer required in order
for the Company to qualify, or to continue to qualify, as a REIT.
    
 
   
     All certificates representing shares of beneficial interest shall bear a
legend referring to the restrictions described above or a statement that the
Company will furnish a full statement about restrictions on transferability to a
shareholder on request and without charge.
    
 
   
     All persons who own, directly or by virtue of the attribution provisions of
the Code, more than 5% (or such other percentage between 1/2 of 1% and 5% as
provided in the rules and regulations promulgated under the Code) of the lesser
of the number or value of the outstanding shares of beneficial interest of the
Company must give a written notice to the Company by January 30 of each year. In
addition, each shareholder will, upon demand, be required to disclose to the
Company in writing such information with respect to the direct, indirect and
constructive ownership of shares of beneficial interest as the Board of Trustees
deems reasonably necessary to comply with the provisions of the Code applicable
to a REIT, to comply with the requirements of any taxing authority or
governmental agency or to determine any such compliance.
    
 
     These ownership limitations could have the effect of delaying, deferring or
preventing a takeover or other transaction in which holders of some, or a
majority, of Common Shares might receive a premium for their Common Shares over
the then prevailing market price or which such holders might believe to be
otherwise in their best interest.
 
TRANSFER AGENT AND REGISTRAR
 
   
     The transfer agent and registrar for the Common Shares is Boston EquiServe
Limited Partnership, an affiliate of First National Bank of Boston.
    
 
                                       96
<PAGE>   105
 
              CERTAIN PROVISIONS OF MARYLAND LAW AND THE COMPANY'S
                        DECLARATION OF TRUST AND BYLAWS
 
     The following summary of certain provisions of Maryland law and of the
Declaration of Trust and Bylaws of the Company does not purport to be complete
and is subject to and qualified in its entirety by reference to Maryland law and
the Declaration of Trust and Bylaws of the Company, copies of which are exhibits
to the Registration Statement of which this Prospectus is a part.
 
     The Declaration of Trust and Bylaws of the Company (the "Bylaws") contain
certain provisions that could make more difficult an acquisition or change in
control of the Company by means of a tender offer, a proxy contest or otherwise.
These provisions are expected to discourage certain types of coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of the Company to negotiate first with the Board of Trustees.
The Company believes that the benefits of these provisions outweigh the
potential disadvantages of discouraging such proposals because, among other
things, negotiation of such proposals might result in an improvement of their
terms. See also "Shares of Beneficial Interest -- Restrictions on Ownership and
Transfer."
 
CLASSIFICATION AND REMOVAL OF BOARD OF TRUSTEES; OTHER PROVISIONS
 
     The Company's Declaration of Trust provides for the Board of Trustees to be
divided into three classes of trustees, with each class to consist as nearly as
possible of an equal number of trustees. The term of office of the first class
of trustees will expire at the 1998 annual meeting of shareholders; the term of
the second class of trustees will expire at the 1999 annual meeting of
shareholders; and the term of the third class will expire at the 2000 annual
meeting of shareholders. At each annual meeting of shareholders, the class of
trustees to be elected at such meeting will be elected for a three-year term,
and the trustees in the other two classes will continue in office. Because
shareholders will have no right to cumulative voting for the election of
trustees, at each annual meeting of shareholders the holders of a majority of
the Common Shares will be able to elect all of the successors to the class of
trustees whose term expires at that meeting.
 
     The Company's Declaration of Trust also provides that, except for any
trustees who may be elected by holders of a class or series of shares of
beneficial interest other than the Common Shares, trustees may be removed only
for cause and only by the affirmative vote of shareholders holding at least a
majority of all the votes entitled to be cast for the election of trustees.
Vacancies on the Board of Trustees may be filled by the affirmative vote of the
remaining trustees and, in the case of a vacancy resulting from the removal of a
trustee by the shareholders, by a majority of the votes entitled to be cast for
the election of trustees. A vote of shareholders holding at least two-thirds of
all the votes entitled to be cast thereon is required to amend, alter, change,
repeal or adopt any provisions inconsistent with the foregoing classified board
and trustee removal provisions. These provisions may make it more difficult and
time-consuming to change majority control of the Board of Trustees of the
Company and, thus, may reduce the vulnerability of the Company to an unsolicited
proposal for the takeover of the Company or the removal of incumbent management.
 
     Because the Board of Trustees will have the power to establish the
preferences and rights of additional series of shares of beneficial interest
without a shareholder vote, the Board of Trustees may afford the holders of any
series of senior shares of beneficial interest preferences, powers and rights,
voting or otherwise, senior to the rights of holders of Common Shares. The
issuance of any such senior shares of beneficial interest could have the effect
of delaying, deferring or preventing a change in control of the Company. The
Board of Trustees, however, currently does not contemplate the issuance of any
shares of beneficial interest other than Common Shares.
 
     See "Management -- Limitation of Liability and Indemnification" for a
description of the limitations on liability of trustees and officers of the
Company and the provisions for indemnification of trustees and officers provided
for under applicable Maryland law and the Declaration of Trust.
 
                                       97
<PAGE>   106
 
CHANGES IN CONTROL PURSUANT TO MARYLAND LAW
 
     Maryland Business Combination Law.  Under the MGCL, as applicable to real
estate investment trusts, certain "business combinations" (including certain
issuances of equity securities) between a Maryland real estate investment trust
and any Interested Shareholder or an affiliate of the Interested Shareholder are
prohibited for five years after the most recent date on which the Interested
Shareholder becomes an Interested Shareholder. Thereafter, any such business
combination must be recommended by the Board of Trustees of such Trust and
approved by two super-majority shareholder votes unless, among other conditions,
the trust's common shareholders receive a minimum price (as defined in the MGCL)
for their shares and the consideration is received in cash or in the same form
as previously paid by the Interested Shareholder for its common shares. As
permitted by the MGCL, the Board of Trustees of the Company has opted out of the
business combination provisions of the MGCL. Consequently, the five-year
prohibition and the super-majority vote requirements will not apply to a
business combination involving the Company; however, the Company's Board of
Trustees may repeal this opt-out and cause the Company to become subject to
these provisions in the future.
 
     Maryland Control Share Acquisition Law.  In addition, also under the MGCL,
as applicable to real estate investments trusts, "control shares" acquired in a
"control share acquisition" have no voting rights except to the extent approved
by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares owned by the acquiror, by officers or by trustees who are
employees of the trust. "Control shares" are voting shares which, if aggregated
with all other such shares previously acquired by the acquiror or in respect of
which the acquiror is able to exercise or direct the exercise of voting power
(except solely by virtue of a revocable proxy), would entitle the acquiror to
exercise voting power in electing trustees within one of the following ranges of
voting power: (i) one-fifth or more but less than one-third, (ii) one-third or
more but less than a majority, or (iii) a majority or more of all voting power.
Control shares do not include shares the acquiring person is then entitled to
vote as a result of having previously obtained shareholder approval. A "control
share acquisition" means the acquisition of control shares, subject to certain
exceptions.
 
     A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses),
may compel the board of trustees of the trust to call a special meeting of
shareholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the trust may itself present
the question at any shareholders meeting.
 
     If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the trust may redeem any or all
of the control shares (except those for which voting rights have previously been
approved) for fair value determined, without regard to the absence of voting
rights for the control shares, as of the date of the last control share
acquisition by the acquiror or of any meeting of shareholders at which the
voting rights of such shares are considered and not approved. If voting rights
for control shares are approved at a shareholders meeting and the acquiror
becomes entitled to vote a majority of the shares entitled to vote, all other
shareholders may exercise appraisal rights. The fair value of the shares as
determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquiror in the control share acquisition.
 
   
     The control share acquisition statute does not apply (a) to shares acquired
in a merger, consolidation or share exchange if the trust is a party to the
transaction or (b) to acquisitions approved or exempted by the declaration of
trust or bylaws of the trust. As permitted by the MGCL, the Bylaws of the
Company contain a provision opting out of the control share provisions of the
MGCL, but the Board of Trustees may amend the Bylaws so that acquisitions of
shares of the Company are subject to these provisions in the future.
    
 
AMENDMENTS TO THE DECLARATION OF TRUST
 
     The Declaration of Trust, including its provisions on classification of the
Board of Trustees, restrictions on transferability of Common Shares and removal
of trustees, may be amended only by the affirmative vote of the holders of not
less than two-thirds of all of the votes entitled to be cast on the matter.
However, amendments relating to changes in the number of authorized shares of
beneficial interest of the Company require the
 
                                       98
<PAGE>   107
 
   
approval of holders of a majority of all votes cast at a meeting of shareholders
at which a quorum is present. Under the Maryland REIT Law, a declaration of
trust may permit the trustees by a two-thirds vote to amend the declaration of
trust from time to time to qualify as a REIT under the Code or the Maryland REIT
Law without the affirmative vote or written consent of the shareholders. The
Company's Declaration of Trust permits such action by the Board of Trustees.
    
 
ADVANCE NOTICE OF TRUSTEE NOMINATIONS AND NEW BUSINESS
 
     The Bylaws of the Company provide that (i) with respect to an annual
meeting of shareholders, nominations of persons for election to the Board of
Trustees and the proposal of business to be considered by shareholders may be
made only (A) pursuant to the Company's notice of the meeting, (B) by the Board
of Trustees or (C) by a shareholder who is entitled to vote at the meeting and
has complied with the advance notice procedures set forth in the Bylaws and (ii)
with respect to special meetings of the shareholders, only the business
specified in the Company's notice of meeting may be brought before the meeting
of shareholders and nominations of persons for election to the Board of Trustees
may be made only (A) pursuant to the Company's notice of the meeting, (B) by the
Board of Trustees or (C) provided that the Board of Trustees has determined that
trustees shall be elected at such meeting, by a shareholder who is entitled to
vote at the meeting and has complied with the advance notice provisions set
forth in the Bylaws.
 
ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE
DECLARATION OF TRUST AND BYLAWS
 
     The business combination provisions and the control share acquisition
provisions of the MGCL, in each case if they ever became applicable to the
Company, the provisions of the Declaration of Trust on classification of the
Board of Trustees and removal of trustees and the advance notice provisions of
the Bylaws could delay, defer or prevent a transaction or a change in control of
the Company that might involve a premium price for holders of Common Shares or
otherwise be in their best interests. The Declaration of Trust, as in effect,
provides that a merger, consolidation or sale of all or substantially all of the
assets of the Company must be approved by the affirmative vote of not less than
a majority of all votes entitled to be cast on the matter.
 
MARYLAND ASSET REQUIREMENTS
 
     To maintain its qualification as a Maryland real estate investment trust,
the Maryland REIT Law requires that the Company hold, either directly or
indirectly, at least 75% of the value of its assets in real estate assets,
mortgages or mortgage related securities, government securities, cash and cash
equivalent items, including high-grade short-term securities and receivables.
The Maryland REIT Law also prohibits using or applying land for farming,
agricultural, horticultural or similar purposes.
 
                                       99
<PAGE>   108
 
                             PARTNERSHIP AGREEMENT
 
     The following summary of the Operating Partnership Agreement, including the
descriptions of certain provisions thereof set forth elsewhere in this
Prospectus, is qualified in its entirety by reference to the Operating
Partnership Agreement, which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
 
MANAGEMENT
 
     The Operating Partnership was formed on November 11, 1996, as a limited
partnership under the Delaware Revised Uniform Limited Partnership Act (the
"Partnership Act"). The Company is the managing general partner of the Operating
Partnership and expects at all times to own a majority interest in the Operating
Partnership. ZML Opportunity Partnership II will be an additional general
partner in the Operating Partnership, but the right and power to manage the
Operating Partnership will be vested exclusively in the Company, as managing
general partner.
 
     The Company, as the managing general partner of the Operating Partnership,
has the exclusive power and authority to conduct the business of the Operating
Partnership, subject to the consent of the limited partners in certain limited
circumstances. Limited partners will have no right or authority to act for or to
bind the Operating Partnership. No limited partner may take part in the conduct
or control of the business or affairs of the Operating Partnership by virtue of
being a holder of Units. In particular, the limited partners expressly
acknowledge in the Operating Partnership Agreement that the Company, as managing
general partner, is acting on behalf of the Operating Partnership's limited
partners and the Company's shareholders collectively, and is under no obligation
to consider the tax consequences to limited partners when making decisions for
the benefit of the Operating Partnership.
 
SALES OF ASSETS
 
     Under the Operating Partnership Agreement, the Company, as managing general
partner, has the exclusive authority to determine whether, when and on what
terms the assets of the Operating Partnership (including the Properties) will be
sold. A sale of all or substantially all of the assets of the Operating
Partnership (or a merger of the Operating Partnership with another entity)
generally requires an affirmative vote of the holders of a majority of the
outstanding Units (including Units held directly or indirectly by the Company).
The Company expects to own, directly or indirectly, a majority of the Units and
thus to control the outcome of such a vote.
 
REMOVAL OF THE MANAGING GENERAL PARTNER; TRANSFER OF THE COMPANY'S INTERESTS
 
     The Operating Partnership Agreement provides that the limited partners may
not remove the Company as managing general partner of the Operating Partnership
with or without cause (unless neither the general partner nor its parent entity
is a "public company," in which case the general partner may be removed for
cause). In addition, the Company may not transfer any of its interests as
general or limited partner in the Operating Partnership, except in connection
with a merger or sale of all or substantially all of the Company's assets
(subject to certain conditions).
 
     Although the Company cannot transfer its partnership interests except in a
transaction in which substantially all of the assets of the surviving entity
consist of Units, the Operating Partnership Agreement does not prevent a
transaction in which another entity acquires control (or all of the outstanding
Common Shares) of the Company and that other entity owns assets and conducts
businesses outside of the Operating Partnership.
 
REIMBURSEMENT OF THE COMPANY; TRANSACTIONS WITH THE COMPANY AND ITS AFFILIATES
 
     The Company will not receive any compensation for its services as general
partner of the Operating Partnership. The Company, however, as a partner in the
Operating Partnership, has the same right to allocations and distributions as
other partners of the Operating Partnership. In addition, the Operating
 
                                       100
<PAGE>   109
 
Partnership will reimburse the Company for all expenses it incurs relating to
its activities as general partner, its continued existence and qualification as
a REIT and all other liabilities incurred by the Company in connection with the
pursuit of its business and affairs (including expenses incurred by the Company
in connection with the issuance of Common Shares or other securities of the
Company). Except as expressly permitted by the Operating Partnership Agreement,
affiliates of the Company will not engage in any transactions with the Operating
Partnership except on terms that are fair and reasonable and no less favorable
to the Operating Partnership than would be obtained from an unaffiliated
third-party.
 
REDEMPTION OF UNITS
 
     Subject to certain limitations in the Operating Partnership Agreement,
holders of Units generally will have the right to require the redemption of
their Units at any time one year after the Closing (or on such date prior to the
expiration of such one-year period as the Company, as managing general partner,
designates with respect to any or all Units); provided, however, that the
Investor Limited Partner who will receive Units in the Consolidation will only
have the right to require the redemption of its Units at any time commencing two
years after the Closing (the "Unit Redemption Right"). Unless the Company elects
to assume and perform the Operating Partnership's obligation with respect to the
Unit Redemption Right, as described below, the limited partner will receive cash
from the Operating Partnership in an amount equal to the market value of the
Units to be redeemed. The market value of a Unit for this purpose will be equal
to the average of the closing trading price of a Common Share on the NYSE for
the ten trading days before the day on which the redemption notice was given. In
lieu of the Operating Partnership's acquiring the Units for cash, the Company
will have the right to elect to acquire the Units directly from a limited
partner exercising the Unit Redemption Right, in exchange for either cash or
Common Shares, and, upon such acquisition, the Company will become the owner of
such Units. Upon exercise of the Unit Redemption Right, the limited partner's
right to receive distributions for the Units so redeemed or exchanged will
cease. At least 1,000 Units (or all remaining Units owned by the limited partner
if less than 1,000 Units) must be redeemed each time the Unit Redemption Right
is exercised. No redemption or exchange can occur if delivery of Common Shares
would be prohibited either under the provisions of the Company's Declaration of
Trust designed to protect the Company's qualification as a REIT or under
applicable Federal or state securities laws as long as the Common Shares are
publicly traded. See "Shares of Beneficial Interest." The Company will at all
times reserve and keep available out of its authorized but unissued Common
Shares, solely for the purpose of effecting the issuance of Common Shares
pursuant to the Unit Redemption Right, a sufficient number of Common Shares as
shall from time to time be sufficient for the redemption of all outstanding
Units not owned by the Company.
 
RESTRICTIONS ON TRANSFER OF UNITS BY LIMITED PARTNERS
 
     The Operating Partnership Agreement imposes certain restrictions on the
transfer of Units. The Operating Partnership Agreement provides that no limited
partner shall, without the prior written consent of the Company (which may be
withheld in the sole discretion of the Company), sell, assign, distribute or
otherwise transfer all or any part of his or its interest in the Operating
Partnership except by operation of law, by gift (outright or in trust) or by
sale, in each case to or for the benefit of his spouse or descendants, except
for pledges or other collateral transfers effected by a limited partner to
secure the repayment of a loan, the redemption of Units in accordance with the
Operating Partnership Agreement, and the distribution of Units by a ZML
Opportunity Partnership to its partners in compliance with any applicable
securities laws. See "Shares of Beneficial Interest -- Restrictions on Ownership
and Transfer."
 
ISSUANCE OF ADDITIONAL UNITS AND/OR PREFERENCE UNITS
 
     The Company is authorized at any time, without the consent of the limited
partners, to cause the Operating Partnership to issue additional Units to the
Company, to the limited partners or to other persons for such consideration and
on such terms and conditions as the Company deems appropriate. If Units are
issued to the Company, then the Company must issue a corresponding number of
Common Shares and must contribute to the Operating Partnership the proceeds, if
any, received by the Company from such issuance. In addition, the Operating
Partnership Agreement provides that the Operating Partnership may also issue
 
                                       101
<PAGE>   110
 
preferred units and other partnership interests of different classes and series
(collectively, "Preference Units") having such rights, preferences and other
privileges, variations and designations as may be determined by the Company. Any
such Preference Units may have terms, provisions and rights which are
preferential to the terms, provisions and rights of the Units. Preference Units,
however, may be issued to the Company only in connection with an offering of
securities of the Company having substantially similar rights and the
contribution of the proceeds therefrom to the Operating Partnership. No limited
partner has preemptive, preferential or similar rights with respect to capital
contributions to the Operating Partnership or the issuance or sale of any
partnership interests therein.
 
CAPITAL CONTRIBUTIONS
 
     No partner of the Operating Partnership will be required to make additional
capital contributions to the Operating Partnership, except that the Company is
generally required to contribute net proceeds of the sale of Common Shares (and
other equity interests) of the Company to the Operating Partnership. No limited
or general partner will be required to pay to the Operating Partnership any
deficit or negative balance which may exist in its account.
 
DISTRIBUTIONS; ALLOCATIONS OF INCOME AND LOSS
 
     The Operating Partnership Agreement generally provides for the quarterly
distribution of "Available Cash" (as defined below), as determined in the manner
provided in the Operating Partnership Agreement, to the partners of the
Operating Partnership in proportion to their percentage interests in the
Operating Partnership (which for any partner is determined by the number of
Units it owns relative to the total number of Units outstanding). "Available
Cash" is generally defined as net cash flow from operations plus any reduction
in reserves and minus interest and principal payments on debt, capital
expenditures, any additions to reserves and other adjustments. Neither the
Company nor the limited partners are entitled to any preferential or
disproportionate distributions of Available Cash with respect to the Units.
 
EXCULPATION AND INDEMNIFICATION OF THE COMPANY
 
     The Operating Partnership Agreement generally provides that the Company and
ZML Opportunity Partnership II, as general partners of the Operating
Partnership, will incur no liability to the Operating Partnership or any limited
partner for losses sustained, liabilities incurred, or benefits not derived as a
result of errors in judgment or for any mistakes of fact or law or for anything
which it may do or refrain from doing in connection with the business and
affairs of the Operating Partnership if the Company or such other general
partner carried out its duties in good faith. The Company's liability in any
event is limited to its interest in the Operating Partnership. Without limiting
the foregoing, the Company has no liability for the loss of any limited
partner's capital. In addition, the Company is not responsible for any
misconduct, negligent act or omission of any consultant, contractor, or agent of
the Operating Partnership or of the Company and has no obligation other than to
use good faith in the selection of all such contractors, consultants, and
agents.
 
     The Operating Partnership Agreement also requires the Operating Partnership
to indemnify the Company, its other general partners, the trustees and officers
of the Company, and such other persons as the Company may from time to time
designate against any loss or damage, including reasonable legal fees and court
costs incurred by such person by reason of anything it may do or refrain from
doing for or on behalf of the Operating Partnership or in connection with its
business or affairs unless it is established that: (i) the act or omission of
the indemnified person was material to the matter giving rise to the proceeding
and either was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the indemnified person actually received an improper personal
benefit in money, property or services; or (iii) in the case of any criminal
proceeding, the indemnified person had reasonable cause to believe that the act
or omission was unlawful. Any such indemnification claims must be satisfied
solely out of the assets of the Operating Partnership.
 
                                       102
<PAGE>   111
 
AMENDMENT OF THE PARTNERSHIP AGREEMENT
 
     Amendments to the Operating Partnership Agreement may be proposed by the
Company or by limited partners owning at least 25% of the then outstanding
Units. Generally, the Operating Partnership Agreement may be amended with the
approval of the Company, as managing general partner, and limited partners
(including the Company) holding a majority of the Units. Certain provisions
regarding, among other things, the rights and duties of the Company as general
partner (e.g., restrictions on the Company's power to conduct businesses other
than owning Units) or the dissolution of the Operating Partnership, may not be
amended without the approval of a majority of the Units not held by the Company.
Certain amendments that would, among other things, (i) convert a limited
partner's interest into a general partner's interest, (ii) modify the limited
liability of a limited partner, (iii) alter the interest of a partner in profits
or losses, or the right to receive any distributions (except as permitted under
the Operating Partnership Agreement with respect to the admission of new
partners or the issuance of additional Units), or (iv) alter the Unit Redemption
Right, must be approved by the Company and each limited partner that would be
adversely affected by such amendment.
 
TERM
 
     The Operating Partnership will be dissolved and its affairs wound up upon
the earliest of (i) December 31, 2095; (ii) the withdrawal of the Company as
general partner without the permitted transfer of the Company's interest to a
successor general partner (except in certain limited circumstances); (iii) the
sale of all or substantially all of the Operating Partnership's assets and
properties; (iv) the entry of a decree of judicial dissolution of the Operating
Partnership pursuant to the provisions of the Partnership Act; (v) the entry of
a final non-appealable judgment ruling that the last remaining general partner
is bankrupt or insolvent (except that, in either such case, in certain
circumstances the limited partners (other than the Company) may vote to continue
the Operating Partnership and substitute a new general partner in place of the
Company); (vi) prior to January 1, 2046, with the consent of holders (including
the Company) of 90% of the outstanding Units; or (vii) on or after January 1,
2046, on election by the Company, in its sole and absolute discretion.
 
                        SHARES AVAILABLE FOR FUTURE SALE
 
   
     Upon the completion of the Offering, the Company will have outstanding
147,851,200 Common Shares (151,601,200 shares if the Underwriters' overallotment
option is exercised in full). In addition, 11,928,200 Common Shares are reserved
for issuance upon exchange of Units. The Common Shares issued in the Offering
will be freely tradeable by persons other than "affiliates" of the Company
without restriction under the Securities Act, subject to the limitations on
ownership set forth in this Prospectus. See "Shares of Beneficial Interest." The
Common Shares received by the ZML Investors in the Consolidation and any Common
Shares acquired in redemption of Units (the "Restricted Common Shares") will be
"restricted" securities under the meaning of Rule 144 promulgated under the
Securities Act ("Rule 144") and may not be sold in the absence of registration
under the Securities Act unless an exemption from registration is available,
including exemptions contained in Rule 144. As described below under
"-- Registration Rights," the Company has granted certain holders registration
rights with respect to their Common Shares.
    
 
     In general, under Rule 144 as currently in effect, if one year has elapsed
since the later of the date of acquisition of Restricted Common Shares from the
Company or any "affiliate" of the Company, as that term is defined under the
Securities Act, the acquiror or subsequent holder thereof is entitled to sell
within any three-month period a number of shares that does not exceed the
greater of 1% of the then outstanding Common Shares or the average weekly
trading volume of the Common Shares during the four calendar weeks immediately
preceding the date on which notice of the sale is filed with the Securities and
Exchange Commission (the "Commission"). Sales under Rule 144 also are subject to
certain manner of sales provisions, notice requirements and the availability of
current public information about the Company. If two years have elapsed since
the date of acquisition of Restricted Common Shares from the Company or from any
"affiliate" of the Company, and the acquiror or subsequent holder thereof is
deemed not to have been an affiliate of the company at any time during the 90
days immediately preceding a sale, such person is entitled to sell such
 
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shares in the public market under Rule 144(k) without regard to the volume
limitations, manner of sale provisions, public information requirements or
notice requirements.
 
     The Company, the Equity Group, the ZML Partners and the executive officers
and trustees of the Company will be required, as a condition to the
Underwriters' participation in the Offering, to agree that they will not,
without the consent of the Representative, offer, sell, contract to sell or
otherwise dispose of any Common Shares (including any Common Shares acquired
upon redemption of Units) for one year following the Closing. See
"Underwriting." The Company will grant demand registration rights to certain ZML
Investors, the ZML Partners and the Equity Group with respect to Common Shares
or Common Shares obtained by upon the redemption of Units received in the
Consolidation (including in liquidation of the ZML Opportunity Partnerships).
The Company will bear all expenses incident to its registration requirements,
except for any underwriting discounts or commissions or transfer taxes, if any,
relating to the such Common Shares.
 
   
     The Company has adopted the Employee Plan and the Purchase Plan for the
purpose of attracting and retaining highly qualified trustees, executive
officers and other key employees. See "Management -- Option and Restricted Share
Plans" and "-- Compensation of Board of Trustees; Payment in Common Shares." The
Company intends to issue options to purchase approximately 4,090,000 Common
Shares to trustees, executive officers, certain key employees and consultants
prior to the completion of the Offering and has reserved additional shares for
future issuance under the Employee Plan. Prior to the expiration of the initial
12-month period following the completion of the Offering, the Company expects to
file a registration statement with the Commission with respect to the Common
Shares issuable under the Employee Plan, which shares may be resold without
restriction, unless held by affiliates.
    
 
     Prior to the Offering, there has been no public market for the Common
Shares. Trading of the Common Shares on the New York Stock Exchange is expected
to commence immediately following the completion of the Offering. No prediction
can be made as to the effect, if any, that future sales or shares of the
availability of shares for future sale, will have on the market price prevailing
from time to time. Sales of substantial amounts of Common Shares (including
Common Shares issued upon the exercise of options), or the perception that such
sales could occur, could adversely affect prevailing market prices of the Common
Shares. See "Risk Factors -- Risks of Ownership of Common Shares" and
"Partnership Agreement -- Transfer of Interests."
 
                       FEDERAL INCOME TAX CONSIDERATIONS
 
   
     The following discussion summarizes all federal income tax considerations
reasonably anticipated to be material to a prospective shareholder in the
company in connection with the ownership of Common Shares. The following
description is for general information only, is not exhaustive of all possible
tax considerations, and is not intended to be (and should not be construed as)
tax advice. For example, this summary does not give a detailed discussion of any
state, local or foreign tax considerations. In addition, the discussion is
intended to address only those federal income tax considerations that are
generally applicable for all shareholders in the Company. It does not discuss
all aspects of federal income taxation that might be relevant to a specific
shareholder in light of its particular investment or tax circumstances. The
description does not purport to deal with aspects of taxation that may be
relevant to shareholders subject to special treatment under the federal income
tax laws, including, without limitation, insurance companies, financial
institutions or broker-dealers, tax-exempt organizations (except to the extent
discussed under the heading "Taxation of Tax-Exempt Shareholders of the
Company") or foreign corporations and persons who are not citizens or residents
of the United States (except to the extent discussed under the heading "Taxation
of Non-U.S. Shareholders of the Company").
    
 
     The information in this section is based on the Code, current, temporary
and proposed Treasury Regulations thereunder, the legislative history of the
Code, current administrative interpretations and practices of the IRS (including
its practices and policies as endorsed in private letter rulings, which are not
binding on the IRS except with respect to a taxpayer that receives such a
ruling), and court decisions, all as of the date hereof. No assurance can be
given that future legislation, Treasury Regulations, administrative
interpretations and court decisions will not significantly change the current
law or adversely affect existing interpretations of current law. Any such change
could apply retroactively to transactions preceding the date of
 
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<PAGE>   113
 
the change. Except as described below in "Taxation of the Company -- Income
Tests Applicable to REITs," the Company has not requested, and does not plan to
request, any rulings from the IRS concerning the tax treatment of the Company,
the ZML Opportunity Partnerships, or the Operating Partnership. Thus, no
assurance can be provided that the statements set forth herein (which do not
bind the IRS or the courts) will not be challenged by the IRS or will be
sustained by a court if so challenged.
 
     As used in this section, the term "Company" refers solely to Equity Office
Properties Trust.
 
     EACH PROSPECTIVE PURCHASER OF SHARES IS URGED TO CONSULT WITH ITS OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO IT OF THE OWNERSHIP AND
DISPOSITION OF SHARES IN AN ENTITY ELECTING TO BE TAXED AS A REIT IN LIGHT OF
ITS SPECIFIC TAX AND INVESTMENT SITUATIONS AND THE SPECIFIC FEDERAL, STATE,
LOCAL AND FOREIGN TAX LAWS APPLICABLE TO IT.
 
TAXATION OF THE COMPANY
 
     General.  The Company plans to make an election to be taxed as a REIT under
Sections 856 through 860 of the Code, commencing with its taxable year ending
December 31, 1997. The Company believes that, commencing with its taxable year
ending December 31, 1997, it will be organized and will operate in such a manner
as to qualify for taxation as a REIT under the Code, and the Company intends to
continue to operate in such a manner, but no assurance can be given that it will
continue to operate in such a manner so as to qualify or remain qualified.
 
   
     These sections of the Code and the corresponding Treasury Regulations are
highly technical and complex. The following sets forth the material aspects of
the rules that govern the federal income tax treatment of a REIT and its
shareholders. This summary is qualified in its entirety by the applicable Code
provisions, rules and regulations promulgated thereunder, and administrative and
judicial interpretations thereof.
    
 
     Hogan & Hartson L.L.P. has acted as special tax counsel to the Company in
connection with the Consolidation and the Company's election to be taxed as a
REIT. In the opinion of Hogan & Hartson L.L.P., commencing with the Company's
taxable year ending December 31, 1997, the Company will be organized in
conformity with the requirements for qualification as a REIT, and its proposed
method of operation will enable it to meet the requirements for qualification
and taxation as a REIT under the Code. It must be emphasized that this opinion
is conditioned upon certain representations made by the Company and the ZML
REITs as to factual matters relating to the organization and operation of the
Company, the Operating Partnership and the ZML Opportunity Partnerships (and the
previous organization and operation of the ZML REITs and the ZML Opportunity
Partnerships). In addition, this opinion is based upon the factual
representations of the Company concerning its business and properties as set
forth in this Prospectus and will assume that the actions described in this
Prospectus are completed in a timely fashion. Moreover, such qualification and
taxation as a REIT depends upon the Company's ability to meet on a ongoing basis
(through actual annual operating results, distribution levels and diversity of
share ownership) the various qualification tests imposed under the Code
discussed below, the results of which will not be reviewed by Hogan & Hartson
L.L.P. Accordingly, no assurance can be given that the actual results of the
Company's operations for any particular taxable year will satisfy such
requirements. Further, the anticipated income tax treatment described in this
Prospectus may be changed, perhaps retroactively, by legislative, administrative
or judicial action at any time. See "-- Failure of the Company to Qualify as a
REIT."
 
   
     If the Company qualifies for taxation as a REIT, it generally will not be
subject to federal corporate income taxes on its net income that is currently
distributed to shareholders. This treatment substantially eliminates the "double
taxation" (at the corporate and shareholder levels) that generally results from
investment in a regular corporation. However, the Company will be subject to
federal income tax as follows: First, the Company will be taxed at regular
corporate rates on any undistributed REIT taxable income, including
undistributed net capital gains. Second, under certain circumstances, the
Company may be subject to the "alternative minimum tax" on its items of tax
preference. Third, if the Company has (i) net income from the sale or other
disposition of "foreclosure property" which is held primarily for sale to
customers in the
    
 
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<PAGE>   114
 
ordinary course of business or (ii) other nonqualifying income from foreclosure
property, it will be subject to tax at the highest corporate rate on such
income. Fourth, if the Company has 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
foreclosure property), such income will be subject to a 100% tax. Fifth, if the
Company should fail to satisfy the 75% gross income test or the 95% gross income
test (as discussed below), but has nonetheless maintained its qualification as a
REIT because certain other requirements have been met, it will be subject to a
100% tax on an amount equal to (a) the gross income attributable to the greater
of the amount by which the Company fails the 75% or 95% test multiplied by (b) a
fraction intended to reflect the Company's profitability. Sixth, if the Company
should fail to distribute during each calendar year at least the sum of (i) 85%
of its REIT ordinary income for such year, (ii) 95% of its REIT capital gain net
income for such year, and (iii) any undistributed taxable income from prior
periods, the Company would be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. Seventh, with
respect to any asset (a "Built-In Gain Asset") acquired by the Company from a
corporation which is or has been a C corporation (i.e., generally a corporation
subject to full corporate-level tax) in a transaction in which the basis of the
Built-In Gain Asset in the hands of the Company is determined by reference to
the basis of the asset in the hands of the C corporation, if the Company
recognizes gain on the disposition of such asset during the ten-year period (the
"Recognition Period") beginning on the date on which such asset was acquired by
the Company, then, to the extent of the Built-In Gain (i.e., the excess of (a)
the fair market value of such asset over (b) the Company's adjusted basis in
such asset, determined as of the beginning of the Recognition Period), such gain
will be subject to tax at the highest regular corporate rate pursuant to IRS
regulations that have not yet been promulgated.
 
     The results described above with respect to the recognition of Built-In
Gain assume that the Company will make an election pursuant to IRS Notice 88-19.
In this regard, the Built-In Gain rules would apply with respect to any assets
acquired by the Company from a ZML REIT in connection with the Merger if the ZML
REIT failed to qualify, for any reason, as a REIT throughout the duration of its
existence. If the Company were not to make an election pursuant to IRS Notice
88-19 (or that election no longer were available because of a change in
applicable law), a ZML REIT that failed to qualify as a REIT at the time of the
Merger would recognize taxable gain on the Merger under the Built-In Gain rules,
notwithstanding that the Merger otherwise qualified as a "tax-free
reorganization." As discussed below in "-- Requirements for Qualification and
"-- Failure of the Company to Qualify as a REIT," a ZML REIT would be required
to have qualified as a REIT for its entire existence in order to qualify as a
REIT at the time of the Merger. The Company believes that each of the ZML REITs
has qualified as a REIT throughout its existence, but the Company intends to
make a protective election under Notice 88-19 with respect to the Merger of each
of the ZML REITs in order to avoid the adverse consequences that otherwise could
result.
 
     Requirements for Qualification.  The Code defines a REIT as a corporation,
trust or association (i) which is managed by one or more trustees or directors;
(ii) the beneficial ownership of which is evidenced by transferable shares, or
by transferable certificates of beneficial interest; (iii) which would be
taxable as a domestic corporation, but for Sections 856 through 859 of the Code;
(iv) which is neither a financial institution nor an insurance company subject
to certain provisions of the Code; (v) the beneficial ownership of which is held
by 100 or more persons; (vi) during the last half of each taxable year not more
than 50% in value of the outstanding stock of which is owned, actually or
constructively, by five or fewer individuals (as defined in the Code to include
certain entities); and (vii) which meets certain other tests, described below,
regarding the nature of its income and assets. The Code provides that conditions
(i) to (iv), inclusive, must be met during the entire taxable year and that
condition (v) must be met during at least 335 days of a taxable year of twelve
months, or during a proportionate part of a taxable year of less than twelve
months. Conditions (v) and (vi) will not apply until after the first taxable
year for which an election is made to be taxed as a REIT. For purposes of
conditions (v) and (vi), pension funds and certain other tax-exempt entities are
treated as individuals, subject to a "look-through" exception in the case of
condition (vi).
 
     The Company believes that it will have issued sufficient Common Shares with
sufficient diversity of ownership in the Consolidation and this Offering to
allow it to satisfy conditions (v) and (vi). In addition, the Company's
Declaration of Trust provides for restrictions regarding the transfer and
ownership of Common
 
                                       106
<PAGE>   115
 
Shares, which restrictions are intended to assist the Company in continuing to
satisfy the share ownership requirements described in (v) and (vi) above. Such
ownership and transfer restrictions are described in "Shares of Beneficial
Interest -- Restrictions on Ownership and Transfer." These restrictions,
however, may not ensure that the Company will, in all cases, be able to satisfy
the share ownership requirements described above. If the Company fails to
satisfy such share ownership requirements, the Company's status as a REIT will
terminate. See "-- Failure of the Company to Qualify as a REIT."
 
     In addition, a corporation may not elect to become a REIT unless its
taxable year is the calendar year. The Company will have a calendar taxable
year.
 
     In order to qualify as a REIT, the Company cannot have at the end of any
taxable year any undistributed "earnings and profits" that are attributable to a
"C corporation" taxable year. The Company itself will be a newly formed entity
and will make a REIT election for its first taxable year. Hence, the Company
itself will not have any undistributed "C corporation earnings and profits." In
the Merger, however, the Company will succeed to various tax attributes of the
ZML REITs, including any undistributed "earnings and profits." If the ZML REITs
each have qualified as a REIT throughout the duration of their existence, then
they also would not have any undistributed "C corporation earnings and profits,"
and the Company would satisfy this requirement. If, however, one or more of the
ZML REITs has failed to qualify as a REIT throughout the duration of its
existence, then it might have undistributed "C corporation earnings and profits"
that, if not distributed by the Company prior to the end of its first taxable
year, could prevent the Company from qualifying as a REIT. The Company and the
ZML REITs believe that each of the ZML REITs has qualified as a REIT throughout
the duration of its existence and that, in any event, no ZML REIT should be
considered to have any undistributed "C corporation earnings and profits" at the
time of the Merger. There can be no assurance, however, that the IRS would not
contend otherwise on a subsequent audit of one or more of the ZML REITs.
Although not free from doubt, it appears pursuant to recently finalized Treasury
Regulations that the Company may be able to use certain "deficiency dividend"
procedures to distribute any "earnings and profits" deemed to have been acquired
in the Merger. In order to use this procedure, the Company would have to make an
additional dividend distribution to its shareholders (in addition to
distributions made for purposes of satisfying the normal REIT distribution
requirements), within 90 days of the IRS determination. In addition, the Company
would have to pay to the IRS an interest charge on 50% of the acquired "earnings
and profits" that were not distributed prior to the end of the taxable year in
which the Consolidation occurred. The statute and Treasury Regulations related
to the application of the "earnings and profits distribution" requirement to a
REIT that acquires a "non-REIT" in a reorganization and the availability of the
"deficiency dividend" procedure in those circumstances are not entirely clear,
and there can be no assurance that the IRS would not take the position either
that the procedure is not available at all (in which case the Company would fail
to qualify as a REIT) or, alternatively, that even if the procedure is
available, the Company cannot qualify as a REIT for the taxable year in which
the Consolidation occurs (but it could qualify as a REIT for subsequent years).
 
     Finally, in the event that any ZML REIT were determined not to qualify as a
REIT, the Company would not be eligible to elect REIT status for up to five
years after the year in which such ZML REIT first failed to qualify as a REIT,
if the Company were considered a "successor" to such ZML REIT. The Company would
be considered a "successor" for these purposes, however, only if (i) persons who
own more than 50 percent of the Common Shares of the Company at any time during
the taxable year ending after the Consolidation occurs owned, directly or
indirectly, 50% or more in value of the shares of such ZML REIT during the first
year in which it ceased to qualify as a REIT and (ii) a significant portion of
the Company's assets were assets owned by such ZML REIT.
 
     Closing Agreements with the IRS with Respect to ZML REITs I and II.  In
December 1996, the IRS was advised that ZML REIT I and ZML REIT II each had
failed to comply with a technical requirement (but, in the opinion of the
applicable ZML Partners, not the intent) of a provision of the Code which must
be satisfied for a company to qualify as a REIT for federal income tax purposes.
More specifically, in connection with structuring certain real estate
investments made by Opportunity Partnership I and Opportunity Partnership II
during the period 1991-1993, all of the voting stock of certain corporations
formed to serve as general partners of limited partnership subsidiaries of such
ZML Opportunity Partnerships was issued to such
 
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<PAGE>   116
 
ZML Opportunity Partnerships. Based upon a Treasury Regulation interpreting the
statutory provision limiting permitted REIT investments, a portion of such ZML
Opportunity Partnerships' ownership of corporate voting stock would be imputed
to ZML REIT I and ZML REIT II and, in so doing, would cause ZML REIT I and ZML
REIT II to violate the prohibition on a REIT owning more than 10% of the voting
stock of a corporation other than a qualified REIT subsidiary.
 
     Pursuant to closing agreements, the IRS has agreed that neither ZML REIT I
nor ZML REIT II will be disqualified as a REIT as a result of the technical
violations disclosed to the IRS. In connection with the agreements, the ZML
Partners of Opportunity Partnership I and Opportunity Partnership II made
certain payments to the IRS. None of ZML REIT I, ZML REIT II, Opportunity
Partnership I, Opportunity Partnership II or the Company will bear the cost of
such payments. As a result of the closing agreements, the technical violations
discussed above will cause no adverse impact on the REIT status of ZML REIT I
and ZML REIT II for the tax years at issue, or the Company's ability to qualify
as a REIT following the Consolidation.
 
   
     Ownership of Partnership Interests by a REIT.  In the case of a REIT which
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 the
partnership shall retain the same character in the hands of the REIT for
purposes of Section 856 of the Code, including satisfying the gross income tests
and the asset tests. Thus, the Company's proportionate share of the assets and
items of income of the ZML Opportunity Partnerships (including each Opportunity
Partnership's share of such items of the Operating Partnership and any
subsidiaries of the Operating Partnership that are partnerships or LLCs) will be
treated as assets and items of income of the Company for purposes of applying
the requirements described herein. A summary of the rules governing the federal
income taxation of partnerships and their partners is provided below in " -- Tax
Aspects of the Company's Ownership of Interests in the ZML Opportunity
Partnerships and the Operating Partnership." The Company will have direct
control of each of the ZML Opportunity Partnerships and the Operating
Partnership and intends to operate them consistent with the requirements for
qualification as a REIT.
    
 
     Income Tests Applicable to REITs.  In order to maintain qualification as a
REIT, the Company annually must satisfy three gross income requirements. First,
at least 75% of the Company's gross income (excluding gross income from
prohibited transactions) for each taxable year must be derived directly or
indirectly from investments relating to real property or mortgages on real
property (including "rents from real property" and, in certain circumstances,
interest) or from certain types of temporary investments. Second, at least 95%
of the Company's gross income (excluding gross income from "prohibited
transactions") for each taxable year must be derived from such real property
investments, dividends, interest and gain from the sale or disposition of stock
or securities (or from any combination of the foregoing). Third, short-term gain
from the sale or other disposition of stock or securities, gain from prohibited
transactions and gain on the sale or other disposition of real property held for
less than four years (apart from involuntary conversions and sales of
foreclosure property) must represent less than 30% of the Company's gross income
(including gross income from "prohibited transactions") for each taxable year.
 
     Rents received by the Company will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if
several conditions are met. First, the amount of rent must not be based in whole
or in part on the income or profits of any person. However, an amount received
or accrued generally will not be excluded from the term "rents from real
property" solely by reason of being based on a fixed percentage or percentages
of receipts or sales. Second, rents received from a tenant will not qualify as
"rents from real property" in satisfying the gross income tests if the REIT, or
an actual or constructive owner of 10% or more of the REIT, actually or
constructively owns 10% or more of such tenant (a "Related Party Tenant").
Third, 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." Finally, for rents received to qualify as
"rents from real property," the REIT generally must not operate or manage the
property or furnish or render services to the tenants of such property, other
than through an independent contractor from whom the REIT derives no
 
                                       108
<PAGE>   117
 
   
revenue. The REIT may, however, directly perform certain services that are
"usually or customarily rendered" in connection with the rental of space for
occupancy only and are not otherwise considered "rendered to the occupant" of
the property. To the extent that services (other than those customarily
furnished or rendered in connection with the rental of real property) are
rendered to the tenants of the property by the independent contractor, the cost
of the services must be borne by the independent contractor. The Company,
through the Operating Partnership, will provide certain services to the
Properties. Based upon the experience of the ZML Partners and the Equity Group
in the office rental markets in which the Company's properties are located, the
Company believes that all services provided to tenants by the Company will be
considered "usually or customarily rendered" in connection with the rental of
office space for occupancy, although there can be no assurance that the IRS will
not contend otherwise. (In this regard the Company has engaged a service
corporation owned by affiliates of the Equity Group Owners, which has been
structured to qualify as an independent contractor, to perform contract services
that might not be permissible for a REIT to perform directly.) The Company does
not and will not (i) charge rent for any property that is based in whole or in
part on the income or profits of any person (except by reason of being based on
a percentage of receipts or sales, as described above, or unless the Board of
Trustees determines, in its discretion, that the rent received from a particular
tenant under such an arrangement is not material and will not jeopardize the
Company's status as a REIT), (ii) rent any property to a Related Party Tenant
(unless the Board of Trustees determines in its discretion that the rent
received from such Related Party Tenant is not material and will not jeopardize
the Company's status as a REIT), (iii) derive rental income attributable to
personal property (other than personal property leased in connection with the
lease of real property, the amount of which is less than 15% of the total rent
received under the lease), or (iv) perform services considered to be rendered to
the occupant of the property, other than through an independent contractor from
whom the Company derives no revenue.
    
 
     The Company has requested a ruling from the IRS to the effect that if the
Operating Partnership enters into arrangements with independent contractors to
operate the Company's parking facilities under which the Operating Partnership
will bear the expenses incurred in operating the parking facilities, such an
arrangement will not affect the Company's ability to satisfy the 95% and 75%
gross income tests. Currently, all but one of the stand-alone garages are
operated by third-party Service Companies under lease agreements whereby the
Opportunity Partnership and the Service Company share the gross receipts from
the parking operation or the Opportunity Partnership receives a fixed payment
from the Service Company, and the Opportunity Partnership bears none of the
operational expenses. The income received by the Opportunity Partnership from
the stand-alone garages under such agreements should qualify as "rents from real
properties" for the purpose of the 95% and 75% gross income tests. The Company
will retain the current arrangements with the Service Companies if it is
unsuccessful in obtaining a favorable ruling from the IRS. One stand-alone
garage agreement provides for the receipt of a percentage of net receipts by the
Opportunity Partnership and, therefore, results in an insignificant amount of
non-qualifying gross income relative to the total gross income of the ZML REIT.
The income received under this agreement has not affected the ZML REIT's ability
to satisfy the 95% and 75% gross income tests and should not affect the
Company's ability to satisfy the 95% and 75% gross income tests in future
taxable years. Parking garages which are located within a building, or are
adjacent to, or are part of the same complex as, a building generally are
operated by Service Companies pursuant to parking management agreements under
which the Service Companies receive a management fee which may be a fixed dollar
amount, or a percentage of gross or net revenues. The Company and the ZML
Partners believe that, based on private letter rulings issued to other REITs
that had similar parking management arrangements, the income received pursuant
to such agreements should qualify as "rents from real property" for the purposes
of the 95% and 75% gross income tests.
 
     "Interest" generally will not qualify under the 75% or 95% gross income
tests if it depends in whole or in part on the income or profits of any person.
However, interest will not fail to so qualify solely by reason of being based on
a fixed percentage or percentages of receipts or sales. The Company does not
expect to derive significant amounts of interest that will not qualify under the
75% and 95% gross income tests.
 
     As discussed above in "The Company," the Management Corp. will conduct
third-party management services with respect to properties not owned by the
Operating Partnership and with respect to Joint Venture Properties. The
Operating Partnership will own 100% of the non-voting stock of the Management
Corp., but
 
                                       109
<PAGE>   118
 
none of its voting stock. The Company's share of any dividends received from the
Management Corp. should qualify for the purposes of the 95% gross income test,
but not for purposes of the 75% gross income test. The Company does not
anticipate that it will receive sufficient dividends from the Management Corp.
to cause it to exceed the limit on non-qualifying income under the 75% gross
income test.
 
     If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code. These relief
provisions will be generally available if the Company's failure to meet such
tests was due to reasonable cause and not due to willful neglect, the Company
attaches a schedule of the sources of its income to its Federal income tax
return, and any incorrect information on the schedule was not due to fraud with
intent to evade tax. It is not possible, however, to state whether in all
circumstances the Company would be entitled to the benefit of these relief
provisions. For example, if the Company fails to satisfy the gross income tests
because non-qualifying income that the Company intentionally incurs exceeds the
limits on such income, the IRS could conclude that the Company's failure to
satisfy the tests was not due to reasonable cause. If these relief provisions
are inapplicable to a particular set of circumstances involving the Company, the
Company will not qualify as a REIT. As discussed above in "-- General," even if
these relief provisions apply, a tax would be imposed with respect to the excess
net income. No similar mitigation provision provides relief if the Company fails
the 30% income test. In such case, the Company would cease to qualify as a REIT.
 
     Any gain realized by the Company on the sale of any property held as
inventory or other property held primarily for sale to customers in the ordinary
course of business (including the Company's share of any such gain realized by
the Operating Partnership) will be treated as income from a "prohibited
transaction" that is subject to a 100% penalty tax. Such prohibited transaction
income may also have an adverse effect upon the Company's ability to satisfy the
income tests for qualification as a REIT. Under existing law, whether property
is held as inventory or primarily for sale to customers in the ordinary course
of a trade or business 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 the Properties for investment with a view to
long-term appreciation, to engage in the business of acquiring, developing,
owning, and operating the Properties (and other properties) and to make such
occasional sales of the Properties as are consistent with the Operating
Partnership's investment objectives. There can be no assurance, however, that
the IRS might not contend that one or more of such sales is subject to the 100%
penalty tax.
 
     Asset Tests Applicable to REITs.  The Company, at the close of each quarter
of its taxable year, must also satisfy three tests relating to the nature of its
assets. First, at least 75% of the value of the Company's total assets must be
represented by real estate assets including (i) its allocable share of real
estate assets held by partnerships in which the Company owns an interest
(including its allocable share of the assets held directly or indirectly through
the Operating Partnership) and (ii) stock or debt instruments held for not more
than one year purchased with the proceeds of a stock offering or long-term (at
least five years) debt offering of the Company, cash, cash items and government
securities. Second, not more than 25% of the Company's total assets may be
represented by securities other than those in the 75% asset class. Third, of the
investments included in the 25% asset class, the value of any one issuer's
securities owned by the Company may not exceed 5% of the value of the Company's
total assets, and the Company may not own more than 10% of any one issuer's
outstanding voting securities.
 
     The Operating Partnership owns none of the voting stock but 100% of the
non-voting stock of the Management Corp. Thus, none of the Operating
Partnership, any ZML Opportunity Partnership, or the Company owns (either alone
or together) more than 10% of the voting securities of the Management Corp. The
Operating Partnership also may own non-voting stock, representing substantially
all of the equity, in other corporate entities that serve as partners or members
in the various titleholding entities. The Company will represent, however, that
the Operating Partnership will not own more than 10% of the voting securities of
any other entity that would be treated as a corporation for federal income tax
purposes. In addition, the Company and its senior management believe, and the
Company will represent, that the Company's pro rata share of the value of the
securities of the Management Corp. does not exceed 5% of the total value of the
Company's assets. There can be no assurance, however, that the IRS might not
contend either that the value of the securities of the Management Corp. held by
the Company (through the ZML Opportunity Partnerships and
 
                                       110
<PAGE>   119
 
the Operating Partnership) exceeds the 5% value limitation or that nonvoting
stock of the Management Corp. or another corporate entity owned by the Operating
Partnership should be considered "voting stock" for this purpose.
 
     After initially meeting the asset tests at the close of any quarter, the
Company will not lose its status as a REIT for failure to satisfy the asset
tests at the end of a later quarter solely by reason of changes in asset values.
If the failure to satisfy the asset tests results from an acquisition of
securities or other property during a quarter (including, for example, as a
result of the Company increasing its interest in the Operating Partnership as a
result of the exercise of a Unit Redemption Right or an additional capital
contribution of proceeds of an offering of Common Shares by the Company such as
this Offering), the failure can be cured by disposition of sufficient
nonqualifying assets within 30 days after the close of that quarter. The Company
intends to maintain adequate records of the value of its assets to ensure
compliance with the asset tests and to take such other actions within 30 days
after the close of any quarter as may be required to cure any noncompliance. If
the Company fails to cure noncompliance with the asset tests within such time
period, the Company would cease to qualify as a REIT.
 
     Annual Distribution Requirements Applicable to REITs.  The Company, in
order to qualify as a REIT, is required to distribute dividends (other than
capital gain dividends) to its shareholders in an amount at least equal to (i)
the sum of (a) 95% of the Company's "REIT taxable income" (computed without
regard to the dividends paid deduction and the Company's net capital gain) and
(b) 95% of the net income (after tax), if any, from foreclosure property, minus
(ii) the sum of certain items of noncash income. In addition, if the Company
disposes of any Built-In Gain Asset during its Recognition Period, the Company
will be required, pursuant to Treasury Regulations which have not yet been
promulgated, to distribute at least 95% of the Built-In Gain (after tax), if
any, recognized on the disposition of such asset. Such distributions must be
paid in the taxable year to which they relate, or in the following taxable year
if declared before the Company timely files its tax return for such year and if
paid on or before the first regular dividend payment date after such
declaration. To the extent that the Company does not distribute all of its net
capital gain or distributes at least 95%, but less than 100%, of its "REIT
taxable income," as adjusted, it will be subject to tax thereon at regular
ordinary and capital gain corporate tax rates. The Company intends to make
timely distributions sufficient to satisfy these annual distribution
requirements. In this regard, the Operating Partnership Agreement authorizes the
Company, as managing 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 the Company to meet these distribution requirements.
 
     It is expected that the Company's REIT taxable income will be less than its
cash flow due to the allowance of depreciation and other non-cash charges in
computing REIT taxable income. Accordingly, the Company anticipates that it will
generally have sufficient cash or liquid assets to enable it to satisfy the
distribution requirements described above. It is possible, however, that the
Company, from time to time, may not have sufficient cash or other liquid assets
to meet these distribution requirements due to timing differences between (i)
the actual receipt of income and actual payment of deductible expenses and (ii)
the inclusion of such income and deduction of such expenses in arriving at
taxable income of the Company. If such timing differences occur, in order to
meet the distribution requirements, the Company may find it necessary to arrange
for short-term, or possibly long-term, borrowings or to pay dividends in the
form of taxable stock dividends.
 
     Under certain circumstances, the Company may be able to rectify a failure
to meet the distribution requirement for a year by paying "deficiency dividends"
to shareholders in a later year, which may be included in the Company's
deduction for dividends paid for the earlier year. Thus, the Company may be able
to avoid being taxed on amounts distributed as deficiency dividends; however,
the Company will be required to pay interest based upon the amount of any
deduction taken for deficiency dividends.
 
     Furthermore, if the Company should fail to distribute during each calendar
year at least the sum of (i) 85% of its REIT ordinary income for such year, (ii)
95% of its REIT capital gain income for such year, and (iii) any undistributed
taxable income from prior periods, the Company would be subject to a 4% excise
tax on the excess of such required distribution over the amounts actually
distributed.
 
                                       111
<PAGE>   120
 
     Failure of the Company to Qualify as a REIT.  If the Company fails to
qualify for taxation as a REIT in any taxable year, and if the relief provisions
do not apply, the Company will be subject to tax (including any applicable
alternative minimum tax) on its taxable income at regular corporate rates.
Distributions to shareholders in any year in which the Company fails to qualify
will not be deductible by the Company nor will they be required to be made. As a
result, the Company's failure to qualify as a REIT would significantly reduce
the cash available for distribution by the Company to its shareholders. In
addition, if the Company fails to qualify as a REIT, all distributions to
shareholders will be taxable as ordinary income, to the extent of the Company's
current and accumulated earnings and profits, and, subject to certain
limitations of the Code, corporate distributees may be eligible for the
dividends received deduction. Unless entitled to relief under specific statutory
provisions, the Company also will 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 in all circumstances the Company would be
entitled to such statutory relief.
 
TAXATION OF TAXABLE U.S. SHAREHOLDERS OF THE COMPANY GENERALLY
 
   
     As used herein, the term "U.S. Shareholder" means a holder of Common Shares
who (for United States federal income tax purposes) (i) is a citizen or resident
of the United States, (ii) is a corporation, partnership, or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, or (iii) is an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source.
    
 
     As long as the Company qualifies as a REIT, distributions made by the
Company out of its current or accumulated earnings and profits (and not
designated as capital gain dividends) will constitute dividends taxable to its
taxable U.S. Shareholders as ordinary income. Such distributions will not be
eligible for the dividends received deduction in the case of U.S. Shareholders
that are corporations. Distributions made by the Company that are properly
designated by the Company as capital gain dividends will be taxable to taxable
U.S. Shareholders as long-term capital gains (to the extent that they do not
exceed the Company's actual net capital gain for the taxable year) without
regard to the period for which a U.S. Shareholder has held his Common Shares.
U.S. Shareholders that are corporations may, however, be required to treat up to
20% of certain capital gain dividends as ordinary income. To the extent that the
Company makes distributions (not designated as capital gain dividends) in excess
of its current and accumulated earnings and profits, such distributions will be
treated first as a tax-free return of capital to each U.S. Shareholder, reducing
the adjusted basis which such U.S. Shareholder has in its Common Shares for tax
purposes by the amount of such distribution (but not below zero), with
distributions in excess of a U.S. Shareholder's adjusted basis in its Common
Shares taxable as capital gains (provided that the Common Shares have been held
as a capital asset). Dividends declared by the Company in October, November, or
December of any year and payable to a shareholder of record on a specified date
in any such month shall be treated as both paid by the Company and received by
the shareholder on December 31 of such year, provided that the dividend is
actually paid by the Company on or before January 31 of the following calendar
year. Shareholders may not include in their own income tax returns any net
operating losses or capital losses of the Company.
 
     Distributions made by the Company and gain arising from the sale or
exchange by a U.S. Shareholder of Common Shares will not be treated as passive
activity income, and, as a result, U.S. Shareholders generally will not be able
to apply any "passive losses" against such income or gain.
 
   
     Upon any sale or other disposition of Common Shares, a U.S. Shareholder
will recognize gain or loss for federal income tax purposes in an amount equal
to the difference between (i) the amount of cash and the fair market value of
any property received on such sale or other disposition and (ii) the holder's
adjusted basis in such Common Shares for tax purposes. Such gain or loss will be
capital gain or loss if the Common Shares have been held by the U.S. Shareholder
as a capital asset, and will be long-term gain or loss if such Common Shares
have been held for more than one year. In general, any loss recognized by a U.S.
Shareholder upon the sale or other disposition of Common Shares that have been
held 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 received
by such U.S. Shareholder from the Company which were required to be treated as
long-term capital gains.
    
 
                                       112
<PAGE>   121
 
BACKUP WITHHOLDING FOR COMPANY DISTRIBUTIONS
 
     The Company will report to its U.S. Shareholders and the IRS the amount of
dividends paid during each calendar year, and the amount of tax withheld, if
any. Under the backup withholding rules, a shareholder may be subject to backup
withholding at the rate of 31% with respect to dividends paid unless such holder
(a) is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact, or (b) provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding, and
otherwise complies with applicable requirements of the backup withholding rules.
A U.S. shareholder that does not provide the Company with his 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 shareholder's
income tax liability. In addition, the Company may be required to withhold a
portion of capital gain distributions to any shareholders who fail to certify
their non-foreign status to the Company. See " -- Taxation of Non-U.S.
Shareholders of the Company."
 
TAXATION OF TAX-EXEMPT SHAREHOLDERS OF THE COMPANY
 
     The IRS has ruled that amounts distributed as dividends by a qualified REIT
do not constitute unrelated business taxable income ("UBTI") when received by a
tax-exempt entity. Based on that ruling, provided that a tax-exempt shareholder
(except certain tax-exempt shareholders described below) has not held its Common
Shares as "debt financed property" within the meaning of the Code and such
Common Shares are not otherwise used in a trade or business, the dividend income
from the Company will not be UBTI to a tax-exempt shareholder. Similarly, income
from the sale of Common Shares will not constitute UBTI unless such tax-exempt
shareholder has held such Common Shares as "debt financed property" within the
meaning of the Code or has used the Common Shares in a trade or business.
 
     For tax-exempt shareholders that are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans exempt from Federal income taxation under Code
Sections 501 (c)(7), (c)(9), (c)(17) and (c)(20), respectively, income from an
investment in the Company will constitute UBTI unless the organization is able
to properly deduct amounts set aside or placed in reserve for certain purposes
so as to offset the income generated by its investment in the Company. Such
prospective shareholders should consult their own tax advisors concerning these
"set aside" and reserve requirements.
 
     Notwithstanding the above, however, the Omnibus Budget Reconciliation Act
of 1993 (the "1993 Act") provides that, effective for taxable years beginning in
1994, a portion of the dividends paid by a "pension held REIT" shall be treated
as UBTI as to any trust which (i) is described in Section 401(a) of the Code,
(ii) is tax-exempt under Section 501(a) of the Code, and (iii) holds more than
10% (by value) of the interests in the REIT. Tax-exempt pension funds that are
described in Section 401(a) of the Code are referred to below as "qualified
trusts."
 
     A REIT is a "pension held REIT" if (i) it would not have qualified as a
REIT but for the fact that Section 856(h)(3) of the Code (added by the 1993 Act)
provides that stock owned by qualified trusts shall be treated, for purposes of
the "not closely held" requirement, as owned by the beneficiaries of the trust
(rather than by the trust itself), and (ii) either (a) at least one such
qualified trust holds more than 25% (by value) of the interests in the REIT, or
(b) one or more such qualified trusts, each of which owns more than 10% (by
value) of the interests in the REIT, hold in the aggregate more than 50% (by
value) of the interests in the REIT. The percentage of any REIT dividend treated
as UBTI is equal to the ratio of (i) the UBTI earned by the REIT (treating the
REIT as if it were a qualified trust and therefore subject to tax on UBTI) to
(ii) the total gross income of the REIT. A de minimis exception applies where
the percentage is less than 5% for any year. The provisions requiring qualified
trusts to treat a portion of REIT distributions as UBTI will not apply if the
REIT is able to satisfy the "not closely held" requirement without relying upon
the "look-through" exception with respect to qualified trusts.
 
     Based on the anticipated ownership of Common Shares immediately following
the Consolidation and this Offering, and as a result of certain limitations on
transfer and ownership of Common Shares contained in the Declaration of Trust,
the Company does not expect to be classified as a "pension held REIT."
 
                                       113
<PAGE>   122
 
TAXATION OF NON-U.S. SHAREHOLDERS OF THE COMPANY
 
   
     The rules governing United States federal income taxation of the ownership
and disposition of Common Shares by persons that are, for purposes of such
taxation, nonresident alien individuals, foreign corporations, foreign
partnerships or foreign estates or trusts (collectively, "Non-U.S.
Shareholders") are complex, and no attempt is made herein to provide more than a
brief summary of such rules. Accordingly, the discussion does not address all
aspects of United States federal income tax and does not address state, local or
foreign tax consequences that may be relevant to a Non-U.S. Shareholder in light
of its particular circumstances. In addition, this discussion is based on
current law, which is subject to change, and assumes that the Company qualifies
for taxation as a REIT. Prospective Non-U.S. Shareholders should consult with
their own tax advisers to determine the impact of federal, state, local and
foreign income tax laws with regard to an investment in Common Shares, including
any reporting requirements.
    
 
   
     Distributions by the Company.  Distributions by the Company to a Non-U.S.
Shareholder that are neither attributable to gain from sales or exchanges by the
Company of United States real property interests nor designated by the Company
as capital gains dividends will be treated as dividends of ordinary income to
the extent that they are made out of current or accumulated earnings and profits
of the Company. Such distributions ordinarily will be subject to withholding of
United States federal income tax on a gross basis (that is, without allowance of
deductions) at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty, unless the dividends are treated as effectively
connected with the conduct by the Non-U.S. Shareholder of a United States trade
or business. Dividends that are effectively connected with such a trade or
business will be subject to tax on a net basis (that is, after allowance of
deductions) at graduated rates, in the same manner as domestic shareholders are
taxed with respect to such dividends, and are generally not subject to
withholding. Any such dividends received by a Non-U.S. Shareholder that is a
corporation may also be subject to an additional branch profits tax at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty.
    
 
     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 determining the applicability of
withholding discussed above and the applicability of a tax treaty rate. Under
proposed Treasury Regulations, not currently in effect, however, a Non-U.S.
Shareholder who wishes to claim the benefit of an applicable treaty rate would
be required to satisfy certain certification and other requirements. Under
certain treaties, lower withholding rates generally applicable to dividends do
not apply to dividends from a REIT, such as the Company. Certain certification
and disclosure requirements must be satisfied to be exempt from withholding
under the effectively connected income exemption discussed above.
 
     Distributions in excess of current or accumulated earnings and profits of
the Company will not be taxable to a Non-U.S. Shareholder to the extent that
they do not exceed the adjusted basis of the shareholder's Common Shares, but
rather will reduce the adjusted basis of such Common Shares. To the extent that
such distributions exceed the adjusted basis of a Non-U.S. Shareholder's Common
Shares, they will give rise to gain from the sale or exchange of its Common
Shares, the tax treatment of which is described below. As a result of a
legislative change made by the Small Business Job Protection Act of 1996, it
appears that the Company will be required to withhold 10% of any distribution in
excess of the Company's current and accumulated earnings and profits.
Consequently, although the Company intends to withhold at a rate of 30% on the
entire amount of any distribution (or a lower applicable treaty rate), to the
extent that the Company does not do so, any portion of a distribution not
subject to withholding at a rate of 30% (or a lower applicable treaty rate) will
be subject to withholding at a rate of 10%. However, the Non-U.S. Shareholder
may seek a refund of such amounts from the IRS if it subsequently determined
that such distribution was, in fact, in excess of current or accumulated
earnings and profits of the Company, and the amount withheld exceeded the
Non-U.S. Shareholder's United States tax liability, if any, with respect to the
distribution.
 
   
     Distributions to a Non-U.S. Shareholder that are designated by the Company
at the time of distribution as capital gains dividends (other than those arising
from the disposition of a United States real property interest) generally will
not be subject to United States federal income taxation, unless (i) investment
in the Common Shares is effectively connected with the Non-U.S. Shareholder's
United States trade or business, in
    
 
                                       114
<PAGE>   123
 
which case the Non-U.S. Shareholder will be subject to the same treatment as
domestic shareholders with respect to such gain (except that a shareholder that
is a foreign corporation may also be subject to the 30% branch profits tax, as
discussed above), or (ii) the Non-U.S. Shareholder is a nonresident alien
individual who is present in the United States for 183 days or more during the
taxable year and has a "tax home" in the United States, in which case the
nonresident alien individual will be subject to a 30% tax on the individual's
capital gains.
 
     Under the Foreign Investment in Real Property Tax Act ("FIRPTA")
distributions to a Non-U.S. Shareholder that are attributable to gain from sales
or exchanges by the Company of United States real property interests will cause
the Non-U.S. Shareholder to be treated as recognizing such gain as income
effectively connected with a United States trade or business. Non-U.S.
Shareholders would thus generally be taxed at the same rates applicable to
domestic shareholders (subject to a special alternative minimum tax in the case
of nonresident alien individuals). Also, such gain may be subject to a 30%
branch profits tax in the hands of a Non-U.S. Shareholder that is a corporation,
as discussed above. The Company is required to withhold 35% of any such
distribution. That amount is creditable against the Non-U.S. Shareholder's
United States Federal income tax liability.
 
     Sale of Common Shares.  Gain recognized by a Non-U.S. Shareholder upon the
sale or exchange of Common Shares generally will not be subject to United States
taxation unless such shares constitute a "United States real property interest"
within the meaning of FIRPTA. The Common Shares will not constitute a "United
States real property interest" so long as the Company is 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 stock is
held directly or indirectly by Non-U.S. Shareholders. The Company believes that
at the closing of the Consolidation and this Offering it will be a "domestically
controlled REIT," and therefore that the sale of Common Shares will not be
subject to taxation under FIRPTA. However, because the Common Shares are
expected to become publicly traded, no assurance can be given that the Company
will continue to be a "domestically controlled REIT." Notwithstanding the
foregoing, gain from the sale or exchange of Common Shares not otherwise subject
to FIRPTA will be taxable to a Non-U.S. Shareholder if the Non-U.S. Shareholder
is a nonresident alien individual who is present in the United States for 183
days or more during the taxable year and has a "tax home" in the United States.
In such case, the nonresident alien individual will be subject to a 30% United
States withholding tax on the amount of such individual's gain.
 
     If the Company does not qualify as or ceases to be a
"domestically-controlled REIT," whether gain arising from the sale or exchange
by a Non-U.S. Shareholder of Common Shares would be subject to United States
taxation under FIRPTA as a sale of a "United States real property interest" will
depend on whether the Common Shares are "regularly traded" (as defined by
applicable Treasury Regulations) on an established securities market (e.g., the
New York Stock Exchange) and on the size of the selling Non-U.S. Shareholder's
interest in the Company. If gain on the sale or exchange of Common Shares were
subject to taxation under FIRPTA, the Non-U.S. Shareholder would be subject to
regular United States income tax with respect to such gain in the same manner as
a U.S. Shareholder (subject to any applicable alternative minimum tax, a special
alternative minimum tax in the case of nonresident alien individuals and the
possible application of the 30% branch profits tax in the case of foreign
corporations), and the purchaser of the Common Shares would be required to
withhold and remit to the IRS 10% of the purchase price.
 
     Backup Withholding Tax and Information Reporting.  Backup withholding tax
(which generally is a withholding tax imposed at the rate of 31% on certain
payments to persons that fail to furnish certain information under the United
States information reporting requirements) and information reporting will
generally not apply to distributions paid to Non-U.S. Shareholders outside the
United States that are treated as (i) dividends subject to the 30% (or lower
treaty rate) withholding tax discussed above, (ii) capital gains dividends or
(iii) distributions attributable to gain from the sale or exchange by the
Company of United States real property interests. As a general matter, backup
withholding and information reporting will not apply to a payment of the
proceeds of a sale of Common Shares by or through a foreign office of a foreign
broker. Information reporting (but not backup withholding) will apply, however,
to a payment of the proceeds of a sale of Common Shares by a foreign office of a
broker that (a) is a United States person, (b) derives 50% or
 
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<PAGE>   124
 
more of its gross income for certain periods from the conduct of a trade or
business in the United States or (c) is a "controlled foreign corporation"
(generally, a foreign corporation controlled by United States shareholders) for
United States tax purposes, unless the broker has documentary evidence in its
records that the holder is a Non-U.S. Shareholder and certain other conditions
are met, or the shareholder otherwise establishes an exemption. Payment to or
through a United States office of a broker of the proceeds of a sale of Common
Shares is subject to both backup withholding and information reporting unless
the shareholder certifies under penalty of perjury that the shareholder is a
Non-U.S. Shareholder, or otherwise establishes an exemption. A Non-U.S.
Shareholder may obtain a refund of any amounts withheld under the backup
withholding rules by filing the appropriate claim for refund with the IRS.
 
     The United States Treasury has recently issued proposed regulations
regarding the withholding and information reporting rules discussed above. In
general, the proposed regulations do not alter the substantive withholding and
information reporting requirements but unify current certification procedures
and forms and clarify and modify reliance standards. If finalized in their
current form, the proposed regulations would generally be effective for payments
made after December 31, 1997, subject to certain transition rules.
 
TAX ASPECTS OF THE COMPANY'S OWNERSHIP OF INTERESTS IN THE ZML OPPORTUNITY
PARTNERSHIPS AND THE OPERATING PARTNERSHIP
 
   
     General.  Substantially all of the Company's investments will be held
indirectly through the ZML Opportunity Partnerships and 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. The Company
will include in its income its proportionate share of the foregoing partnership
items for purposes of the various REIT income tests and in the computation of
its REIT taxable income. Moreover, for purposes of the REIT asset tests, the
Company will include its proportionate share of assets held through the ZML
Opportunity Partnerships and the Operating Partnership. See "Taxation of the
Company -- Ownership of Partnership Interests by a REIT."
    
 
     Entity Classification.  If any of the ZML Opportunity Partnerships or the
Operating Partnership were treated as an association, the entity would be
taxable as a corporation and therefore would be subject to an entity level tax
on its income. In such a situation, the character of the Company's assets and
items of gross income would change and would preclude the Company from
qualifying as a REIT (see "Taxation of the Company -- Asset Tests Applicable to
REITs" and "-- Income Tests Applicable to REITs"). The same result could occur
if any subsidiary partnership failed to qualify for treatment as a partnership.
 
   
     Prior to January 1, 1997, an organization formed as a partnership or a
limited liability company was treated as a partnership for federal income tax
purposes rather than as a corporation only if it had no more than two of the
four corporate characteristics that the Treasury Regulations in effect at that
time used to distinguish a partnership from a corporation for tax purposes.
These four characteristics were (i) continuity of life, (ii) centralization of
management, (iii) limited liability and (iv) free transferability of interests.
Under final Treasury Regulations which became effective January 1, 1997, the
four factor test has been eliminated and an entity formed as a partnership or as
a limited liability company will be taxed as a partnership for federal income
tax purposes, unless it specifically elects otherwise. The Regulations provide
that the IRS will not challenge the classification of an existing partnership or
limited liability company for tax periods prior to January 1, 1997 so long as
(1) the entity had a reasonable basis for its claimed classification, (2) the
entity and all its members recognized the federal income tax consequences of any
changes in the entity's classification within the 60 months prior to January 1,
1997, and (3) neither the entity nor any member of the entity had been notified
in writing on or before May 8, 1996, that the classification of the entity was
under examination by the IRS.
    
 
     Hogan & Hartson L.L.P., special tax counsel to the Company, is of the
opinion, based upon certain factual assumptions and representations described in
the opinion, that each of the ZML Opportunity
 
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<PAGE>   125
 
Partnerships and the Operating Partnership will be treated as a partnership for
Federal income tax purposes (and not as an association taxable as a
corporation).
 
     Partnership Allocations.  Although a partnership agreement will generally
determine the allocation of income and loss among partners, such allocations
will be disregarded for tax purposes if they do not comply with the provisions
of Section 704(b) of the Code and the Treasury Regulations promulgated
thereunder. Generally, Section 704(b) and the Treasury Regulations promulgated
thereunder require that partnership allocations respect the economic arrangement
of the partners.
 
   
     If an allocation is not recognized for federal income tax purposes, the
item subject to the allocation will be reallocated in accordance with the
partners' interests in the partnership, which will be determined by taking into
account all of the facts and circumstances relating to the economic arrangement
of the partners with respect to such item. The allocations of taxable income and
loss provided for in the ZML Opportunity Partnership and Operating Partnership
partnership agreements are intended to comply with the requirements of Section
704(b) of the Code and the Treasury Regulations promulgated thereunder.
    
 
   
     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 (such as the Properties) that is contributed to a
partnership in exchange for an interest in the partnership, 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 such time (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 will be formed by way of contributions of appreciated
property (including the Properties and the Management Business). Consequently,
the Operating Partnership Agreement requires that such allocations be made in a
manner consistent with Section 704(c) of the Code.
    
 
     In general, the partners of the Operating Partnership who contributed
depreciable assets having an adjusted tax basis less than their fair market
value at the time of contribution (which includes the ZML Opportunity
Partnerships and the Company as successor to the ZML REITs) will be allocated
depreciation deductions for tax purposes which are lower than such deductions
would be if determined on a pro rata basis. In addition, in the event of the
disposition of any of the contributed assets which have such a Book-Tax
Difference, all income attributable to such Book-Tax Difference generally will
be allocated to such partners. These allocations will tend to eliminate the
Book-Tax Difference over the life of the Operating Partnership. However, the
special allocation rules of Section 704(c) do not always entirely eliminate 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 the Company to be allocated
lower depreciation and other deductions, and possibly an amount 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. Such an
allocation might cause the Company to recognize taxable income in excess of cash
proceeds, which might adversely affect the Company's ability to comply with the
REIT distribution requirements. See "Taxation of the Company -- Annual
Distribution Requirements Applicable to REITs."
 
     Treasury Regulations under Section 704(c) of the Code provide partnerships
with a choice of several methods of accounting for Book-Tax Differences,
including retention of the "traditional method" or the election of certain
methods which would permit any distortions caused by a Book-Tax Difference to be
entirely rectified on an annual basis or with respect to a specific taxable
transaction such as a sale. The Operating Partnership and the Company have
determined to use the "traditional method" for accounting for Book-Tax
Differences with respect to the properties initially contributed to the
Operating Partnership in connection with the Consolidation. This method is
generally the most favorable method from the perspective of the Equity Group,
the ZML Partners and the Investor Limited Partners at the time of the
Consolidation and will be less favorable from the perspective of the Company to
the extent it subsequently contributes cash (such as the proceeds of this
Offering) to the Operating Partnership.
 
                                       117
<PAGE>   126
 
     With respect to any property purchased by the Operating Partnership
subsequent to this offering, such property will initially have a tax basis equal
to its fair market value, and Section 704(c) of the Code will not apply.
 
   
OTHER TAX CONSEQUENCES FOR THE COMPANY, ITS SHAREHOLDERS AND THE MANAGEMENT
CORP.
    
 
   
     The Company and its shareholders may be subject to state or local taxation
in various state or local jurisdictions, including those in which it or they
transact business or reside. The state and local tax treatment of the Company
and its shareholders may not conform to the federal income tax consequences
discussed above. Consequently, prospective shareholders should consult their own
tax advisors regarding the effect of state and local tax laws on an investment
in the Company.
    
 
   
     A portion of the cash to be used by the Company to fund distributions is
expected to come from the Management Corp. through payments of dividends on the
stock of the Management Corp. held by the Operating Partnership. The Management
Corp. pays federal and state income tax at the full applicable corporate rates.
To the extent that the Management Corp. is required to pay federal, state or
local taxes, the cash available for distribution by the Company to shareholders
will be reduced accordingly.
    
 
                              ERISA CONSIDERATIONS
 
EMPLOYMENT BENEFIT PLANS, TAX-QUALIFIED PENSION, PROFIT SHARING OR STOCK BONUS
PLANS AND IRS
 
     Each fiduciary of an employee benefit plan subject to ERISA (an "ERISA
Plan") should carefully consider whether an investment in the Common Shares is
consistent with its fiduciary responsibilities under ERISA. In particular, the
fiduciary requirements of Part 4 of Title I of ERISA require an ERISA Plan's
investment, inter alia, to be (i) prudent and solely in the interests of the
participants and beneficiaries of the ERISA Plan, (ii) diversified in order to
minimize the risk of large losses, unless it is clearly prudent not to do so,
and (iii) authorized under the terms of the governing documents of the ERISA
Plan. In addition, a fiduciary of an ERISA Plan should not cause or permit such
ERISA Plan to enter into transactions prohibited under Section 406 of ERISA or
Section 4975 of the Code. In determining whether an investment in the Common
Shares is prudent for purposes of ERISA, the appropriate fiduciary of an ERISA
Plan should consider all of an ERISA Plan's investment portfolio for which the
fiduciary has responsibility, to meet the objectives of the ERISA Plan, taking
into consideration the risk of loss and opportunity for gain (or other return)
from the investment, the diversification, cash flow and funding requirements of
the ERISA Plan, and the liquidity and current return of the ERISA Plan's
investment portfolio. A fiduciary should also take into account the nature of
the Company's business, the length of the Company's operating history, the terms
of the management agreements, the fact that certain investment properties may
not have been identified yet, other matters described under "Risk Factors" and
the possibility of UBTI. See "Federal Income Tax Considerations -- Taxation of
Securities."
 
     The fiduciary of an ERISA Plan, or of an IRA or a qualified pension, profit
sharing or stock bonus plan which is not subject to ERISA (a "Non-ERISA Plan")
but is subject to Section 4975 of the Code ("Other Plans"), should ensure that
the purchase of Common Shares will not constitute a prohibited transaction under
ERISA or the Code.
 
STATUS OF THE COMPANY AND THE OPERATING PARTNERSHIP UNDER ERISA
 
     The following section discusses certain principles that apply in
determining whether the fiduciary requirements of ERISA and the prohibited
transaction provisions of ERISA and the Code apply to an entity because one or
more investors in the entity's equity interests is an ERISA Plan or Other Plan.
An ERISA plan fiduciary should also consider the relevance of these principles
to ERISA's prohibition on improper delegation of control over or responsibility
for Plan assets and ERISA's imposition of co-fiduciary liability on a fiduciary
who participates in, permits (by action or inaction) the occurrence of, or fails
to remedy a known breach by another fiduciary.
 
                                       118
<PAGE>   127
 
     If the underlying assets of the Company are deemed to be assets of an ERISA
Plan ("Plan Assets"), (i) the prudence standards and other provisions of Part 4
of Title I of ERISA and the prohibited transaction provisions of ERISA and the
Code would be applicable to any transactions involving the Company's assets and
(ii) persons who exercise any authority or control over the Company's assets, or
who provide investment advice for a fee or other compensation to the Company,
would be (for purposes of ERISA and the Code) fiduciaries of ERISA Plans and
Other Plans that acquire Common Shares. The United States Department of Labor
(the "DOL"), which has certain administrative responsibility over ERISA Plans
and Other Plans, has issued a regulation defining plan assets for certain
purposes (the "DOL Regulation"). The DOL Regulation generally provides that when
an ERISA Plan or Other Plan acquires a security that is an equity interest in an
entity and that security is neither a "publicly-offered security" nor a security
issued by an investment company registered under the 1940 Act, the assets of the
ERISA Plan or Other Plan include both the equity interest and an undivided
interest in each of the underlying assets of the entity, unless it is
established either that the entity is an "operating company" (as defined in the
DOL Regulation) or that equity participation in the entity by "benefit plan
investors" is not significant.
 
     The DOL Regulation defines a "publicly-offered security" as a security that
is "widely held," "freely transferable" and either part of a class of securities
registered under the Exchange Act, or sold pursuant to an effective registration
statement under the Securities Act (provided the securities are registered under
the Exchange Act within 120 days, or such later time as may be allowed by the
SEC (the "registration period"), after the end of the fiscal year of the issuer
during which the offering occurred). The Common Shares are being sold in an
offering registered under the Securities Act and the Company intends to register
the Common Shares under the Exchange Act within the registration period.
 
     The DOL Regulation provides that a security is "widely-held" only if it is
part of a class of securities that is owned by 100 or more investors independent
of the issuer and of one another. A security will not fail to be "widely held"
because the number of independent investors falls below 100 subsequent to the
initial public offering as a result of events beyond the issuer's control.
 
   
     The DOL Regulation provides that whether a security is "freely
transferable" is a factual question to be determined on the basis of all
relevant facts and circumstances. The DOL Regulation further provides that where
a security is part of an offering in which the minimum investment is $10,000 or
less, certain restrictions ordinarily will not, alone or in combination, affect
a finding that such securities are "freely transferable." The Offering will not
impose a minimum investment requirement. The restrictions on transfer enumerated
in the DOL Regulation as ordinarily not affecting a finding that the securities
are "freely transferable" include: (i) any restriction on or prohibition against
any transfer or assignment that would result in a termination or
reclassification of the Company for federal or state tax purposes, or that would
otherwise violate any state or Federal law or court order, (ii) any requirement
that advance notice of a transfer or assignment be given to the Company, (iii)
any requirement that either the transferor or transferee, or both, execute
documentation setting forth representations as to compliance with any
restrictions on transfer that are among those enumerated in the DOL Regulation
as not affecting free transferability, (iv) any administrative procedure that
established an effective date, or an event (such as completion of the Offering)
prior to which a transfer or assignment will not be effective, (v) any
prohibition against transfer or assignment to an ineligible or unsuitable
investor, and (vi) any limitation or restriction on transfer or assignment that
is not imposed by the issuer or a person acting for or on behalf of the issuer.
The Company believes that the restrictions imposed under the Declaration of
Trust on the transfer of Common Shares are of the type of restrictions on
transfer generally permitted under the DOL Regulation or are not otherwise
material and should not result in the failure of the Common Shares to be "freely
transferable" within the meaning of the DOL Regulation. See "Shares of
Beneficial Interest -- Restrictions on Transfer." The Company also believes that
certain restrictions on transfer that derive from the securities laws, from
contractual arrangements with the Underwriters in connection with the Offering
and from certain provisions should not result in the failure of the Share to be
"freely transferable." See "Underwriting." Furthermore, the Company is not aware
of any other facts or circumstances limiting the transferability of the Common
Shares that are not included among those enumerated as not affecting their free
transferability under the DOL Regulation, and the Company does not
    
 
                                       119
<PAGE>   128
 
expect to impose in the future (or to permit any person to impose on its behalf)
any other limitations or restrictions on transfer that would not be among the
enumerated permissible limitations or restrictions.
 
     Assuming (i) that the Common Shares are "widely held" within the meaning of
the DOL Regulation and (ii) that no facts and circumstances other than those
referred to in the preceding paragraph exist that restrict transferability of
the Common Shares, the Company believes that, under the DOL Regulation, the
Common Shares should be considered "publicly-offered securities" and, therefore,
that the underlying assets of the Company should not be deemed to be plan assets
of any ERISA Plan or Other Plan that invests in the Common Shares.
 
     The DOL Regulation will also apply in determining whether the underlying
assets of the Operating Partnership will be deemed to be plan assets. The
partnership interests in the Operating Partnership will not be publicly offered
securities. Nevertheless, if the Common Shares constitute publicly offered
securities, the Company believes that the indirect investment in the Operating
Partnership by ERISA Plans or Other Plans through their ownership of the Common
Shares will not cause the assets of the Operating Partnership to be treated as
plan assets.
 
                                       120
<PAGE>   129
 
                                  UNDERWRITING
 
   
     Subject to the terms and conditions in the United States purchase agreement
(the "U.S. Purchase Agreement"), between the Company and each of the
underwriters named below (the "U.S. Underwriters"), and concurrently with the
sale of the 5,000,000 Common Shares to the International Managers (as defined
below), the Company has agreed to sell to each of the U.S. Underwriters, for
whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, Lehman Brothers Inc.,
J.P. Morgan & Co., Prudential Securities Incorporated and Smith Barney Inc., are
acting as representatives (the "U.S. Representatives"), and each of the U.S.
Underwriters has severally agreed to purchase from the Company, the respective
number of Common Shares set forth below opposite their respective names:
    
 
   
<TABLE>
<CAPTION>
                        UNDERWRITER                           NUMBER OF COMMON SHARES
                        -----------                           -----------------------
<S>                                                           <C>
Merrill Lynch, Pierce, Fenner & Smith
             Incorporated...................................
Lehman Brothers Inc. .......................................
J.P. Morgan & Co. ..........................................
Prudential Securities Incorporated..........................
Smith Barney Inc. ..........................................
                                                                    ----------
             Total .........................................        20,000,000
                                                                    ==========
</TABLE>
    
 
   
     The Company has also entered into a purchase agreement (the "International
Purchase Agreement" and, together with the U.S. Purchase Agreement, the
"Purchase Agreements") with certain underwriters outside the United States and
Canada (the "International Managers" and, together with the U.S. Underwriters,
the "Underwriters") for whom Merrill Lynch International Limited, Credit
Lyonnais, and UBS Limited are acting as lead managers. Subject to the terms and
conditions set forth in the International Purchase Agreement and concurrently
with the sale of 20,000,000 Common Shares to the U.S. Underwriters pursuant to
the U.S. Purchase Agreement, the Company has agreed to sell to the International
Managers, and the International Managers have severally agreed to purchase from
the Company, an aggregate of 5,000,000 Common Shares. The initial public
offering price per share and the total underwriting discount per share are
identical under the U.S. Purchase Agreement and the International Purchase
Agreement.
    
 
   
     In each Purchase Agreement, the several U.S. Underwriters and the several
International Managers have agreed, respectively, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the Common
Shares being sold pursuant to such Purchase Agreement if any of such Common
Shares are purchased. Under certain circumstances, the commitments of
non-defaulting U.S. Underwriters or International Managers (as the case may be)
may be increased. The sale of Common Shares pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement are conditioned upon each
other.
    
 
   
     The U.S. Representatives have advised the Company that the U.S.
Underwriters propose initially to offer the Common Shares to the public at the
public offering price per share set forth on the cover page of this Prospectus,
and to certain dealers at such price less a concession not in excess of
$.       per share. The U.S. Underwriters may allow, and such dealers may
re-allow, a discount not in excess of $.       per share on sales to certain
other dealers. After the date of this Prospectus, the initial public offering
price, concession and discount may be changed. The Company has been informed
that the U.S. Underwriters and the International Managers have entered into an
agreement (the "Intersyndicate Agreement") providing for the coordination of
their activities. Under the terms of the Intersyndicate Agreement, the U.S.
Underwriters and the International Managers are permitted to sell Common Shares
to each other for purposes of resale at the initial public offering price, less
an amount not greater than the selling concession. Under the terms of the
Intersyndicate Agreement, the International Managers and any dealer to whom they
sell Common Shares will not offer to sell or sell Common Shares to persons who
are United States persons or Canadian persons or to persons they believe intend
to resell to persons who are United States persons or Canadian persons, and the
U.S. Underwriters and any dealer to whom they sell Common Shares will not offer
to sell or sell Common Shares to persons who are non-United States and
non-Canadian persons or to persons they believe intend to resell to
    
 
                                       121
<PAGE>   130
 
   
non-United States and non-Canadian persons, except in each case for transactions
pursuant to such agreement.
    
 
   
     The Company has granted to the U.S. Underwriters an option, exercisable for
30 days after the date of this Prospectus, to purchase up to 3,000,000
additional Common Shares to cover over-allotments, if any, at the initial public
offering price, less the underwriting discount set forth on the cover page of
this Prospectus. If the U.S. Underwriters exercise this option, each U.S.
Underwriter will have a firm commitment, subject to certain conditions, to
purchase approximately the same percentage thereof which the number of Common
Shares to be purchased by it shown in the foregoing table bears to such U.S.
Underwriters' initial amount reflected in the foregoing table. The Company also
has granted an option to the International Managers, exercisable during the
30-day period after the date of this Prospectus, to purchase up to 750,000
additional Common Shares to cover overallotments, if any, on terms similar to
those granted to the U.S. Underwriters.
    
 
   
     At the request of the Company, the U.S. Underwriters have reserved up to
1,250,000 Common Shares (the "Reserved Shares") for sale at the public offering
price to certain employees of the Company, the Company's business affiliates and
other parties who have expressed an interest in purchasing Common Shares. The
number of Common Shares available to the general public will be reduced to the
extent these persons purchase the Reserved Shares. Any Reserved Shares that are
not so purchased by such persons at the completion of the Offering will be
offered by the U.S. Underwriters to the general public on the same terms as the
other shares offered by this Prospectus.
    
 
   
     Until the distribution of the Common Shares is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Common Shares. As an
exception to these rules, the U.S. Representatives are permitted to engage in
certain transactions that stabilize the price of the Common Shares. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Common Shares.
    
 
   
     If the Underwriters create a short position in the Common Shares in
connection with the Offering, i.e., if they sell more Common Shares than are set
forth on the cover page of this Prospectus, the U.S. Representatives and the
International Managers, respectively, may reduce that short position by
purchasing Common Shares in the open market. The U.S. Representatives and the
International Managers, respectively, may also elect to reduce any short
position by exercising all or part of the over-allotment option described above.
    
 
   
     The U.S. Representatives and the International Managers, respectively, may
also impose a penalty bid on certain Underwriters and selling group members.
This means that if the U.S. Representatives or the International Managers
purchase Common Shares in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Shares, they may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the offering.
    
 
     In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
 
   
     Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Shares. In addition, neither
the Company nor any of the Underwriters makes any representation that the U.S.
Representatives or the International Managers will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.
    
 
   
     In the Purchase Agreements, the Company has agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act. Insofar as indemnification of the Underwriters for liabilities
arising under the Securities Act may be permitted pursuant to the foregoing
provision, the Company has been informed that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
    
 
                                       122
<PAGE>   131
 
     The Company and the Operating Partnership have agreed, subject to certain
exceptions, not to sell, offer or contract to sell, grant any option for the
sale of, or otherwise dispose of any Common Shares or Units or any securities
convertible into or exchangeable for Common Shares or Units for a period of one
year from the date of the Prospectus, without the prior written consent of
Merrill Lynch.
 
     The Underwriters do not intend to confirm sales to any account over which
they exercise discretionary authority.
 
   
     Prior to the Offering, there has been no public market for the Common
Shares of the Company. The initial public offering price will be determined
through negotiations between the Company and the U.S. Representatives. Among the
factors to be considered in such negotiations, in addition to prevailing market
conditions, will be dividend yields and financial characteristics of publicly
traded REITs that the Company and the U.S. Representatives believe to be
comparable to the Company, the expected results of operations of the Company
(which will be based on the results of operations of the Properties and the
management and leasing businesses in recent periods), estimates of the future
business potential and earnings prospects of the Company as a whole and the
current state of the real estate market in the Company's primary markets and the
economy as a whole.
    
 
   
     Affiliates of Merrill Lynch served as placement agent in connection with
the offer and sale of interests in each of the ZML Funds. In addition,
affiliates of Merrill Lynch regularly provide investment banking services to
affiliates of the Equity Group Owners.
    
 
     Affiliates of Merrill Lynch currently are limited partners of the ZML
Partners and in such capacity have received fees in the amount of $3,068,000 for
the year ended December 31, 1996 and expect to receive $777,000 for 1997 from
the Company and its predecessors. Such affiliates will receive less than 1% of
the ownership interest in the Company (on a fully diluted basis) upon
consummation of the Consolidation (without giving effect to the Offering).
Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of Merrill
Lynch is the lead managing underwriter of the Offering and will receive standard
underwriter's compensation in connection therewith.
 
                                    EXPERTS
 
   
     The combined financial statements of Equity Office Predecessors at December
31, 1996 and 1995, and for each of the three years in the period ended December
31, 1996, the statements of revenue and certain expenses for Promenade II, Two
California Plaza, BP Tower, SunTrust Center, Reston Town Center, Colonnade I,
177 Broad Street, Preston Commons, Oakbrook Terrace Tower, One Maritime Plaza,
201 Mission and 30 N. LaSalle and the balance sheet of Equity Office Properties
Trust, a Maryland real estate investment trust as of December 31, 1996, all
appearing in this Prospectus and Registration Statement, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere herein, and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
    
 
                                       123
<PAGE>   132
 
                                 LEGAL MATTERS
 
   
     The validity of the Common Shares will be passed upon for the Company by
Rosenberg & Liebentritt, P.C., Chicago, Illinois. Certain matters of Maryland
law will be passed upon for the Company by Ballard Spahr Andrews & Ingersoll,
Baltimore, Maryland. Certain tax matters will be passed upon for the Company by
Hogan & Hartson L.L.P., Washington, D.C., special tax counsel for the Company.
In addition, the description of Federal income tax consequences under the
heading "Federal Income Tax Consequences" is based upon the opinion of Hogan &
Hartson L.L.P. Certain legal matters will be passed upon for the Underwriters by
Hogan & Hartson L.L.P.  Rosenberg & Liebentritt, P.C., Ballard Spahr Andrews &
Ingersoll, and Hogan & Hartson L.L.P. acted as counsel for the Company and the
Operating Partnership in connection with the organization of the Company and the
Operating Partnership and the offering of the Units and the Common Shares in the
Consolidation. Hogan & Hartson L.L.P. from time to time also provides services
to the Company and other entities affiliated with the Equity Group Owners. Sheli
Z. Rosenberg, a trustee of the Company, is a principal in the law firm of
Rosenberg & Liebentritt, P.C.
    
 
                             ADDITIONAL INFORMATION
 
     The Company has filed with the Commission a Registration Statement on Form
S-11 (of which this Prospectus is a part) under the Securities Act with respect
to the securities offered hereby. This Prospectus does not contain all
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the content of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement is qualified in all respects by such
reference and the exhibits and schedules hereto. For further information
regarding the company and the Common Shares offered hereby, reference is hereby
made to the Registration Statement and such exhibits and schedules, which may be
obtained from the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the Commission.
The Commission maintains a website at http://www.sec.gov containing reports,
proxy and information statements and other information regarding registrants,
including the Company, that file electronically with the Commission. In
addition, the Company intends to file an application to list the Common Shares
on the NYSE and, if the Common Shares are listed on the NYSE, similar
information concerning the Company can be inspected and copies at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
 
     The Company intends to furnish its shareholders with annual reports
containing audited financial statements and a report thereon by independent
certified public auditors.
 
                                       124
<PAGE>   133
 
   
                                    GLOSSARY
    
 
     For purposes of this Prospectus, the following capitalized terms shall have
the meanings set forth below:
 
     "ACBMs" means asbestos-containing building materials.
 
     "ACV" means American Classic Voyages Co.
 
     "ADA" means the Americans with Disabilities Act, as amended.
 
     "Anixter" means Anixter International Inc.
 
     "Available Cash" means net cash flow from operations plus any reduction in
reserves and minus interest and principal payments on debt, capital
expenditures, any additions to reserves and other adjustments.
 
     "Book-Tax Difference" has the meaning ascribed to it in the section
entitled "Federal Income Tax Considerations -- Tax Aspects of the Company's
Investments in Partnerships -- Tax Allocations with Respect to the Properties."
 
     "Bylaws" means the bylaws adopted by the Board of Trustees of the Company.
 
     "Capsure" means Capsure Holdings Corp.
 
     "Cash Available for Distribution" means Funds from Operations adjusted for
certain non-cash items, less reserves.
 
     "CBD" means central business district.
 
     "Class B Distribution" has the meaning set forth under "Structure and
Formation of the Company -- Formation Transactions."
 
     "Closing" means the closing of the Offering.
 
     "Code" means the Internal Revenue Code of 1986, as amended.
 
     "Commission" means the Securities and Exchange Commission.
 
     "Common Shares" means the common shares of beneficial interest, $0.01 par
value per share, of the Company.
 
     "Company" means either Equity Office Properties Trust, a Maryland real
estate investment trust, alone as an entity, or, as the context may require, the
combined enterprise consisting of Equity Office Properties Trust, the Operating
Partnership and their subsidiaries, and assumes that the Consolidation has been
consummated. All references to the historical activities of the Company refer to
the activities of the Equity Office Predecessors.
 
     "Consolidation" means all of the transactions described under "Structure
and Formation of the Company -- Formation Transactions."
 
     "Contribution Agreement" means the agreement pursuant to which the ZML
Funds and Equity Office will agree to consolidate.
 
     "Core Portfolio" means the Properties that were held by the Equity Office
Predecessors during the entire period for both years being compared.
 
     "Debt to Market Capitalization Ratio" means the total consolidated and
unconsolidated debt of the Company as a percentage of the market value of
outstanding Common Shares and Units plus total consolidated and unconsolidated
debt, but excluding (i) all nonrecourse consolidated debt in excess of the
Company's proportionate share of such debt and (ii) all nonrecourse
unconsolidated debt of partnerships in which the Company is a limited partner.
 
   
     "Declaration of Trust" means the Company's declaration of trust, as amended
from time to time, and as filed with the State Department of Assessments and
Taxation of Maryland.
    
 
                                       125
<PAGE>   134
 
     "DOL" means the United States Department of Labor.
 
     "DOL Regulation" means the regulation issued by the DOL defining Plan
Assets for certain purposes.
 
     "EGI" means Equity Group Investments, Inc., an Illinois corporation.
 
     "Employee Plan" means the Company's 1997 Employee Share Option and
Restricted Share Plan.
 
     "Environmental Laws" means Federal, state and local laws and regulations
relating to protection of the environment.
 
     "EOH" means Equity Office Holdings, L.L.C., a Delaware limited liability
company.
 
   
     "EOP" means Equity Office Properties, L.L.C., a Delaware limited liability
company.
    
 
     "EQR" means Equity Residential Properties Trust, a Maryland real estate
investment trust, which is an equity REIT focused solely on multifamily
properties and is affiliated with Mr. Zell.
 
   
     "Equity Group" means one or both of EGI and EOH.
    
 
   
     "Equity Group Owners" means certain trusts established for the benefit of
the families of Mr. Zell and of Mr. Robert Lurie, the deceased former partner of
Mr. Zell and the partnerships comprised of such trusts.
    
 
     "Equity Office Predecessors" means, on a combined basis, the Office
Properties and Parking Facilities of the ZML Funds and the Management Business
of the Equity Group that will be combined into the Company pursuant to the
Consolidation.
 
     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
 
     "ERISA Plan" means an employee benefit plan subject to Title I of ERISA.
 
     "Escrowed Common Shares" means Common Shares issued to the ZML REIT
shareholders which are deposited into ZML REIT Escrows.
 
     "Exchange Act" means the Securities Exchange Act of 1934, as amended.
 
     "401(k) Plan" means the Equity Office Section 401(k) Savings/Retirement
Plan.
 
   
     "Funds from Operations" means net income (loss) computed in accordance with
GAAP, excluding gains (or losses) from debt restructuring and sales of property,
plus real estate related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures. Management believes that Funds
from Operations is helpful to investors as a measure of the performance of an
equity REIT because, along with cash flow from operating activities, financing
activities and investing activities, it provides investors with an indication of
the ability of the Company to incur and service debt, to make capital
expenditures and to fund other cash needs. The Company computes Funds from
Operations in accordance with standards established by the White Paper on Funds
from Operations approved by the Board of Governors of NAREIT in March 1995 which
may differ from the methodology for calculating Funds from Operations utilized
by other equity REITs and, accordingly, may not be comparable to such other
REITs. Funds from Operations should not be considered as an alternative to net
income (determined in accordance with GAAP) as an indicator of the Company's
financial performance or to cash flow from operating activities (determined in
accordance with GAAP) as a measure of the Company's liquidity, nor is it
indicative of funds available to fund the Company's cash needs, including its
ability to make distributions.
    
 
     "GAAP" means generally accepted accounting principles in the United States.
 
     "GP Incentive Distribution" has the meaning set forth under "Structure and
Formation of the Company -- Formation Transactions."
 
     "Indemnity Common Shares" means the Common Shares deposited into the
Indemnity Escrows for two years following the Consolidation, which will
represent 1% of the Common Shares issued in connection with the Merger of the
ZML REITs into the Company.
 
     "Indemnity Escrow" means the escrow formed to hold the Indemnity Common
Shares.
 
                                       126
<PAGE>   135
 
     "Interested Shareholder" means any person who beneficially owns 10% or more
of the voting power of a Maryland real estate investment trust's shares of
beneficial interest or any person who, at any time within the two-year period
prior to the date in question, was the beneficial owner of ten percent or more
of the voting power of the outstanding voting shares of beneficial interest of
the trust.
 
   
     "International Purchase Agreement" means the purchase agreement between the
Company and the International Managers.
    
 
   
     "International Managers" means the Underwriters outside of the United
States and Canada named in this Prospectus for whom Merrill Lynch International
Limited, Credit Lyonnais and UBS Limited are acting as lead managers.
    
 
   
     "Intersyndicate Agreement" means the agreement between the U.S.
Underwriters and the International Managers providing for the coordination of
their activities.
    
 
     "Investor Limited Partners" means, collectively, the ZML Investors who are
limited partners of Opportunity Partnership I and Opportunity Partnership II.
 
     "IRS" means the United States Internal Revenue Service.
 
   
     "Joint Venture Properties" means 18 of the Properties which are held in
partnerships or subject to participation agreements with unaffiliated third
parties.
    
 
     "leased" means all space for which leases have been executed, whether or
not the lease term has commenced.
 
     "LIBOR" means the London Interbank Offering Rate.
 
     "LLC" means limited liability company.
 
   
     "Line of Credit" means the $600 million unsecured revolving credit
agreement into which the Company expects to enter.
    
 
     "Liquidation Period" means the two-year period following the Consolidation
during which the ZML Opportunity Partnerships will be liquidated.
 
   
     "Managed Properties" means the properties of the Equity Group, together
with the Joint Venture Properties, to be managed by the Management Corp.
    
 
   
     "Managed Property Business" means that portion of the Management Business
that relates to property management of the Managed Properties and the Joint
Venture Properties, which business will be owned and conducted by the Management
Corp.
    
 
     "Management Business" means the office property management business of EOP,
the office property asset management business and the parking asset management
business of EGI and EOH relating to the Properties.
 
     "Management Corp." means Equity Office Properties Management Corp., a
Delaware corporation.
 
     "Market Interest Rate" means the current market credit spread for each loan
when added to the annualized monthly Treasury rate.
 
   
     "market rent" represents the gross rental rate per rentable square foot for
buildings of comparable size, class, location and age based upon information
obtained from CB Commercial Real Estate Group, Inc./Torto Wheaten Research, as
of December 31, 1996.
    
 
     "Maryland REIT Law" means Title 8 of the Corporations and Associations
Article of the Annotated Code of Maryland, as amended from time to time.
 
     "Merger Agreement" means the agreement pursuant to which the ZML REITs have
agreed to merge with the Company.
 
     "Merger" means the proposed merger of the ZML REITs into the Company.
 
                                       127
<PAGE>   136
 
     "Merrill Lynch" means Merrill Lynch & Co. or its affiliates.
 
     "MGCL" means the Maryland General Corporation Law, as amended from time to
time.
 
     "MHC" means Manufactured Home Communities, Inc., a Maryland corporation,
which is an equity REIT focused solely on manufactured housing communities and
is affiliated with Mr. Zell.
 
   
     "Named Executive Officers" means the Company's Chief Executive Officers and
the Company's four other most highly paid executive officers.
    
 
     "NAREIT" means the National Association of Real Estate Investment Trusts,
Inc.
 
     "1940 ACT" means the Investment Company Act of 1940, as amended.
 
     "Non-ERISA Plan" means a qualified pension, profit sharing or stock bonus
plan not subject to ERISA.
 
     "Non-U.S. Stockholders" means nonresident alien individuals, foreign
corporations, foreign partnerships and other foreign stockholders.
 
   
     "NYSE" means the New York Stock Exchange, Inc.
    
 
     "occupied" means all space which is leased and for which the lease term has
commenced.
 
     "Offering" means this offering of Common Shares of the Company pursuant to
and as described in this Prospectus.
 
     "Office Properties" means the office properties to be owned by the
Operating Partnership.
 
     "Operating Partnership" means EOP Operating Limited Partnership, a Delaware
limited partnership, alone, or as the context may require, together with its
subsidiaries.
 
     "Operating Partnership Agreement" means the limited partnership agreement
of the Operating Partnership.
 
     "Other Plans" means an IRA and a Non-ERISA Plan.
 
     "Ownership Limit" means 9.9% of the lesser of the number or value of the
issued and outstanding Common Shares and 9.9% of the lesser of the number or
value of the outstanding shares of any other class or series of beneficial
interest of the Company.
 
     "Parking Facilities" means the stand-alone parking facilities to be owned
by the Operating Partnership.
 
     "Partial Liquidation Date" means each of the 15-month, 18-month, 21-month
and 24-month anniversaries of the Closing.
 
     "Plan Assets" means the assets of the Company deemed to be assets of an
ERISA Plan.
 
     "Plan of Liquidation" means the two-year plan of liquidation to be adopted
by each of the ZML Opportunity Partnerships.
 
     "Preference Units" means preferred units and other partnership interests of
different classes and series having such rights, preferences, and other
privileges, variations and designations as may be determined by the Company.
 
     "Preferred Shares" means the preferred shares of beneficial interest, $0.01
par value per share, of the Company.
 
     "Properties" means collectively, one or more of the Office Properties and
one or more of the Parking Facilities more particularly described in the section
entitled "Business and Properties -- The Properties."
 
     "Property Operating Expenses" means real estate taxes and insurance,
repairs and maintenance and property operating expenses.
 
   
     "Prospectus" means this prospectus, as the same may be amended.
    
 
   
     "Purchase Agreements" means the U.S. Purchase Agreement and the
International Purchase Agreement.
    
 
                                       128
<PAGE>   137
 
   
     "Purchase Plan" means the Company's 1997 Non-Qualified Employee Share
Purchase Plan.
    
 
     "QFC" means Quality Foods Centers, Inc.
 
     "REIT" means a real estate investment trust as defined under Sections 856
through 860 of the Code and applicable Treasury regulations.
 
     "Related Party Tenant" under the Code means a tenant of the Company's real
property in which the Company or an owner of 10.0% or more of the Company,
directly or constructively owns 10.0% or more of the ownership interests.
 
     "replacement cost rent" represents the Company's estimate of the gross rent
that would be required to justify construction of a building which would be
competitive with the subject Property. An estimate of the replacement cost to
build a property similar to the subject Property was calculated utilizing the
Marshall and Swift (June 1996) Commercial Estimator 5.0 Software Program. The
replacement cost rent is calculated under the assumptions that a net effective
return of 12% would be required to justify new construction and that occupancy
would stabilize at 95% as follows: replacement cost rent equals (estimated
replacement cost per square foot times 12% plus the estimated operating expenses
per square foot at the subject Property) divided by 95%. The estimated
replacement costs and the estimated replacement cost rents are based on
constructing a building similar to the subject Property in terms of the quality
of construction and amenities. The actual cost to construct a building that
would be competitive with the subject Property and the required investor returns
could be more or less than this estimate.
 
   
     "Restricted Common Shares" means the Common Shares received by the ZML
Investors and ZML Partners in the Consolidation or any Common Shares acquired in
redemption of units.
    
 
   
     "Sealy" means Sealy Corporation.
    
 
     "SEC" means the Securities and Exchange Commission.
 
     "Securities Act" means the Securities Act of 1933, as amended.
 
     "Service" means the Internal Revenue Service.
 
   
     "Stabilized Yield" means, for the year indicated, net income before
amortization and depreciation over the Company's undepreciated capitalized cost
of investment.
    
 
     "Subsidiary" or "Subsidiaries" means, collectively, the Operating
Partnership, any other partnerships in which the Company holds a direct or
indirect partnership interest, any wholly owned corporate subsidiaries of the
Company, and, as appropriate, the Management Corp.
 
   
     "Treasury Regulations" means the regulations promulgated by the IRS under
the Code.
    
 
     "UBTI" means unrelated business taxable income as defined in Section 512(a)
of the Code.
 
   
     "Underwriters" means the U.S. Underwriters and the International Managers.
    
 
     "Unit" means a unit of partnership interest in the Operating Partnership.
 
     "Unit Redemption Right" means the right of holders of Units to require the
redemption of their Units at any time one year after the Closing; provided,
however, that partners of the ZML Opportunity Partnerships, including the
Investor Limited Partners, who receive Units in the consolidation will only have
the right to require redemption of their Units at any time commencing two years
after the Closing.
 
     "UPREIT" means umbrella partnership REIT.
 
   
     "U.S. Purchase Agreement" means the purchase agreement between the Company
and the U.S. Underwriters.
    
 
   
     "U.S. Representatives" means Merrill Lynch, Pierce, Fenner & Smith,
Incorporated; Lehman Brothers Inc.; J.P. Morgan & Co.; Prudential Securities
Incorporated and Smith Barney Inc.
    
 
                                       129
<PAGE>   138
 
   
     "U.S. Underwriters" means the Underwriters for the United States and Canada
named in the Prospectus for whom the U.S. Representatives are acting as
representatives.
    
 
     "USTs" means underground storage tanks.
 
     "ZML Fund I" means Opportunity Partnership I and its general and limited
partners, including ZML REIT I.
 
     "ZML Fund II" means Opportunity Partnership II and its general and limited
partners, including ZML REIT II.
 
     "ZML Fund III" means Opportunity Partnership III and its general and
limited partners, including ZML REIT III.
 
     "ZML Fund IV" means Opportunity Partnership IV and its general and limited
partners, including ZML REIT IV.
 
     "ZML Funds" means, collectively, the ZML Opportunity Partnerships, together
with their limited and general partners, including the ZML REITs.
 
     "ZML Investors" means shareholders in the ZML REITs and limited partners
(other than the ZML REITs) in the ZML Opportunity Partnerships.
 
     "ZML Opportunity Partnership I" means Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership.
 
     "ZML Opportunity Partnership II" means Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership II.
 
     "ZML Opportunity Partnership III" means Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership III.
 
     "ZML Opportunity Partnership IV" means Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership IV.
 
     "ZML Opportunity Partnerships" means, collectively, ZML Opportunity
Partnership I, ZML Opportunity Partnership II, ZML Opportunity Partnership III
and ZML Opportunity Partnership IV.
 
     "ZML Partner(s)" means ZML Partners Limited Partnership, ZML Partners
Limited Partnership II, ZML Partners Limited Partnership III and/or ZML Partners
Limited Partnership IV, as applicable, each of which is the current general
partner of, respectively, ZML Opportunity Partnership I, ZML Opportunity
Partnership II, ZML Opportunity Partnership III, ZML Opportunity Partnership IV.
 
     "ZML REIT Escrows" means, collectively, the four separate escrows set up
for the Escrowed Common Shares of the ZML REIT shareholders.
 
     "ZML REIT I" means ZML Investors, Inc., a Delaware corporation.
 
     "ZML REIT II" means ZML Investors II, Inc., a Delaware corporation.
 
     "ZML REIT III" means Zell/Merrill Lynch Real Estate Opportunity Partners
III Trust, a Maryland real estate investment trust.
 
     "ZML REIT IV" means Zell/Merrill Lynch Real Estate Opportunity Partners IV
Trust, a Maryland real estate investment trust.
 
     "ZML REITs" means, collectively, ZML REIT I, ZML REIT II, ZML REIT III and
ZML REIT IV.
 
                                       130
<PAGE>   139
 
                         INDEX TO FINANCIAL STATEMENTS
 
   
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
EQUITY OFFICE PROPERTIES TRUST
Pro Forma Condensed Combined Financial Statements
  (unaudited):
  Pro Forma Condensed Combined Financial Statements.........   F-3
  Pro Forma Condensed Combined Balance Sheet as of March 31,
     1997...................................................   F-4
  Pro Forma Condensed Combined Statement of Operations for
     the three months ended March 31, 1997..................   F-5
  Pro Forma Condensed Combined Statement of Operations for
     the year ended December 31, 1996.......................   F-6
  Notes to Pro Forma Condensed Combined Financial
     Statements.............................................   F-7
Historical:
  Report of Independent Auditors............................  F-14
  Balance Sheet as of March 31, 1997 (unaudited) and
     December 31, 1996......................................  F-15
  Notes to Balance Sheet....................................  F-16
EQUITY OFFICE PREDECESSORS
  Report of Independent Auditors............................  F-18
  Combined Balance Sheets as of March 31, 1997 (unaudited),
     December 31, 1996 and 1995.............................  F-19
  Combined Statements of Operations for the three months
     ended March 31, 1997 and 1996 (unaudited), and the
     years ended December 31, 1996, 1995 and 1994...........  F-20
  Combined Statements of Owners' Equity for the three months
     ended March 31, 1997 (unaudited) and the years ended
     December 31, 1996, 1995 and 1994.......................  F-21
  Combined Statements of Cash Flows for the three months
     ended March 31, 1997 and 1996 (unaudited), and the
     years ended December 31, 1996, 1995 and 1994...........  F-22
  Notes to Combined Financial Statements....................  F-23
  Schedule III -- Real Estate and Accumulated Depreciation
     as of December 31, 1996................................  F-34
PROMENADE II
  Report of Independent Auditors............................  F-38
  Statements of Revenue and Certain Expenses for the period
     from January 1, 1996 to June 13, 1996 (unaudited) and
     the year ended December 31, 1995.......................  F-39
  Notes to Statements of Revenue and Certain Expenses.......  F-40
TWO CALIFORNIA PLAZA
  Report of Independent Auditors............................  F-41
  Statements of Revenue and Certain Expenses for the period
     from January 1, 1996 to July 31, 1996 (unaudited) and
     the year ended December 31, 1995.......................  F-42
  Notes to Statements of Revenue and Certain Expenses.......  F-43
BP TOWER
  Report of Independent Auditors............................  F-44
  Statements of Revenue and Certain Expenses for the period
     from January 1, 1996 to August 31, 1996 (unaudited) and
     the year ended December 31, 1995.......................  F-45
  Notes to Statements of Revenue and Certain Expenses.......  F-46

</TABLE>
    
 
                                       F-1
<PAGE>   140
   
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
SUNTRUST CENTER
  Report of Independent Auditors............................  F-47
  Statements of Revenue and Certain Expenses for the period
     from January 1, 1996 to August 31, 1996 (unaudited) and
     the year ended December 31, 1995.......................  F-48
  Notes to Statements of Revenue and Certain Expenses.......  F-49
RESTON TOWN CENTER
  Report of Independent Auditors............................  F-50
  Statements of Revenue and Certain Expenses for the period
     from January 1, 1996 to September 30, 1996 (unaudited)
     and the year ended December 31, 1995...................  F-51
  Notes to Statements of Revenue and Certain Expenses.......  F-52
COLONNADE I
  Report of Independent Auditors............................  F-53
  Statement of Revenue and Certain Expenses for the period
     from January 1, 1996 to December 4, 1996...............  F-54
  Notes to Statement of Revenue and Certain Expenses........  F-55
177 BROAD STREET
  Report of Independent Auditors............................  F-56
  Statement of Revenue and Certain Expenses for the year
     ended December 31, 1996................................  F-57
  Notes to Statement of Revenue and Certain Expenses........  F-58
PRESTON COMMONS
  Report of Independent Auditors............................  F-59
  Statement of Revenue and Certain Expenses for the year
     ended December 31, 1996................................  F-60
  Notes to Statement of Revenue and Certain Expenses........  F-61
OAKBROOK TERRACE TOWER
  Report of Independent Auditors............................  F-62
  Statements of Revenue and Certain Expenses for the three
     months ended March 31, 1997 (unaudited) and the year
     ended December 31, 1996................................  F-63
  Notes to Statements of Revenue and Certain Expenses.......  F-64
ONE MARITIME PLAZA
  Report of Independent Auditors............................  F-65
  Statements of Revenue and Certain Expenses for the three
     months ended March 31, 1997 (unaudited) and the year
     ended December 31, 1996................................  F-66
  Notes to Statements of Revenue and Certain Expenses.......  F-67
201 MISSION STREET
  Report of Independent Auditors............................  F-68
  Statements of Revenue and Certain Expenses for the three
     months ended March 31, 1997 (unaudited) and the year
     ended December 31, 1996................................  F-69
  Notes to Statements of Revenue and Certain Expenses.......  F-70
30 N. LASALLE
  Report of Independent Auditors............................  F-71
  Statements of Revenue and Certain Expenses for the three
     months ended March 31, 1997 (unaudited) and the year
     ended December 31, 1996................................  F-72
  Notes to Statements of Revenue and Certain Expenses.......  F-73
</TABLE>
    
 
                                       F-2
<PAGE>   141
 
                         EQUITY OFFICE PROPERTIES TRUST
 
               PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
   
            AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
    
   
                      FOR THE YEAR ENDED DECEMBER 31, 1996
    
   
                                  (UNAUDITED)
    
 
   
     The accompanying unaudited pro forma condensed combined balance sheet as of
March 31, 1997 reflects: (a) the acquisition and sale of properties and certain
capital contributions, distributions and financing activities that occurred
subsequent to March 31, 1997, as if such transactions had occurred as of March
31, 1997 and (b) the transactions expected to occur in connection with the
Offering and the Consolidation, including the assumed sale of $500 million of
Common Shares as if those shares had been sold and the net proceeds had been
used for the repayment of debt as of March 31, 1997.
    
 
   
     The accompanying unaudited pro forma condensed combined statement of
operations for the three months ended March 31, 1997 reflects: (a) the
acquisition of 9 properties acquired between January 1, 1997 and June 15, 1997
and the pending acquisition of one property and the disposition of one property,
as if these transactions had occurred as of January 1, 1997 and (b) the decrease
in interest resulting from debt assumed to be repaid at the time of the Offering
and the Consolidation, as if this debt repayment had occurred as of January 1,
1997.
    
 
   
     The accompanying unaudited pro forma condensed combined statement of
operations for the year ended December 31, 1996 reflects: (a) the acquisition of
24 properties acquired between January 1, 1996 and June 15, 1997, the pending
acquisition of one property and the disposition of two properties, as if these
transactions had occurred as of January 1, 1996 and (b) the decrease in interest
resulting from debt assumed to be repaid at the time of the Offering and the
Consolidation, as if this debt repayment had occurred as of January 1, 1996.
    
 
     The accompanying unaudited pro forma condensed combined financial
statements have been prepared by management of Equity Office Predecessors and do
not purport to be indicative of the results which would actually have been
obtained had the transactions described above been completed on the dates
indicated or which may be obtained in the future. The pro forma condensed
combined financial statements should be read in conjunction with the combined
financial statements of Equity Office Predecessors included elsewhere herein.
 
                                       F-3
<PAGE>   142
 
                         EQUITY OFFICE PROPERTIES TRUST
 
                   PRO FORMA CONDENSED COMBINED BALANCE SHEET
 
   
<TABLE>
<CAPTION>
                                                                      AS OF MARCH 31, 1997
                                                                      --------------------
                                                                           (UNAUDITED)
                                                                         (IN THOUSANDS)
                                                                                              OFFERING AND
                                    EQUITY                                    CASH PROVIDED   CONSOLIDATION      EQUITY OFFICE
                                    OFFICE                                    BY FINANCING      PRO FORMA       PROPERTIES TRUST
                                 PREDECESSORS   ACQUISITIONS   DISPOSITIONS    ACTIVITIES      ADJUSTMENTS         PRO FORMA
                                 ------------   ------------   ------------   -------------   -------------     ----------------
                                                   (A)             (B)             (C)             (D)
<S>                              <C>            <C>            <C>            <C>             <C>               <C>
            ASSETS
- -------------------------------
  Investment in real estate,
    net........................   $3,377,515     $ 464,921       $(50,894)      $     --       $   967,246(E)      $4,758,788
  Cash and cash equivalents....      376,121      (510,670)        58,969        229,452          (122,387)(F)         31,485
  Rents and other
    receivables................       62,134            --           (204)            --           (53,804)(G)          8,126
  Escrow deposits and
    restricted cash............       33,655            --             --             --                --             33,655
  Investments in unconsolidated
    joint ventures.............       26,729        45,749             --             --             2,998(H)          75,476
  Other assets.................       90,201            --         (1,113)            --           (71,710)(I)         17,378
                                  ----------     ---------       --------       --------       -----------         ----------
    TOTAL ASSETS...............   $3,966,355     $      --       $  6,758       $229,452       $   722,343         $4,924,908
                                  ==========     =========       ========       ========       ===========         ==========
        LIABILITIES AND
     SHAREHOLDERS' EQUITY
- -------------------------------
  Mortgage debt................   $1,941,849     $      --       $     --       $(10,472)      $  (573,104)(J)     $1,358,273
  Revolving line of credit.....       54,625            --             --        208,596                --            263,221
  Distribution payable.........      100,330            --             --       (100,330)               --                 --
  Other liabilities............      100,865            --         (1,047)            --            (1,337)(K)         98,481
                                  ----------     ---------       --------       --------       -----------         ----------
    TOTAL LIABILITIES..........    2,197,669            --         (1,047)        97,794          (574,441)         1,719,975
                                  ----------     ---------       --------       --------       -----------         ----------
Commitments and contingencies
Minority interests:
  Operating Partnership........           --            --             --             --           239,669(L)         239,669
  Partially owned properties...        9,346            --             --             --                --              9,346
Owners' equity.................    1,759,340            --          7,805        131,658        (1,898,803)(M)             --
Common shares of beneficial
  interests....................           --            --             --             --             1,479(N)           1,479
Paid in capital................           --            --             --             --         2,954,439(O)       2,954,439
                                  ----------     ---------       --------       --------       -----------         ----------
    TOTAL SHAREHOLDERS'
      EQUITY...................    1,759,340            --          7,805        131,658         1,057,115          2,955,918
                                  ----------     ---------       --------       --------       -----------         ----------
    TOTAL LIABILITIES AND
      SHAREHOLDERS' EQUITY.....   $3,966,355     $      --       $  6,758       $229,452       $   722,343         $4,924,908
                                  ==========     =========       ========       ========       ===========         ==========
</TABLE>
    
 
                            See accompanying notes.
 
                                       F-4
<PAGE>   143
 
   
                         EQUITY OFFICE PROPERTIES TRUST
    
 
   
              PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
    
 
   
<TABLE>
<CAPTION>
                                                          FOR THE THREE MONTHS ENDED MARCH 31, 1997
                                                          -----------------------------------------
                                                                         (UNAUDITED)
                                                                        (IN THOUSANDS)
                                                                                     OFFERING AND
                                                      1997 ACQUIRED                  CONSOLIDATION       EQUITY OFFICE
                                      EQUITY OFFICE   AND PROBABLE                     PRO FORMA        PROPERTIES TRUST
                                      PREDECESSORS     PROPERTIES     DISPOSITIONS    ADJUSTMENTS          PRO FORMA
                                      -------------   -------------   ------------   -------------      ----------------
                                                         (P)              (Q)
<S>                                   <C>             <C>             <C>            <C>                <C>
Income
  Rental............................     $116,418        $12,939        $(1,809)       $  3,885(R)          $131,433
  Tenant reimbursements.............       19,187          3,998            (14)             --               23,171
  Parking...........................        9,530            820           (378)             --                9,972
  Other.............................        3,336            513             --              --                3,849
  Fees from noncombined
     affiliates.....................        1,200             --             --              --                1,200
  Interest..........................        4,896             65             --              --                4,961
                                         --------        -------        -------        --------             --------
                                          154,567         18,335         (2,201)          3,885              174,586
                                         --------        -------        -------        --------             --------
Expenses
  Property operating................       58,148          8,178           (947)             --               65,379
  Interest..........................       36,355          3,961            (36)        (11,366)(S)           28,914
  Depreciation......................       25,005          2,906           (397)          5,441(T)            32,955
  Amortization......................        3,076             --            (54)         (1,846)(U)            1,176
  General and administrative........        7,073             --             --             600(V)             7,673
                                         --------        -------        -------        --------             --------
                                          129,657         15,045         (1,434)         (7,171)             136,097
                                         --------        -------        -------        --------             --------
Income before (income) allocated to
  minority interests, income from
  investments in unconsolidated
  joint ventures, gain on sale of
  real estate and extraordinary
  items.............................       24,910          3,290           (767)         11,056               38,489
(Income) allocated to minority
  interests:
  Operating Partnership.............           --             --             --          (2,965)(W)           (2,965)
  Partially owned properties........         (529)            --             --             (10)(W)             (539)
Income from investments in
  unconsolidated joint ventures.....          922            658             --              --                1,580(X)
Gain on sale of real estate.........        5,741             --         (5,741)             --                   --
                                         --------        -------        -------        --------             --------
Income before extraordinary items...       31,044          3,948         (6,508)          8,081               36,565
Extraordinary items.................         (275)            --            275              --                   --
                                         --------        -------        -------        --------             --------
Net income..........................     $ 30,769        $ 3,948        $(6,233)       $  8,081             $ 36,565
                                         ========        =======        =======        ========             ========
Net income per Common Share.........                                                                            $.25(Y)
                                                                                                            ========
</TABLE>
    
 
   
                            See accompanying notes.
    
 
                                       F-5
<PAGE>   144
 
                         EQUITY OFFICE PROPERTIES TRUST
 
              PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
   
<TABLE>
<CAPTION>
                                              FOR THE YEAR ENDED DECEMBER 31, 1996
                                              ------------------------------------
                                                           (UNAUDITED)
                                                         (IN THOUSANDS)
                                                                       1997
                                                                   ACQUIRED AND
                               EQUITY OFFICE         1996            PROBABLE
                               PREDECESSORS      ACQUISITIONS       PROPERTIES       DISPOSITIONS
                              ---------------   ---------------   ---------------   ---------------
                                                      (P)               (P)               (Q)
<S>                           <C>               <C>               <C>               <C>
Income
  Rental....................  $      386,481    $       53,340    $       56,247    $       (8,303)
  Tenant reimbursements.....          62,036             9,967            16,053               (88)
  Parking...................          27,253            13,518             3,406            (1,462)
  Other.....................          17,626             1,797             1,945               (99)
  Fees from noncombined
     affiliates.............           5,120                --                --                --
  Interest..................           9,608                --               249                (7)
                              ---------------   ---------------   ---------------   ---------------
                                     508,124            78,622            77,900            (9,959)
                              ---------------   ---------------   ---------------   ---------------
Expenses
  Property operating........         201,067            30,971            34,128            (4,778)
  Interest..................         119,595            22,093            15,021              (956)
  Depreciation..............          82,905            13,488            12,523            (1,941)
  Amortization..............          13,332                --                --              (346)
  General and
     administrative.........          23,145                --                --                --
                              ---------------   ---------------   ---------------   ---------------
                                     440,044            66,552            61,672            (8,021)
                              ---------------   ---------------   ---------------   ---------------
Income before (income)
  allocated to minority
  interests, income from
  investments in
  unconsolidated joint
  ventures, and gain on sale
  of real estate............          68,080            12,070            16,228            (1,938)
(Income) allocated to
  minority interests:
  Operating Partnership.....              --                --                --                --
  Partially owned
     properties.............          (2,086)               --                --                --
Income from investments in
  unconsolidated joint
  ventures..................           2,093                --             2,632                --
Gain on sale of real
  estate....................           5,338                --                --                --
                              ---------------   ---------------   ---------------   ---------------
Net income..................  $       73,425    $       12,070    $       18,860    $       (1,938)
                              ===============   ===============   ===============   ===============
Net income per Common
  Share.....................
 
<CAPTION>
                              FOR THE YEAR ENDED DECEMBER 31, 1996
                              ------------------------------------

                                           (UNAUDITED)
                                         (IN THOUSANDS)
                               OFFERING AND
                               CONSOLIDATION        EQUITY OFFICE
                                 PRO FORMA         PROPERTIES TRUST
                                ADJUSTMENTS           PRO FORMA
                              ---------------      ----------------
 
<S>                           <C>                  <C>
Income
  Rental....................  $       15,539(R)    $       503,304
  Tenant reimbursements.....              --                87,968
  Parking...................              --                42,715
  Other.....................              --                21,269
  Fees from noncombined
     affiliates.............              --                 5,120
  Interest..................              --                 9,850
                              ---------------      ---------------
                                      15,539               670,226
                              ---------------      ---------------
Expenses
  Property operating........              --               261,388
  Interest..................         (43,041)(S)           112,712
  Depreciation..............          21,976(T)            128,951
  Amortization..............          (8,591)(U)             4,395
  General and
     administrative.........           2,400(V)             25,545
                              ---------------      ---------------
                                     (27,256)              532,991
                              ---------------      ---------------
Income before (income)
  allocated to minority
  interests, income from
  investments in
  unconsolidated joint
  ventures, and gain on sale
  of real estate............          42,795               137,235
(Income) allocated to
  minority interests:
  Operating Partnership.....         (10,886)(W)           (10,886)
  Partially owned
     properties.............             (56)(W)            (2,142)
Income from investments in
  unconsolidated joint
  ventures..................              --                 4,725(X)
Gain on sale of real
  estate....................              --                 5,338
                              ---------------      ---------------
Net income..................  $       31,853       $       134,270
                              ===============      ===============
Net income per Common
  Share.....................                       $           .91(Y)
                                                   ===============
</TABLE>
    
 
                            See accompanying notes.
 
                                       F-6
<PAGE>   145
 
                         EQUITY OFFICE PROPERTIES TRUST
 
              NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET
 
   
                                 MARCH 31, 1997
    
   
                                  (unaudited)
    
 
     Basis of Presentation.  The contribution to the Operating Partnership of
the ZML Partners' interests in the Office Properties and Parking Facilities and
the Equity Group's interest in the Management Business in exchange for Units and
Common Shares typically would be accounted for at the historical cost of those
interests, similar to a pooling of interests. Due to the relatively small
percentage of these interests, however, such interests, together with all
remaining non-affiliated interests, have been accounted for using the purchase
method of accounting, based on the fair value of the Common Shares and Units
issued.
 
   
A.  To reflect the acquisition of the following properties since March 31, 1997:
    
 
   
     Oakbrook Terrace Tower
    
     One Maritime Plaza
     201 Mission Street
     Smith Barney Tower
     50% Interest in Civic Parking L.L.C.
   
     30 N. LaSalle
    
 
   
     This adjustment also reflects the probable acquisition of a parking
facility in Chicago, Illinois.
    
 
   
B.  To reflect the sale of 8383 Wilshire for $59 million.
    
 
   
C.  To reflect $229.5 million of net cash proceeds for events that occurred or
     are expected to occur subsequent to March 31, 1997, as follows:
    
 
   
<TABLE>
    <S>                                                             <C>
    Capital contributed by capital partners of the ZML Funds....    $136,390,000
    Distributions of $100.3 million made to capital partners of
      the ZML Funds less $20.3 million of net proceeds received
      from the disposal of three Non-Office Properties
      subsequent to March 31, 1997; and distributions of $10.6
      million by the Management Business to Equity Group Owners
      and $14.5 million to the capital partners of the ZML
      Funds, both of which are expected to occur prior to the
      Offering and the Consolidation............................    (105,062,000)
    Net repayment upon refinancing of mortgage indebtedness.....     (10,472,000)
    Net proceeds from the line of credit of $220.5 million from
      draws made subsequent to March 31, 1997, $25.1 million
      estimated to be drawn for the pending acquisition of a
      parking facility in Chicago, Illinois and $37.0 million
      estimated to be repaid prior to the Offering from cash
      held by Equity Office Predecessors........................     208,596,000
                                                                    ------------
                                                                    $229,452,000
                                                                    ============
</TABLE>
    
 
   
D.  To record the Offering and the Consolidation based upon the assumed issuance
     of 147.9 million Common Shares, assuming a price of $20.00 per share, in
     exchange for 92.5% of the ownership interest in the Operating Partnership
     that is assumed to be owned by the Company (comprised of 25 million shares
     to be sold in the Offering and 122.9 million shares to be issued in the
     Consolidation). It is assumed that 11.9 million Units in the Operating
     Partnership are issued in exchange for 7.5% of the ownership interest in
     the Operating Partnership that will not be owned by the Company.
    
 
                                       F-7
<PAGE>   146
 
                         EQUITY OFFICE PROPERTIES TRUST
 
       NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET -- (CONTINUED)
 
   
                                 MARCH 31, 1997
    
   
                                  (unaudited)
    
 
E.  To record the allocation of estimated equity value in excess of book value
     ("net equity value") to investment in real estate based on the issuance of
     Common Shares and Units as follows:
 
   
<TABLE>
<S>                                                               <C>
Issuance of 159.8 million shares and Units at $20.00 per
  share/Unit...............................................       $ 3,195,587,500
Less book value of owner's equity before adjustments to
  reflect the estimated net equity value of assets (see
  Note O):
  Historical owners' equity of Equity Office
     Predecessors...........................  $(1,759,340,000)
  Disposal of 8383 Wilshire in May 1997 (see
     Note M)................................       (7,805,000)
  Net capital contributed by capital
     partners of the ZML Funds (see Note
     M).....................................     (131,658,000)
  Net proceeds from Offering (see Note F)...     (464,472,000)
  Costs associated with the Consolidation
     (see Note F)...........................       19,175,000
  Elimination of unamortized deferred loan
     costs (See Note I).....................        2,379,000
  Anticipated prepayment penalties (see Note
     F).....................................       14,882,000
                                              ---------------
                                                                   (2,326,839,000)
                                                                  ---------------
Total share/Unit value in excess of book value:............       $   868,748,500
                                                                  ===============
Allocation of excess value to assets and liabilities based
  on relative differences between book value and estimated
  net equity value:
Decrease in other assets (see Note I)......................       $   (69,331,000)
Decrease in accounts receivable related to net deferred
  rent (see Note G)........................................           (53,804,000)
Decrease in other deferred liabilities (see Note K)........             1,337,000
Decrease in mortgage indebtedness resulting from adjustment
  to fair value (see Note J)...............................            20,302,000
Increase in investments in unconsolidated joint ventures
  (see Note H).............................................             2,998,000
Adjustment to the basis of the investment in real estate,
  net......................................................           967,246,500
                                                                  ---------------
Total adjustments..........................................       $   868,748,500
                                                                  ===============
</TABLE>
    
 
F.  To reflect the following:
 
   
<TABLE>
<S>                                                             <C>
Gross proceeds from the assumed sale of 25 million Common
  Shares, $0.01 par value per share, at $20.00 per share....    $               500,000,000
Transaction, registration and issuance costs................                    (35,528,000)
                                                                ---------------------------
  Net proceeds..............................................                    464,472,000
                                                                ---------------------------
Costs associated with the Consolidation.....................                    (19,175,000)
Anticipated repayment of mortgage debt and other
  indebtedness secured by properties to be owned by the
  Company (see Note J)......................................                   (552,801,800)
Anticipated prepayment penalties on retired mortgage debt
  and other indebtedness (calculated as of March 31, 1997;
  this amount is subject to change based on the actual date
  of repayment and changes in interest rates)...............                    (14,882,000)
                                                                ---------------------------
Net decrease in cash at March 31, 1997......................    $              (122,386,800)
                                                                ===========================
</TABLE>
    
 
G.  To eliminate the deferred rent receivable, which arose from the historical
     straight-lining of rents (see Note E).
 
   
H.  To increase the basis of the investments in unconsolidated joint ventures
     accounted for on the equity method (see Note E).
    
 
                                       F-8
<PAGE>   147
 
                         EQUITY OFFICE PROPERTIES TRUST
 
       NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET -- (CONTINUED)
 
   
                                 MARCH 31, 1997
    
   
                                  (unaudited)
    
 
   
I.   To eliminate the $2.4 million of unamortized deferred loan costs related to
     mortgage debt of $15.0 million for Denver Corporate Center Towers II and
     III repaid in May, 1997 and $552.8 million expected to be repaid with net
     proceeds of the Offering and cash held by Equity Office Predecessors (see
     Note J), and the $69.3 million decrease in other assets, consisting of
     lease acquisition costs, deferred loan costs and organization costs that
     will be written off as a result of the Consolidation (see Note E).
    
 
J.   To reflect the following:
 
   
<TABLE>
    <S>                                                             <C>
    Adjustment to reduce the assumed Equity Office Predecessors
      debt to its fair value (calculated as of June 1, 1997);
      this amount is subject to change based on the actual date
      of repayment and changes in interest rates (see Note E)...    $ (20,302,000)
    Debt to be repaid from net proceeds of the Offering and cash
      held by Equity Office Predecessors (see below)............     (552,801,800)
                                                                    -------------
    Net decrease in mortgage debt payable at March 31, 1997.....    $(573,103,800)
                                                                    =============
</TABLE>
    
 
   
     The fair value of debt was computed by discounting the projected debt
service payments for each loan based on the spread between the market rate and
the effective rate, including the amortization of loan origination costs, for
each year.
    
 
     Debt to be repaid from net proceeds of the Offering and cash held by Equity
Office Predecessors
 
   
<TABLE>
<CAPTION>
                                                                                    AMOUNT TO
                     PROPERTY                   MATURITY DATE      INTEREST RATE    BE REPAID
      --------------------------------------  ------------------   --------------  -----------
      <S>                                     <C>                  <C>            <C>
      60 Spear..............................  December 1, 1999         9.01%      $  9,271,700
      CIGNA Center..........................  December 1, 1999         9.01%           730,100
      Summit Office Center..................  December 1, 1999         9.01%         5,840,800
      Tampa Commons.........................  December 1, 1999         9.01%        14,877,600
      First Union Center....................  December 1, 1999         9.01%        16,548,800
      Intercontinental Center...............  December 1, 1999         9.01%         6,205,800
      Four Forest...........................  December 1, 1999         9.01%        17,011,000
      Dominion Tower........................  December 1, 1999         9.01%        23,363,000
      Northborough Tower....................  December 1, 1999         9.01%         7,008,900
      500 Marquette Building................  December 1, 1999         9.01%        11,292,100
      Atrium Tower..........................  December 1, 1999         9.01%         1,606,200
      Sarasota City Center..................  December 1, 1999         9.01%        11,681,500
      University Tower......................  December 1, 1999         9.01%        11,170,400
      1111 19th Street......................  December 1, 1999         9.01%        18,690,400
      1 & 2 Stamford/300 Atlantic...........  March 29, 2000       LIBOR + 2.25%    75,087,800
      850 Third Avenue......................  March 20, 2002           8.79%        54,200,000
      Two California Plaza..................  August 21, 2003        LIBOR + 2%     54,587,000
      One North Franklin....................  December 31, 2002      LIBOR + 1%     65,150,400
      One and Two Paces West................  March 21, 1998       LIBOR + 1.875%   47,700,000
      2010 Main Plaza.......................  December 13, 1997    LIBOR + 1.875%   25,900,000
      1920 Main Plaza.......................  September 29, 2001     LIBOR + 2%     30,628,300
      One American Center...................  October 31, 2000          8.5%        44,250,000
                                                                                  ------------
                                                                                  $552,801,800
                                                                                  ============
</TABLE>
    
 
   
     The amounts reflected above are based on the balances at March 31, 1997.
     The actual amounts repaid will be different to the extent of any
     amortization of loan balances which occurs prior to the actual date of
     repayment.
    
 
                                      F-9
<PAGE>   148
 
                         EQUITY OFFICE PROPERTIES TRUST
 
       NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET -- (CONTINUED)
 
   
                                 MARCH 31, 1997
    
   
                                  (unaudited)
    
 
   
K.  To eliminate the deferred rent payable, which arose from the historical
     straight-lining of rents (see Note E).
    
 
   
L.  To reflect the recognition of minority interest ownership in the Operating
     Partnership, estimated to be 7.5%, that will not be owned by the Company.
     Minority interests were computed as follows:
    
 
   
<TABLE>
<S>                                                           <C>
Pro Forma equity of the Operating Partnership, net of Equity
  Office Predecessors' historical minority interests of
  $9,346,000 related to partially owned properties (see Note
  E)........................................................  $3,195,587,500
Percentage of Units in the Operating Partnership which are
  not assumed to be owned by the Company....................             7.5%
                                                              --------------
Minority interests in the equity of the Operating
  Partnership as of March 31, 1997..........................  $  239,669,060
                                                              ==============
</TABLE>
    
 
   
M. To reclassify owners' equity:
    
 
   
<TABLE>
<S>                                                           <C>
Historical owners' equity of Equity Office Predecessors.....  $1,759,340,000
Disposal of 8383 Wilshire...................................       7,805,000
Effect on owners' equity of net cash provided by financing
  activities (see Note C)...................................     131,658,000
                                                              --------------
     Owners' Equity.........................................  $1,898,803,000
                                                              ==============
</TABLE>
    
 
   
N.  To record par value of 147.9 million Common Shares anticipated to be issued
     in the Offering and the Consolidation with a par value of $0.01 per share.
    
 
   
O.  To reflect the net increase to paid in capital associated with the issuance
     of Common Shares and certain other transactions related to the
     Consolidation, as summarized below:
    
 
   
<TABLE>
<S>                                                           <C>
Net proceeds from the sale of 25 million Common Shares, net
  of $35.528 million of issuance costs (see Note F).........  $  464,472,000
Costs associated with the Consolidation (see Note F)........     (19,175,000)
Adjustments to assets and liabilities resulting from
  issuance of Common Shares and Units (see Note E)..........     868,748,500
Reclassification of owners' equity (see Note M).............   1,898,803,000
Elimination of unamortized loan costs on debt to be repaid
  at the time of the Consolidation (see Note I).............      (2,379,000)
Prepayment penalties on retired mortgage debt (see Note
  F)........................................................     (14,882,000)
Par value of 147.9 million Common Shares (see Note N).......      (1,479,000)
Allocation of minority interests in the equity of the
  Operating Partnership (see Note L)........................    (239,669,060)
                                                              --------------
Net increase to paid in capital.............................  $2,954,439,440
                                                              ==============
</TABLE>
    
 
                                      F-10
<PAGE>   149
 
                         EQUITY OFFICE PROPERTIES TRUST
 
                     NOTES TO PRO FORMA CONDENSED COMBINED
                            STATEMENT OF OPERATIONS
 
   
                 FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
    
                      FOR THE YEAR ENDED DECEMBER 31, 1996
   
                                  (unaudited)
    
 
   
P.  To reflect the operations and the depreciation expense for a) the pro forma
     condensed combined statement of operations for the three months ended March
     31, 1997: for the period from January 1, 1997 through the earlier of the
     date of acquisition, or March 31, 1997, as applicable, for properties
     acquired or anticipated to be acquired in 1997 and b) the pro forma
     condensed combined statement of operations for the year ended December 31,
     1996: for the period from January 1, 1996 through the date of acquisition
     for properties acquired in 1996, or December 31, 1996 for the properties
     acquired or anticipated to be acquired in 1997, for the following
     properties. Interest expense was also adjusted, where applicable, to
     reflect a quarter and a full year, for the three months ended March 31,
     1997 and the year ended December 31, 1996, respectively.
    
 
   
<TABLE>
<CAPTION>
            ACQUIRED PROPERTY                DATE ACQUIRED         PERIOD REFERENCE
            -----------------                -------------         ----------------
<S>                                        <C>                     <C>
1601 Market Street.......................  January 18, 1996           A
Promenade II.............................  June 14, 1996              A
Two California Plaza.....................  August 23, 1996            A
BP Tower.................................  September 4, 1996          A
SunTrust Center..........................  September 18, 1996         A
Reston Town Center.......................  October 22, 1996           A
One Phoenix Plaza........................  December 4, 1996           A
Colonnade I..............................  December 4, 1996           A
Boston Harbor Garage.....................  December 10, 1996          A
Milwaukee Center Parking Garage..........  December 18, 1996          A
15th & Sansom Streets Garage.............  December 27, 1996          A
1616 Chancellor Street Garage............  December 27, 1996          A
Juniper/Locust Streets Garage............  December 27, 1996          A
1616 Sansom Street Garage................  December 27, 1996          A
1111 Sansom Street Garage................  December 27, 1996          A
177 Broad Street.........................  January 29, 1997           B
Biltmore Apartments......................  January 29, 1997           B
Preston Commons..........................  March 21, 1997             B
Oakbrook Terrace Tower...................  April 16, 1997             B
50% Interest in Civic Parking L.L.C......  April 16, 1997             B
One Maritime Plaza.......................  April 21, 1997             B
Smith Barney Tower.......................  April 29, 1997             B
201 Mission Street.......................  April 30, 1997             B
30 N. LaSalle............................  June 13, 1997              B
Chicago parking facility.................  Pending                    B
</TABLE>
    
 
   
     Note A:  Included in the pro forma condensed combined statement of
              operations for the year ended December 31, 1996, in the column
              entitled "1996 Acquisitions".
    
   
     Note B:  Included in the pro forma condensed combined statement of
              operations for the year ended December 31, 1996 in the column
              entitled "1997 Acquired and Probable Properties" and for the three
              months ended March 31, 1997, in the column entitled "1997 Acquired
              and Probable Properties".
    
 
   
     The total revenues and total expenses for the Chicago parking facility for
     the three months ended March 31, 1997 and the year ended December 31, 1996
     were $755,000 and $286,000; and $3 million and $1.1 million, respectively.
    
 
                                      F-11
<PAGE>   150
 
                         EQUITY OFFICE PROPERTIES TRUST
 
                     NOTES TO PRO FORMA CONDENSED COMBINED
                     STATEMENT OF OPERATIONS -- (CONTINUED)
 
   
                 FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
    
                      FOR THE YEAR ENDED DECEMBER 31, 1996
   
                                  (unaudited)
    
 
   
     The depreciation adjustment of $2.9 million and $26.0 million for the three
     months ended March 31, 1997 and the year ended December 31, 1996,
     respectively, is based on the cost to acquire the above listed properties,
     assuming that 10% of the purchase price is allocated to land and the
     depreciable lives are 40 years. Depreciation is computed using the
     straight-line method.
    
 
   
Q.  To eliminate the operations of Barton Oaks Plaza II and 8383 Wilshire for
     the three months ended March 31, 1997 and for the year ended December 31,
     1996, which were sold in January and May, 1997, respectively.
    
 
   
R.  To reflect the adjustment for the straight line effect of scheduled rent
     increases, assuming the transaction closed on January 1, 1996 and 1997,
     respectively, for the pro forma condensed combined statement of operations
     for the year ended December 31, 1996 and the three months ended March 31,
     1997, respectively.
    
 
   
S.  To reflect the reduction of interest expense associated with the $15.0
     million of mortgage debt on Denver Corporate Center Towers II and III
     repaid in May, 1997 and the $552.8 million expected to be repaid with net
     proceeds of the Offering and cash held by Equity Office Predecessors (see
     Note J).
    
 
   
T.  To reflect depreciation expense related to the adjustment to record the net
     equity value of the investment in real estate for the three months ended
     March 31, 1997 and for the year ended December 31, 1996, on a straight-line
     basis, as follows:
    
 
   
<TABLE>
<CAPTION>
                                            FOR THE THREE MONTHS ENDED   FOR THE YEAR ENDED
                                                  MARCH 31, 1997         DECEMBER 31, 1996
                                            --------------------------   ------------------
<S>                                         <C>                          <C>
Adjustment to the basis of the investment
  in real estate (see Note E)..............        $967,246,500             $976,691,600
Less: Portion allocated to land, estimated
  to be 10%................................         (96,724,650)             (97,669,160)
                                                   ------------             ------------
                                                   $870,521,850             $879,022,440
                                                   ============             ============
Depreciation expense based on an estimated
  useful life of 40 years..................        $  5,440,800             $ 21,975,600
                                                   ============             ============
</TABLE>
    
 
   
U.  To eliminate the $3.1 million and $13.3 million of amortization historically
     recognized by Equity Office Predecessors as a result of the write-off of
     deferred loan costs, lease acquisition costs and organizational costs (see
     Note I), net of the $1.2 million and $4.4 million amortization of the
     discount required to record the mortgage debt at fair value based upon the
     issuance of Common Shares and Units, and the $.1 million and $.3 million of
     amortization relating to disposed properties for the three months ended
     March 31, 1997 and the year ended December 31, 1996, respectively.
    
 
   
V.  To reflect additional general and administrative expenses expected to be
     incurred as a result of reporting as a public company, as follows:
    
 
   
<TABLE>
<CAPTION>
                                              FOR THE THREE MONTHS ENDED   FOR THE YEAR ENDED
                                                    MARCH 31, 1997         DECEMBER 31, 1996
                                              --------------------------   ------------------
      <S>                                     <C>                          <C>
      Directors and officers insurance.......          $125,000                $  500,000
      Printing and mailing...................           125,000                   500,000
      Trustees and directors fees............            75,000                   300,000
      Investor relations.....................            75,000                   300,000
      Other..................................           200,000                   800,000
                                                    -----------                ----------
      Total..................................          $600,000                $2,400,000
                                                    ===========                ==========
</TABLE>
    
 
                                      F-12
<PAGE>   151
 
                         EQUITY OFFICE PROPERTIES TRUST
 
                     NOTES TO PRO FORMA CONDENSED COMBINED
                     STATEMENT OF OPERATIONS -- (CONTINUED)
 
   
                 FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
    
                      FOR THE YEAR ENDED DECEMBER 31, 1996
   
                                  (unaudited)
    
 
   
W. To reflect the estimated 7.5% minority interests ownership in the Operating
     Partnership and to reflect the 5% economic interest that the Company will
     not own in the Management Corp., as follows:
    
 
   
<TABLE>
<CAPTION>
                                                             FOR THE THREE MONTHS ENDED   FOR THE YEAR ENDED
                                                                   MARCH 31, 1997         DECEMBER 31, 1996
                                                             --------------------------   ------------------
      <S>                                                    <C>                          <C>
      Net income allocated to minority interests ownership
        in the Operating Partnership........................         $2,965,000               $10,886,000
                                                                   ============               ===========
      Historical ownership interest in partially owned
        properties..........................................         $  529,000               $ 2,086,000
                                                                   ------------               -----------
        Fees from noncombined affiliates....................         $1,200,000               $ 5,120,000
        Management Corp. expenses...........................          1,000,000                 4,000,000
                                                                   ------------               -----------
        Estimated Management Corp. net income...............         $  200,000               $ 1,120,000
                                                                   ------------               -----------
        Minority interest 5% economic interest in the
          Management Corp...................................         $   10,000               $    56,000
                                                                   ------------               -----------
      Net income allocated to minority interests ownership
        in partially owned properties.......................         $  539,000               $ 2,142,000
                                                                   ============               ===========
</TABLE>
    
 
   
X.  Investment in Unconsolidated Joint Ventures:
    
 
   
     Equity Office Predecessors acquired a mortgage receivable secured by the
     500 Orange Tower Property ("500 Orange") and purchased land underlying and
     adjacent to 500 Orange in July 1994. Based upon the terms of the mortgage
     note, Equity Office Predecessors, as lender, participates in residual
     profits, provides all cash needs required by the property and can only look
     to the property to recover the loan. In addition, 100% of the income is
     allocated to Equity Office Predecessors. Accordingly, the mortgage is
     analogous to an investment in a real estate limited partnership and
     therefore is accounted for utilizing the equity method. In addition, Equity
     Office Predecessors acquired a 50% limited partnership interest in Civic
     Parking, L.L.C. in April 1997. Based upon the terms of the agreement,
     Equity Office Predecessors is entitled to 50% of the revenues and expenses
     of the property. The purchase was accounted for utilizing the equity
     method. Under such accounting method, the net equity investment of Equity
     Office Predecessors is reflected on the pro forma condensed combined
     balance sheet, and the pro forma condensed combined statements of
     operations include Equity Office Predecessors' share of net income or loss
     from 500 Orange and Civic Parking, L.L.C. The operations of 500 Orange and
     Civic Parking, L.L.C. for the three months ended March 31, 1997 and the
     year ended December 31, 1996 are as follows:
    
 
   
<TABLE>
<CAPTION>
                                                           FOR THE THREE MONTHS ENDED   FOR THE YEAR ENDED
                        500 ORANGE                               MARCH 31, 1997         DECEMBER 31, 1996
                        ----------                         --------------------------   ------------------
<S>                                                        <C>                          <C>
Total Revenues............................................         $1,247,000               $4,775,000
Total Expenses............................................            325,000                2,682,000
                                                                -------------               ----------
Net Income................................................            922,000                2,093,000
Equity Office Predecessors' Share.........................                100%                     100%
                                                                -------------               ----------
Net Income allocated to Equity Office Predecessors........         $  922,000               $2,093,000
                                                                =============               ==========
</TABLE>
    
 
   
<TABLE>
<CAPTION>
                                                           FOR THE THREE MONTHS ENDED   FOR THE YEAR ENDED
                  CIVIC PARKING, L.L.C.                          MARCH 31, 1997         DECEMBER 31, 1996
                  ---------------------                    --------------------------   ------------------
<S>                                                        <C>                          <C>
Total Revenues............................................         $2,583,000               $10,332,000
Total Expenses............................................          1,266,500                 5,068,000
                                                                -------------               -----------
Net Income................................................          1,316,500                 5,264,000
Equity Office Predecessors' Share.........................                 50%                       50%
                                                                -------------               -----------
Net Income allocated to Equity Office Predecessors........         $  658,250               $ 2,632,000
                                                                =============               ===========
</TABLE>
    
 
   
Y.  Pro forma net income per Common Share is based upon 147.9 million Common
     Shares assumed to be outstanding upon completion of the Offering and the
     Consolidation.
    
 
                                      F-13
<PAGE>   152
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Trustees
of Equity Office Properties Trust
 
     We have audited the accompanying balance sheet of Equity Office Properties
Trust, a Maryland real estate investment trust, as of December 31, 1996. This
balance sheet is the responsibility of the Company's management. Our
responsibility is to express an opinion on this balance sheet based on our
audit.
 
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
 
     In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Equity Office Properties Trust at
December 31, 1996, in conformity with generally accepted accounting principles.
 
                                          ERNST & YOUNG LLP
 
Chicago, Illinois
April 28, 1997
 
                                      F-14
<PAGE>   153
 
                         EQUITY OFFICE PROPERTIES TRUST
 
                                 BALANCE SHEET
 
   
<TABLE>
<CAPTION>
                                                         MARCH 31,
                                                           1997       DECEMBER 31,
                                                        (UNAUDITED)       1996
                                                        -----------   ------------
<S>                                                     <C>           <C>
                        ASSETS
- ------------------------------------------------------
Cash..................................................    $25,000       $25,000
                                                          -------       -------
                                                          $25,000       $25,000
                                                          =======       =======
                 SHAREHOLDERS' EQUITY
- ------------------------------------------------------
Commitments and contingencies
Common Shares, $0.01 par value; 1,000 shares
  authorized, issued and outstanding..................    $    10       $    10
Additional Paid in Capital............................     24,990        24,990
                                                          -------       -------
                                                          $25,000       $25,000
                                                          =======       =======
</TABLE>
    
 
                            See accompanying notes.
 
                                      F-15
<PAGE>   154
 
                         EQUITY OFFICE PROPERTIES TRUST
 
                             NOTES TO BALANCE SHEET
 
   
1.   ORGANIZATION
    
 
     Unless defined otherwise herein, capitalized terms used in these notes to
the balance sheet have the same meaning as defined elsewhere in this Prospectus.
These footnotes should be read in conjunction with the Prospectus. Equity Office
Properties Trust (together with its subsidiaries, the "Company"), a Maryland
real estate investment trust, was formed on October 9, 1996. The Company will be
the managing general partner and majority owner of a newly formed limited
partnership (the "Operating Partnership"). The Company will conduct
substantially all of its business through the Operating Partnership. The Company
has been formed to continue and expand the national office property business
organized by Mr. Samuel Zell, Chairman of the Board of Trustees of the Company.
The Company will be a fully integrated self-administered and self-managed real
estate company and expects to qualify as a real estate investment trust (a
"REIT") for federal income tax purposes commencing with the year ended December
31, 1997. Upon completion of the Offering, more fully described elsewhere in
this Prospectus, the Company will sell common shares of beneficial interest
("Common Shares") to the public. The ZML Opportunity Partnerships will
contribute Office Properties and Parking Facilities to the Operating Partnership
in exchange for Units and the Shareholders in the ZML REITs will receive Common
Shares in exchange for their interests in the ZML REITs. In addition, the Equity
Group will contribute the Management Business in exchange for Units which will
be exchangeable for Common Shares.
 
2.   COMMITMENTS AND CONTINGENCIES
 
     The Company will become a party to various legal actions resulting from the
operating activities to be transferred to the Operating Partnership. These
actions are incidental to the transferred business and management does not
believe that these actions will have a material adverse effect on the Company.
 
   
     As discussed elsewhere in the Prospectus, in connection with the Offering
and the Consolidation, the Operating Partnerships will transfer their mortgage
indebtedness to the Operating Partnership. The Company anticipates refinancing
approximately $293,000,000 of mortgage indebtedness, for which it has not yet
obtained consents from the mortgage lenders. In the event that this refinancing
does not occur prior to December 31, 1997 the Company would be required to
obtain the consent of the existing mortgage lenders. The Company believes that,
inasmuch as most of the mortgage instruments given to secure this indebtedness
contemplated these transfers, such consents could be obtained on reasonable
terms and, in instances where such consents could not be obtained, such loans
could be refinanced.
    
 
3.   USE OF ESTIMATES
 
     The preparation of the balance sheet in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the balance sheet and accompanying notes. Actual
results could differ from those estimates.
 
   
4.   UNAUDITED INTERIM STATEMENT
    
 
   
     The balance sheet as of March 31, 1997 is unaudited. In the opinion of
management, the balance sheet reflects all adjustments necessary for a fair
presentation of the results of the interim period. All such adjustments are of a
normal, recurring nature.
    
 
   
5.   OFFERING AND CONSOLIDATION COSTS
    
 
     In connection with the Offering, the Company will incur legal, accounting
and related costs. These costs will be deducted from the gross proceeds of the
Offering. In addition, the direct costs incurred in connection with the
Consolidation will be included in the costs of the Office Properties and Parking
Facilities contributed to the Operating Partnership.
 
                                      F-16
<PAGE>   155
 
   
6.   INCOME TAXES
    
 
     Commencing with the year ending December 31, 1997, the Company intends to
make an election to be taxed as a REIT under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "Code"). As a REIT, the Company
generally will not be subject to federal income tax if it distributes at least
95% of its taxable income for each tax year to its shareholders. REITs are
subject to a number of organizational and operational requirements. If the
Company fails to qualify as a REIT in any taxable year, the Company will be
subject to federal income tax (including any applicable alternative minimum tax)
on its taxable income at regular corporate tax rates. Even if the Company
qualifies for taxation as a REIT, the Company may be subject to state and local
income taxes and to federal income tax and excise tax on its undistributed
income.
 
   
7.   SHARE OPTION AND RESTRICTED SHARE AWARD PLANS
    
 
   
     The Company has adopted the Employee Plan for the purpose of attracting and
retaining highly qualified executive officers, trustees, employees and
consultants. The Company will reserve Common Shares for issuance pursuant to the
Employee Plan in an amount equal to approximately 6.8% of the total Common
Shares outstanding immediately following the Offering and Consolidation. In
connection with the establishment of the Employee Plan, the Company will grant
options to purchase Common Shares to certain officers, trustees, employees and
consultants.
    
 
   
     The Employee Plan will be qualified under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Employee Plan will be
administered by the Compensation Committee and provide for the granting of share
options, share appreciation rights or restricted shares. At the time of the
Offering, it is expected that the Company will grant share options to purchase
2.56% of the Company's outstanding Common Shares (calculated on a fully diluted
basis) to executive or other key employees and consultants of the Company. Share
options may be granted in the form of "incentive stock options" (as defined in
Section 422 of the Code), or non-statutory share options, and are exercisable
for up to 10 years following the date of the grant. The exercise price of each
option will be set by the Compensation Committee; provided, however, that the
price per share must be equal to or greater than the fair market value of the
Common Shares on the grant date.
    
 
     The Employee Plan also provides for the issuance of share appreciation
rights which will generally entitle a holder to receive cash or shares, as
determined by the Compensation Committee at the time of exercise, equal to the
difference between the exercise price and the fair market value of the Common
Shares. In addition, the Employee Plan permits the Company to issue restricted
Common Shares to executive or other key employees upon such terms and conditions
as shall be determined by the Compensation Committee in its sole discretion.
 
   
8.   SUBSEQUENT EVENT
    
 
   
     On June 13, 1997, the Declaration of Trust of the Company was amended
whereby the Company has authorized the issuance of 750,000,000 Common Shares and
100,000,000 preferred shares of beneficial interest ("Preferred Shares"). The
Company's Common Shares and Preferred Shares issued and outstanding at June 13,
1997 was 1,000 and 0, respectively.
    
 
                                      F-17
<PAGE>   156
 
                         REPORT OF INDEPENDENT AUDITORS
 
To the Owners of
the Equity Office Predecessors
 
     We have audited the accompanying combined balance sheets of the Equity
Office Predecessors, as defined in Note 1, as of December 31, 1996 and 1995, and
the related combined statements of operations, owners' equity, and cash flows
for each of the three years in the period ended December 31, 1996. Our audits
also included the financial statement schedule III, Real Estate and Accumulated
Depreciation. These financial statements and schedule are the responsibility of
the management of the Equity Office Predecessors. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of the Equity Office
Predecessors at December 31, 1996 and 1995, and the combined results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
 
                                          ERNST & YOUNG LLP
 
Chicago, Illinois
March 25, 1997
 
                                      F-18
<PAGE>   157
 
                           EQUITY OFFICE PREDECESSORS
 
                            COMBINED BALANCE SHEETS
 
   
<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                                        MARCH 31,        ------------------------
                                                     1997 (UNAUDITED)       1996          1995
                                                     ----------------    ----------    ----------
                                                                    (IN THOUSANDS)
<S>                                                  <C>                 <C>           <C>
                     ASSETS
- -------------------------------------------------
Investment in real estate........................       $3,658,957       $3,549,708    $2,571,851
Accumulated depreciation.........................         (281,442)        (257,893)     (178,448)
                                                        ----------       ----------    ----------
                                                         3,377,515        3,291,815     2,393,403
Cash and cash equivalents........................          376,121          410,420       111,121
Rents and other receivables (net of allowance for
  doubtful accounts of $2,930, $2,724 and $2,075,
  respectively)..................................           62,134           58,661        38,974
Escrow deposits and restricted cash..............           33,655           32,593        20,360
Investment in unconsolidated joint venture.......           26,729           26,910        26,505
Other assets (net of accumulated amortization of
  $24,593, $21,806 and $14,721, respectively)....           90,201           92,166        60,527
                                                        ----------       ----------    ----------
       TOTAL ASSETS..............................       $3,966,355       $3,912,565    $2,650,890
                                                        ==========       ==========    ==========
         LIABILITIES AND OWNERS' EQUITY
- -------------------------------------------------
Mortgage debt....................................       $1,941,849       $1,837,767    $1,358,827
Revolving lines of credit........................           54,625          127,125        76,000
Accounts payable and accrued expenses............           66,779           81,995        62,754
Due to affiliates................................            3,625            2,074           839
Distribution payable.............................          100,330           96,500        12,508
Other liabilities................................           30,461           29,022        18,406
                                                        ----------       ----------    ----------
       TOTAL LIABILITIES.........................        2,197,669        2,174,483     1,529,334
                                                        ----------       ----------    ----------
Commitments and contingencies (Note 11)
Minority interests...............................            9,346           11,080        31,587
Owners' equity...................................        1,759,340        1,727,002     1,089,969
                                                        ----------       ----------    ----------
       TOTAL LIABILITIES AND OWNERS' EQUITY......       $3,966,355       $3,912,565    $2,650,890
                                                        ==========       ==========    ==========
</TABLE>
    
 
                            See accompanying notes.
 
                                      F-19
<PAGE>   158
 
                           EQUITY OFFICE PREDECESSORS
 
                       COMBINED STATEMENTS OF OPERATIONS
 
   
<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED MARCH 31,            YEARS ENDED DECEMBER 31,
                                      ------------------------------------    --------------------------------
                                      1997 (UNAUDITED)    1996 (UNAUDITED)      1996        1995        1994
                                      ----------------    ----------------    --------    --------    --------
                                                                   (IN THOUSANDS)
<S>                                   <C>                 <C>                 <C>         <C>         <C>
INCOME:
  Rental..........................        $116,418            $ 87,385        $386,481    $289,320    $193,046
  Tenant reimbursements...........          19,187              13,575          62,036      41,935      27,200
  Parking.........................           9,530               5,842          27,253      15,390       6,920
  Other...........................           3,336                 843          17,626      10,314       3,262
  Fees from noncombined
    affiliates....................           1,200                 772           5,120       5,899       6,018
  Interest........................           4,896               1,733           9,608       8,599       4,432
                                          --------            --------        --------    --------    --------
      Total income................         154,567             110,150         508,124     371,457     240,878
                                          --------            --------        --------    --------    --------
EXPENSES:
  Interest........................          36,355              26,267         119,595     100,566      59,316
  Depreciation....................          25,005              18,655          82,905      64,716      40,812
  Amortization....................           3,076               2,518          13,332       9,440       6,093
  Real estate taxes and
    insurance.....................          18,068              13,842          57,045      41,330      30,014
  Repairs and maintenance.........          19,440              13,955          71,156      53,618      35,260
  Property operating..............          20,640              16,023          72,866      56,540      42,138
  General and administrative......           7,073               6,056          23,145      21,987      15,603
  Provision for value
    impairment....................               0                   0               0      20,248           0
                                          --------            --------        --------    --------    --------
      Total expenses..............         129,657              97,316         440,044     368,445     229,236
                                          --------            --------        --------    --------    --------
Income before (income) loss
  allocated to minority interests,
  income from investment in
  unconsolidated joint venture,
  gain on sale of real estate, and
  extraordinary items.............          24,910              12,834          68,080       3,012      11,642
(Income) loss allocated to
  minority interests, net of
  extraordinary gain of $20,035 in
  1995............................            (529)               (610)         (2,086)     (2,129)      1,437
Income from investment in
  unconsolidated joint venture....             922                 492           2,093       2,305       1,778
Gain on sale of real estate.......           5,741               5,262           5,338           0           0
                                          --------            --------        --------    --------    --------
Income before extraordinary
  items...........................          31,044              17,978          73,425       3,188      14,857
Extraordinary items...............            (275)                  0               0      31,271       1,705
                                          --------            --------        --------    --------    --------
Net income........................        $ 30,769            $ 17,978        $ 73,425    $ 34,459    $ 16,562
                                          ========            ========        ========    ========    ========
</TABLE>
    
 
                            See accompanying notes.
 
                                      F-20
<PAGE>   159
 
                           EQUITY OFFICE PREDECESSORS
 
                     COMBINED STATEMENTS OF OWNERS' EQUITY
 
   
<TABLE>
<CAPTION>
                                                                FOR THE THREE MONTHS
                                                                  ENDED MARCH 31,
                                                                  1997 (UNAUDITED)
                                                                AND THE YEARS ENDED
                                                                 DECEMBER 31, 1996,
                                                                   1995 AND 1994
                                                                --------------------
                                                                (IN THOUSANDS)
<S>                                                             <C>
Owners' Equity, January 1, 1994.............................         $  488,627
Contributions...............................................            251,909
Offering expenses...........................................               (942)
Distributions...............................................            (25,058)
Net income for the year ended December 31, 1994.............             16,562
                                                                     ----------
Owners' Equity, December 31, 1994...........................            731,098
Contributions...............................................            337,048
Offering expenses...........................................               (128)
Distributions...............................................            (12,508)
Net income for the year ended December 31, 1995.............             34,459
                                                                     ----------
Owners' Equity, December 31, 1995...........................          1,089,969
Contributions...............................................            661,265
Offering expenses...........................................             (1,157)
Distributions...............................................            (96,500)
Net income for the year ended December 31, 1996.............             73,425
                                                                     ----------
Owners' Equity, December 31, 1996...........................          1,727,002
Contributions...............................................            101,569
Distributions...............................................           (100,000)
Net income for the three months ended March 31, 1997........             30,769
                                                                     ----------
Owner's Equity, March 31, 1997..............................         $1,759,340
                                                                     ==========
</TABLE>
    
 
                            See accompanying notes.
 
                                      F-21
<PAGE>   160
 
                           EQUITY OFFICE PREDECESSORS
 
                       COMBINED STATEMENTS OF CASH FLOWS
 
   
<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED
                                                             MARCH 31,                YEARS ENDED DECEMBER 31,
                                                     -------------------------   ----------------------------------
                                                        1997          1996          1996        1995        1994
                                                     -----------   -----------   ----------   ---------   ---------
                                                     (UNAUDITED)   (UNAUDITED)
                                                                             (IN THOUSANDS)
<S>                                                  <C>           <C>           <C>          <C>         <C>
OPERATING ACTIVITIES:
  Net income.......................................   $  30,769     $ 17,978     $   73,425   $  34,459   $  16,562
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and amortization..................      28,081       21,173         96,237      74,156      46,905
    (Income) from investment in unconsolidated
      joint venture................................        (922)        (492)        (2,093)     (2,305)     (1,778)
    (Gain) on sale of real estate..................      (5,741)      (5,262)        (5,338)          0           0
    Provision for value impairment.................           0            0              0      20,248           0
    Extraordinary (gain) loss from early
      extinguishments of debt......................         275            0              0           0      (1,705)
    Extraordinary (gain) on repurchase of debt.....           0            0              0     (31,271)          0
    Provision for doubtful accounts................         218        1,882          2,284       2,096         572
    Income (loss) allocated to minority
      interests....................................         529          610          2,086       2,129      (1,437)
    Changes in assets and liabilities:
      (Increase) in rents receivable...............      (3,708)      (4,247)       (21,971)    (17,411)     (8,552)
      (Increase) decrease in other assets..........       3,812         (373)        (9,747)      1,374      (3,124)
      Increase (decrease) in accounts payable and
         accrued expenses..........................     (15,216)     (26,430)        19,241       6,931      19,382
      Increase (decrease) in due to affiliates.....       1,551          884          1,235         (89)        293
      Increase (decrease) in other liabilities.....       1,439       (3,316)        10,616       3,561       6,703
                                                      ---------     --------     ----------   ---------   ---------
         Net cash provided by operating
           activities..............................      41,087        2,407        165,975      93,878      73,821
                                                      ---------     --------     ----------   ---------   ---------
INVESTING ACTIVITIES:
  Property acquisitions............................     (91,884)     (35,337)      (768,906)   (317,669)   (351,489)
  Payments for capital and tenant improvements.....     (26,378)     (15,482)      (129,485)    (76,985)    (72,952)
  Proceeds from sale of real estate................      13,298       14,502         14,502           0           0
  Distributions from (investment in) unconsolidated
    joint venture..................................       1,103          318          1,688       2,300     (24,722)
  Payments of lease acquisition costs..............      (4,583)      (2,073)       (29,793)    (16,106)    (22,883)
  (Increase) decrease in escrow deposits and
    restricted cash................................      (1,062)       1,956        (12,233)     27,845     (41,919)
                                                      ---------     --------     ----------   ---------   ---------
         Net cash (used for) investing
           activities..............................    (109,506)     (36,116)      (924,227)   (380,615)   (513,965)
                                                      ---------     --------     ----------   ---------   ---------
FINANCING ACTIVITIES:
  Capital contributions............................     101,569       80,819        661,265     337,048     251,909
  Capital distributions............................     (96,170)     (12,508)       (12,508)    (17,800)     (8,458)
  Payments for offering expenses...................           0            0         (1,157)       (128)       (942)
  Contributions from (distributions to) minority
    interest partners..............................      (2,263)     (20,655)       (22,593)        141      26,018
  Proceeds from mortgage notes.....................     132,446      127,724        640,953     271,482     240,365
  Proceeds from revolving lines of credit..........           0            0        216,943     288,000     166,000
  Repurchase of debt...............................           0            0              0     (40,078)          0
  Principal payments on mortgage notes.............     (28,364)     (54,937)      (254,104)   (182,244)   (152,615)
  Principal payments on revolving line of credit...     (72,500)     (56,000)      (165,818)   (378,000)          0
  Payments of loan costs...........................        (390)        (543)        (5,430)     (1,908)     (6,854)
  Prepayment penalties on early extinguishments of
    debt...........................................        (208)           0              0           0        (500)
                                                      ---------     --------     ----------   ---------   ---------
         Net cash provided by financing
           activities..............................      34,120       63,900      1,057,551     276,513     514,923
                                                      ---------     --------     ----------   ---------   ---------
Net (decrease) increase in cash and cash
  equivalents......................................     (34,299)      30,191        299,299     (10,224)     74,779
Cash and cash equivalents at the beginning of the
  period...........................................     410,420      111,121        111,121     121,345      46,566
                                                      ---------     --------     ----------   ---------   ---------
Cash and cash equivalents at the end of the
  period...........................................   $ 376,121     $141,312     $  410,420   $ 111,121   $ 121,345
                                                      =========     ========     ==========   =========   =========
Supplemental information:
  Interest paid during the period, including
    capitalized interest of $1,622, $824, $4,640,
    $1,682 and $0, respectively....................   $  37,273     $ 27,468     $  121,813   $ 100,700   $  55,832
                                                      =========     ========     ==========   =========   =========
  Non-cash financing activities:
    Financing assumed upon acquisition of real
      estate.......................................   $       0     $      0     $   92,091   $ 265,816   $ 211,263
                                                      =========     ========     ==========   =========   =========
</TABLE>
    
 
                            See accompanying notes.
 
                                      F-22
<PAGE>   161
 
                           EQUITY OFFICE PREDECESSORS
 
                     NOTES TO COMBINED FINANCIAL STATEMENTS
 
NOTE 1 - BUSINESS AND ORGANIZATION:
 
     Unless defined otherwise herein, capitalized terms used in these notes to
the combined financial statements have the same meanings as defined elsewhere in
this Prospectus. These footnotes should be read in conjunction with the
Prospectus.
 
Business
 
     Equity Office Predecessors is currently engaged in acquiring, owning,
managing, leasing, and renovating office properties and parking facilities
throughout the United States. The Management Business includes activities
related to both the management of Properties owned by Equity Office Predecessors
as well as properties which are owned by entities affiliated with Equity Office
Predecessors. The Company will continue the business of Equity Office
Predecessors.
 
Consolidation Transactions
 
     Pursuant to the Consolidation as described in the Prospectus, the
Opportunity Partnerships will contribute all of their assets associated with the
Office Properties and Parking Facilities to the Operating Partnership and the
Operating Partnership will assume all liabilities associated with the Office
Properties and Parking Facilities in exchange for Units in the Operating
Partnership. In addition, the Equity Group will contribute the Management
Business to the Operating Partnership in exchange for Units in the Operating
Partnership. The ZML REITs will be merged into the Company, which will be the
managing general partner and majority owner of the Operating Partnership. The
consummation of these proposed transactions is subject to various conditions as
described in the Prospectus.
 
Organization
 
   
     Equity Office Predecessors is not a legal entity but rather a combination
of the Office Properties and Parking Facilities of the ZML Funds (which includes
ZML Fund I, ZML Fund II, ZML Fund III and ZML Fund IV), and the Management
Business (which includes the office property management business of EOP, the
office property asset management business and parking asset management business
of EGI and EOH relating to the Properties) of the Equity Group that will be
combined into the Company pursuant to the Consolidation. The business of the
apartment and retail properties owned by the ZML Funds (the "Non-Office
Properties") have not been included in these financial statements. Refer to
Schedule III for a detailed listing of the Office Properties and Parking
Facilities included in the financial statements.
    
 
Capital Contributions/Distributions
 
   
     As of March 31, 1997, the capital partners of the four ZML Funds previously
committed to contribute approximately $2,113,947,500, of which approximately
$1,894,895,800 had been cumulatively contributed by capital partners,
approximately $82,661,700 of the commitment had been canceled, and approximately
$136,390,000 remained uncalled. In April, 1997, the remaining capital commitment
of approximately $136,390,000 was contributed by the capital partners of the ZML
Funds.
    
 
   
     As of March 31, 1997, the ZML Funds had cumulatively declared or
distributed approximately $239,045,900 to their capital partners.
    
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
Basis of Combination
 
     The financial statements have been presented on a combined basis, at
historical cost, because the ZML Funds and the Management Business are under the
common control and management of the Equity Group Owners through general
partnership interests in the ZML Funds and through their ownership of the
Management Business. Minority interests have been recorded for those entities
that are not wholly owned by the ZML Funds. Where controlling interests are not
held by the ZML Funds, the entities are accounted for as
 
                                      F-23
<PAGE>   162
 
   
investments in unconsolidated joint ventures utilizing equity accounting. All
significant intercompany transactions and balances have been eliminated in
combination.
    
 
   
     The combined financial statements as of March 31, 1997 and for the three
months ended March 31, 1997 and 1996 are unaudited. In the opinion of
management, such financial statements reflect all adjustments necessary for a
fair presentation of the results of the respective interim periods. All such
adjustments are of a normal, recurring nature.
    
 
   
     As of March 31, 1997, the net book value of the Non-Office Properties,
consisting of 13 apartment buildings and one shopping center, which are not
included in these combined financial statements, was approximately $198,550,400.
All cash deficits incurred by the Non-Office Properties are reflected as
distributions and all excess cash flow generated by the Non-Office Properties,
including net proceeds from the sale of these properties, are reflected as
contributions to Equity Office Predecessors. The net contributions
(distributions) for the three months ended March 31, 1997, and for the years
ended December 31, 1996, 1995 and 1994 related to the Non-Office Properties was
approximately $51,163,000, $98,780,000, $908,000 and ($7,258,000), respectively.
    
 
   
     During 1996, two Non-Office Properties were sold to unaffiliated third
parties which generated net proceeds of approximately $96,664,000 which is
included in the $98,780,000 net contributions from Non-Office Properties for the
year ended December 31, 1996. During the three months ended March 31, 1997, one
Non-Office Property was sold to an unaffiliated third party and another
Non-Office Property was sold to Equity Residential Properties Trust, which
generated net proceeds of approximately $52,997,800 which is included in the
$51,163,000 net contributions from Non-Office Properties for the three months
ended March 31, 1997.
    
 
   
     Subsequent to March 31, 1997, 10 apartment buildings were sold to Equity
Residential Properties Trust, an affiliate of the Equity Group Owners, and one
apartment building was sold to an unaffiliated third party, which generated net
proceeds of approximately $45,600,000. The remaining two apartment buildings are
held for disposition and are expected to be sold to Equity Residential
Properties Trust. Although these transactions are subject to the satisfaction of
certain conditions and contingencies, they are expected to close in 1997.
    
 
Investment in Real Estate
 
     Investment in real estate, including Office Properties and Parking
Facilities, was as follows:
 
   
<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                         MARCH 31,    -----------------------
                                            1997         1996         1995
                                         ----------   ----------   ----------
                                                    (IN THOUSANDS)
<S>                                      <C>          <C>          <C>
Land...................................  $  322,752   $  314,370   $  235,581
Building...............................   2,947,129    2,871,690    2,099,391
Building improvements..................     174,427      161,497       85,737
Tenant improvements....................     208,619      196,093      146,966
Furniture and fixtures.................       6,030        6,058        4,176
                                         ----------   ----------   ----------
                                          3,658,957    3,549,708    2,571,851
Accumulated depreciation...............    (281,442)    (257,893)    (178,448)
                                         ----------   ----------   ----------
                                         $3,377,515   $3,291,815   $2,393,403
                                         ==========   ==========   ==========
</TABLE>
    
 
                                      F-24
<PAGE>   163
 
     Rental property and improvements, including costs capitalized during
construction and other costs incurred, are included in investment in real estate
and are stated at cost. Expenditures for ordinary maintenance and repairs are
expensed to operations as they are incurred. Significant renovations and
improvements which improve or extend the useful life of the assets are
capitalized. Except for amounts attributed to land, rental property and
improvements are depreciated over their estimated useful lives using the
straight-line method. The estimated useful lives by asset category are:
 
<TABLE>
<CAPTION>
                   ASSET CATEGORY                        ESTIMATED USEFUL LIFE
                   --------------                        ---------------------
<S>                                                      <C>
Building.............................................    40 years
Building improvements................................    4 -- 40 years
Tenant improvements..................................    life of lease
Furniture and fixtures...............................    3 -- 12 years
</TABLE>
 
     During 1995, the Financial Accounting Standards Board issued Statement No.
121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" ("Statement No. 121") which established accounting
standards for the evaluation of the potential impairment of such assets. This
statement was adopted by Equity Office Predecessors as of January 1, 1995.
Rental properties are individually evaluated for impairment when conditions
exist which may indicate that it is probable that the sum of expected future
cash flows (on an undiscounted basis) from a rental property are less than its
historical net cost basis. Upon determination that a permanent impairment has
occurred, rental properties are reduced to their fair value. During the year
ended December 31, 1995, Equity Office Predecessors recorded a provision for
value impairment of approximately $20,248,500, of which $17,512,000 related to
the adjustment of investment in real estate and approximately $2,736,500 related
to unamortized lease acquisition costs.
 
   
     For properties to be disposed of, an impairment loss is recognized when the
fair value of the property, less the estimated cost to sell, is less than the
carrying amount of the property measured at the time Equity Office Predecessors
has a commitment to sell the property and/or is actively marketing the property
for sale. Property to be disposed of is reported at the lower of its carrying
amount or its estimated fair value, less its cost to sell. Subsequent to the
date that a property is held for disposition, depreciation expense is not
provided for in the statement of operations. As of March 31, 1997, 8383 Wilshire
was held for disposition.
    
 
Lease Acquisition Costs
 
   
     Capitalized lease acquisition costs are recorded at cost and are included
in other assets. These costs are amortized over the respective lives of the
leases. Lease acquisition costs, net of accumulated amortization of $20,648,300,
$18,455,000 and $12,281,900, as of March 31, 1997, December 31, 1996 and 1995,
respectively, were approximately $64,619,700, $62,592,700 and $40,913,700,
respectively.
    
 
Loan Costs
 
   
     Capitalized loan costs are recorded at cost and are included in other
assets. These costs are amortized over the term of the respective financings on
a straight-line basis, which approximates the effective yield method. Loan
costs, net of accumulated amortization of $3,944,600, $3,351,000 and $2,438,700,
as of March 31, 1997, December 31, 1996 and 1995, respectively, were
approximately $7,989,100, $8,372,300 and $7,217,100, respectively.
    
 
Rental Income
 
   
     Certain leases of Office Properties provide for tenant occupancy during
periods for which no rent is due or where minimum rent payments increase during
the term of the lease. Equity Office Predecessors records rental income for the
full term of each lease on a straight-line basis. As of March 31, 1997, December
31, 1996 and 1995, the receivables from tenants, net of reserves, which Equity
Office Predecessors expects to collect over the remaining life of these leases
rather than currently were approximately $53,868,000, $49,986,100 and
$31,558,700, respectively ("Deferred Rent"). The amounts included in rental
income for the three months ended March 31, 1997 and 1996, and for the years
ended December 31, 1996 and 1995, which are not currently collectible, were
approximately $3,898,900, $3,710,500, $18,427,400 and $12,662,600, respectively.
Deferred Rent is not recognized for income tax purposes.
    
 
                                      F-25
<PAGE>   164
 
Cash Equivalents
 
     Cash equivalents are considered to be all highly liquid investments
purchased with a maturity of three months or less. In addition, cash equivalents
include deposits made to a commingled bank account which is held in an
affiliate's name. Such affiliate provides centralized cash management services
to Equity Office Predecessors.
 
Escrow Deposits
 
     Escrow deposits mainly consist of amounts held by lenders to provide for
future real estate tax expenditures and tenant improvements and earnest money
deposits on acquisitions.
 
Restricted Cash
 
     Restricted cash represents amounts committed for various utility deposits
and security deposits. Certain of these amounts may be reduced upon the
fulfillment of certain obligations.
 
Fair Value of Financial Instruments
 
   
     Management believes that the carrying basis of Equity Office Predecessors'
long-term debt, consisting of mortgage loans, revolving bank loans and various
interest rate protection agreements, approximated their respective fair market
values as of March 31, 1997, and December 31, 1996 and 1995. The current value
of debt was computed by discounting the projected debt service payments for each
loan based on the spread between the market rate and the effective rate,
including the amortization of loan origination costs, for each year. In
addition, the carrying values of cash and cash equivalents, restricted cash,
escrow deposits, rents receivable (excluding Deferred Rent), accounts payable
and accrued expenses are reasonable estimates of their fair value.
    
 
Interest Rate Protection Agreements
 
     Equity Office Predecessors periodically entered into certain interest rate
protection agreements to effectively convert or cap floating rate debt to a
fixed rate basis, as well as to hedge anticipated finance transactions. Net
amounts paid or received under these agreements are recognized as an adjustment
to interest expense when such amounts are incurred or earned. Settlement amounts
paid or received in connection with terminated interest rate protection
agreements are deferred and amortized over the term of the related financing
transaction on the straight-line method, which approximates the effective yield
method.
 
Income Taxes
 
   
     The Office Properties, Parking Facilities and the Management Business are
primarily owned in limited partnerships or limited liability companies, which
are substantially pass-through entities. Some of these pass-through entities
have corporate general partners or members, which are subject to Federal and
state income and franchise taxes. Equity Office Predecessors incurred Federal
and state income and franchise taxes of approximately $278,200, $396,300,
$1,375,000 and $1,578,100 for the three months ended March 31, 1997 and 1996 and
for the years ended December 31, 1996 and 1995, respectively, which are included
in general and administrative expenses.
    
 
     The results of Equity Office Predecessors are included in the income tax
returns of the owners and, accordingly, the income tax obligations of the owners
have not been reflected in these financial statements.
 
Reclassification
 
   
     Certain reclassifications have been made to the previously reported 1996,
1995 and 1994 statements in order to provide comparability with the 1997
statements reported herein. These reclassifications have not changed the 1996,
1995 and 1994 results or Owners' Equity.
    
 
Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the
 
                                      F-26
<PAGE>   165
 
   
reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.
    
 
   
NOTE 3 - MORTGAGE DEBT AND REVOLVING LINES OF CREDIT:
    
 
Fixed Rate Debt
 
   
     As of March 31, 1997, December 31, 1996 and 1995, Equity Office
Predecessors had outstanding fixed rate mortgage indebtedness of approximately
$1,398,101,100, $1,304,075,400 and $900,912,800, respectively. Payments on fixed
rate mortgage debt are generally due in monthly installments of principal and
interest or interest only. As of March 31, 1997, December 31, 1996 and 1995,
fixed interest rates ranged from 6.88% to 9.01%, 6.88% to 10% and 6.75% to
10.25%, respectively. The weighted average fixed interest rate was approximately
7.81%, 7.89% and 8.01% as of March 31, 1997, December 31, 1996 and 1995,
respectively.
    
 
Variable Rate Debt
 
   
     As of March 31, 1997, December 31, 1996 and 1995, Equity Office
Predecessors had outstanding variable rate mortgage indebtedness of
approximately $543,747,900, $533,691,500 and $457,914,100, respectively.
Payments on variable rate mortgage debt are generally due in monthly
installments of principal and interest or interest only. As of March 31, 1997,
December 31, 1996 and 1995, variable interest rates ranged from 6.41% (LIBOR +
1%) to 7.69% (LIBOR + 2.25%), 6.56% (LIBOR + 1%) to 7.83% (LIBOR + 2.25%) and
6.75% (LIBOR + 1%) to 10.28% (LIBOR + 4.375%), respectively. The weighted
average variable interest rate was approximately 7.19%, 7.35% and 7.72% as of
March 31, 1997, December 31, 1996 and 1995, respectively.
    
 
Lines of Credit
 
   
     As of March 31, 1997, December 31, 1996 and 1995, Equity Office
Predecessors had amounts outstanding under lines of credit of approximately
$54,625,000, $127,125,000 and $76,000,000, respectively. The $200 million line
of credit ("$200 M Line") was obtained in October 1994 and canceled in September
1996. Interest was payable monthly based on the LIBOR + .625%. The $200 M line
was secured by the capital commitments of certain investors and was used to
finance acquisitions.
    
 
   
     A $275 million acquisition and term loan facility was obtained in September
1996 which matures in September 1999 (the "$275 M Facility"). Under the $275 M
Facility, Equity Office Predecessors may obtain six month unsecured and secured
loans ("Facility A Loans") and secured three year term loans ("Facility B
Loans") for office buildings and parking facilities. Equity Office Predecessors
may draw up to 50% of the purchase price of the property for secured and
unsecured Facility A Loans and up to 65% of the purchase price of the property
for Facility B Loans. The $275 M Facility is full recourse to Equity Office
Predecessors. Interest only is payable monthly with the interest based on
various LIBOR options (plus 1.625% on unsecured Facility A Loans, 1.5% on
secured Facility A Loans and 1.375% on Facility B Loans) or the prime rate. As
of March 31, 1997, Equity Office Predecessors had chosen a LIBOR option. (See
Note 12--Subsequent Events.)
    
 
Draw Facilities
 
   
     As stated in the respective loan agreements, Equity Office Predecessors has
the ability to draw additional proceeds on certain of its mortgages for
operating deficits, capital and tenant improvements, and lease acquisition
costs. As of March 31, 1997, December 31, 1996 and 1995, amounts available to
draw under these mortgage notes were approximately $75,581,300, $92,577,200 and
$134,218,100, respectively.
    
 
Interest Rate Protection Agreements
 
   
     In order to limit the market risk associated with variable rate debt,
Equity Office Predecessors entered into several interest rate protection
agreements. A $73,000,000 8% interest rate protection agreement based on the
three-month LIBOR at a total cost of 2.05% payable in quarterly installments of
approximately $66,600 was entered into in August 1993 and expires on August 14,
2000. A $100,000,000 7% interest rate protection agreement based on a
three-month LIBOR at a total cost of 1.67% payable in quarterly installments of
approximately $97,600 was entered into in August 1993 and expires on August 12,
1998. Equity Office Predecessors entered into an interest rate protection
agreement in October 1995 which fixes the interest
    
 
                                      F-27
<PAGE>   166
 
   
rate on a $93,600,000 loan at 6.94% through June 30, 2000. Amounts paid under
this interest rate protection agreement for the three months ended March 31,
1997 and 1996, and for the years ended December 31, 1996 and 1995 were
approximately $99,800, $91,600, $463,400 and $16,200, respectively. The costs
associated with these interest rate protection agreements have been included in
interest expense.
    
 
     In addition, Equity Office Predecessors entered into two interest rate
protection agreements totaling $179,500,000 as a hedge on two mortgages loans.
The interest rate protection agreements were terminated at a net cost to Equity
Office Predecessors of approximately $110,000. This amount will be amortized as
interest expense over the term of the respective mortgage loans.
 
   
     Scheduled payments of principal on mortgage debt and the revolving line of
credit for the remainder of 1997, each of the next five years and thereafter as
of March 31, 1997 were as follows:
    
 
   
<TABLE>
<S>                    <C>
Remaining 1997.......  $              53,204,500
1998.................                 98,004,500
1999.................                409,845,900
2000.................                260,729,200
2001.................                223,495,100
2002.................                177,279,700
Thereafter...........                773,915,100
                       -------------------------
                       $           1,996,474,000
                       =========================
</TABLE>
    
 
NOTE 4 - EXTRAORDINARY ITEMS AND PROVISION FOR VALUE IMPAIRMENT:
 
   
     As disclosed in Note 10, Equity Office Predecessors sold Barton Oaks Plaza
II in January 1997. Pursuant to the terms of the loan collateralizing the
property, Equity Office Predecessors repaid the $6,585,400 outstanding note
balance of Barton Oaks Plaza II and an additional $1,646,300 was used to repay a
portion of the outstanding note balance of Tampa Commons. Equity Office
Predecessors incurred $207,600 of prepayment penalties and recognized $67,400 of
unamortized loan costs in connection with the repayment. As a result, Equity
Office Predecessors recorded an extraordinary loss in the amount of $275,000 on
early extinguishment of debt.
    
 
     As reflected in the Combined Statement of Operations for the year ended
December 31, 1995, Equity Office Predecessors reported an extraordinary gain of
approximately $31,270,800 on the repurchase of debt, which is net of the
$20,034,600 minority partners' share, and a provision for value impairment of
approximately $20,248,500 related to Equity Office Predecessors' investment in
San Felipe Plaza Ltd.
 
     As reflected in the Combined Statement of Operations for the year ended
December 31, 1994, Equity Office Predecessors repaid the mortgage notes relating
to two properties at a 10% discount resulting in a gain on early extinguishment
of debt of approximately $1,704,900, which was net of approximately $499,900 in
prepayment penalties and the write-off of $547,600 of unamortized loan costs
incurred in connection with the refinancing of certain of Equity Office
Predecessors' properties.
 
   
NOTE 5 - INVESTMENT IN UNCONSOLIDATED JOINT VENTURE:
    
 
     Equity Office Predecessors acquired a mortgage receivable secured by the
500 Orange Tower Office Property ("500 Orange") and purchased land underlying
and adjacent to 500 Orange in July 1994. The mortgage note matures on June 30,
2013. The combined initial investment by Equity Office Predecessors'
subsidiaries amounted to $26,874,100, including acquisition expenses and fees.
Based upon the terms of the mortgage note, Equity Office Predecessors, as
lender, participates in residual profits, provides all cash needs required by
the property and can only look to the property to recover the loan. In addition,
100% of the income is allocated to Equity Office Predecessors. Accordingly, the
mortgage is analogous to an investment in a real estate limited partnership and
therefore is accounted for utilizing the equity method. Under such accounting
method, the net equity investment of Equity Office Predecessors is reflected on
the combined balance sheets, and the combined statements of operations include
Equity Office Predecessors' share of net income or loss from 500 Orange.
 
                                      F-28
<PAGE>   167
 
NOTE 6 - MINORITY INTERESTS:
 
     The following properties are controlled and partially owned by Equity
Office Predecessors but have partners with minority interests. Equity Office
Predecessors has included 100% of the financial condition and results of
operations of these properties in the Combined Financial Statements of Equity
Office Predecessors. The equity interests by the unaffiliated partners are
reflected as minority interests.
 
<TABLE>
<CAPTION>
                               EQUITY
                               OFFICE
                             PREDECESSOR
        PROPERTY              OWNERSHIP
- -------------------------    -----------
<S>                          <C>
CIGNA Center.............            95%(1)
Plaza at La Jolla
  Village................         66.67%(1)
First Union Center.......            97%(2)
San Felipe Plaza.........            35%(3)
Capital Commons Garage...            50%(4)
</TABLE>
 
1)  Equity Office Predecessors owns a controlling interest and is the managing
     general partner.
 
2)  Equity Office Predecessors owns a controlling interest and receives
     preferential allocations.
 
3)  An affiliate of Equity Office Predecessors controls the major operating and
     financing decisions of the property. Equity Office Predecessors receives
     preferential allocations which result in Equity Office Predecessors
     receiving 100% of the economic benefits.
 
4)  Equity Office Predecessors owns a controlling interest and receives
     preferential allocations. The unaffiliated partner is entitled to receive
     50% of the remaining cash flow after Equity Office Predecessors receives
     its preferential allocations.
 
     In addition to the properties listed above, Equity Office Predecessors owns
certain other properties, and has a controlling interest in such properties,
subject to minority or participating interests. Equity Office Predecessors is
entitled to 100% of the economic benefits of these properties subject to
diminution after Equity Office Predecessors receives specified preferential
returns. Accordingly, no minority interests are reflected for these unaffiliated
parties.
 
   
NOTE 7 - FUTURE MINIMUM RENTS:
    
 
   
     Future minimum rental receipts due on noncancelable operating leases at the
Office Properties and Parking Facilities as of December 31, 1996 were as
follows:
    
 
   
<TABLE>
<CAPTION>
 
<S>                      <C>
1997.................    $             452,618,100
1998.................                  425,503,500
1999.................                  378,930,400
2000.................                  324,634,500
2001.................                  261,674,200
Thereafter...........                1,069,271,200
                         -------------------------
                         $           2,912,631,900
                         =========================
</TABLE>
    
 
   
     Equity Office Predecessors is subject to the usual business risks
associated with the collection of the above scheduled rents.
    
 
   
     Equity Office Predecessors' investment in 500 Orange is accounted for
utilizing the equity method. Future minimum rental receipts for this Office
Property have not been included in the above schedule.
    
 
                                      F-29
<PAGE>   168
 
   
NOTE 8 - FUTURE MINIMUM LEASE PAYMENTS:
    
 
   
     Equity Office Predecessors' ownership of three of its Office Properties and
two of its Parking Facilities are subject to ground leases. As disclosed in
their respective ground lease agreements, certain of these leases are subject to
rental increases based upon the appraised value of the property at specified
dates or certain financial calculations of the respective property. As disclosed
in Note 9, Equity Office Predecessors leases its office space from an affiliate.
In addition, Equity Office Predecessors has assumed lease obligations of certain
of their tenants at their former locations. Future minimum lease obligations
under these noncancelable leases, net of sublease rental income, as of December
31, 1996 were as follows:
    
 
   
<TABLE>
<S>                                                       <C>
1997.............................................        $  2,554,700
1998.............................................           2,484,100
1999.............................................           2,466,900
2000.............................................           2,381,400
2001.............................................           2,262,700
Thereafter.......................................         369,366,900
                                                         ------------
                                                         $381,516,700
                                                         ============
</TABLE>
    
 
   
     Rental expense, net of sublease rental income of approximately $955,000 and
$712,900 for the years ended December 31, 1996 and 1995, was approximately
$1,671,800 and $1,043,300, respectively.
    
 
   
NOTE 9 - RELATED PARTY TRANSACTIONS:
    
 
   
     Affiliates provide various services to Equity Office Predecessors. Fees and
reimbursements paid by Equity Office Predecessors to affiliates for the three
months ended March 31, 1997 and 1996, and for the years ended December 31, 1996,
1995 and 1994 were as follows:
    
 
   
<TABLE>
<CAPTION>
                                PAID                                                                 PAYABLE AS OF
                         THREE MONTHS ENDED                       PAID                     ----------------------------------
                              MARCH 31,                 YEARS ENDED DECEMBER 31,           MARCH 31,        DECEMBER 31,
                       -----------------------   ---------------------------------------   ----------   ---------------------
                          1997         1996         1996          1995          1994          1997         1996        1995
                       ----------   ----------   -----------   -----------   -----------   ----------   ----------   --------
<S>                    <C>          <C>          <C>           <C>           <C>           <C>          <C>          <C>
Acquisition Fees
  (A)................  $  586,700   $       --   $ 3,067,800   $ 1,097,200   $ 5,818,900   $  190,600   $  586,700   $     --
Accounting and tax
  related services...      43,200      248,900       796,600       554,100       457,800      266,100       61,500     85,100
Legal fees and
  expenses (B).......     273,400      827,100     3,480,500     3,230,100     2,084,900    1,658,200    1,294,700    652,600
Office rent (C)......     221,200      213,400       777,100       668,000       543,300           --           --         --
Disposition fees.....          --           --       124,400            --            --           --           --         --
Development fees
  (D)................     101,600      198,300       702,100       437,500            --           --           --     43,800
Reimbursement of
  property insurance
  premiums...........      34,800        7,600     5,032,000     3,735,100     2,498,900    1,409,300          200     24,500
Organizational and
  Offering Expenses
  (E)................          --           --       777,600       179,700       515,100      105,600      105,600     16,200
Administrative
  services (F).......     155,900       87,000       821,600       608,700     1,635,200            0       20,600     16,800
Consulting...........     109,700           --       274,000       409,700       204,100       (4,700)       4,700         --
                       ----------   ----------   -----------   -----------   -----------   ----------   ----------   --------
                       $1,526,500   $1,582,300   $15,853,700   $10,920,100   $13,758,200   $3,625,100   $2,074,000   $839,000
                       ==========   ==========   ===========   ===========   ===========   ==========   ==========   ========
</TABLE>
    
 
(A) Represents amounts paid to Merrill Lynch, a limited partner of the general
     partner of the ZML Funds.
 
(B) Represents amounts primarily paid to Rosenberg & Liebentritt, P.C. for legal
     fees and expenses in connection with acquisition, corporate, and leasing
     activity.
 
                                      F-30
<PAGE>   169
 
(C) Equity Office Predecessors leases its corporate office space from an
     affiliate of the Equity Group Owners. Significant terms of the lease are as
     follows:
 
<TABLE>
<S>                                         <C>
Term:...................................    January 1, 1995 -- December 31, 2001
Total space leased:.....................    52,028 square feet
Base rent after December 31, 1996:
  1997..................................    $870,900
  1998..................................    $896,900
  1999..................................    $922,900
  2000..................................    $948,900
  2001..................................    $974,900
</TABLE>
 
     Additional rent: Tenant's pro rata share of certain additional landlord
costs in excess of 1995 costs.
 
(D) The renovation project at the 28 State Street Office Building is being
     managed by an affiliate of the Equity Group Owners. In consideration for
     their services, the development managers are being paid fees which
     management believes are equal to or less than market for such services.
 
(E) Affiliates of the Equity Group Owners were reimbursed for reasonable costs
     incurred in connection with the organization and the offering of units in
     the ZML Funds, including legal and accounting fees and expenses, printing
     costs and filing fees.
 
(F) Administrative services include fees paid by Equity Office Predecessors to
     EGI for centralized services such as payroll processing, employee benefits,
     telecommunications, publications, and consulting services such as economic
     and demographics research for possible acquisitions.
 
     An affiliate of the Equity Group Owners has an indirect interest in
Standard Parking Limited Partnership ("SPLP") which manages the parking
operations at certain Office Buildings that are owned by Equity Office
Predecessors. Management believes amounts paid to SPLP are equal to market for
such services.
 
Amounts received and due from affiliates
 
   
     Affiliates of Equity Office Predecessors lease space in certain of the
Office Properties owned by Equity Office Predecessors. The provisions of the
leases are consistent with terms of unaffiliated tenants' leases. Total rents
and other amounts paid by affiliates under the terms of their respective leases
were approximately $1,063,400, $744,000, $3,471,500 and $2,657,500 for the three
months ended March 31, 1997 and 1996 and years ended December 31, 1996 and 1995,
respectively.
    
 
   
     Equity Office Predecessors provides asset and property management services
to certain non-combined office and garage properties owned by affiliates of the
Equity Group Owners . Amounts due for these services as of March 31, 1997, and
December 31, 1996 and 1995 were approximately $452,500, $816,900 and $1,363,300,
respectively.
    
 
   
     Equity Office Predecessors entered into various lease agreements with SPLP
whereby SPLP leased the North Loop Transportation Center Parking Facility, the
Milwaukee Center Parking Garage and the Boston Harbor Garage from Equity Office
Predecessors. Certain of these lease agreements provide SPLP with annual
successive options to extend the term of the lease through various dates. The
rent paid in the three months ended March 31, 1997 and 1996, and in the years
ended December 31, 1996 and 1995 under these lease agreements was approximately
$2,176,800, $753,700, $3,161,500 and $1,691,600, respectively. The annual rent
to be paid to Equity Office Predecessors for 1997 is approximately $10,102,800.
In addition, Equity Office Predecessors may receive additional rent based upon
actual gross revenues generated by these Parking Facilities. In accordance with
certain of these leases, Equity Office Predecessors may be obligated to make an
early termination payment if agreement is not reached as to rent amounts to be
paid.
    
 
                                      F-31
<PAGE>   170
 
   
NOTE 10 - DISPOSITIONS:
    
 
   
1) In January 1997, Equity Office Predecessors sold Barton Oaks Plaza II for a
   gross sales price of approximately $13,535,000. Approximately $6,585,400 of
   the sales proceeds were used to repay the outstanding note balance of Barton
   Oaks Plaza II and an additional $1,646,300 was used to repay a portion of the
   outstanding note balance of Tampa Commons.
    
 
   
2) Three Lakeway is a mixed use property, including a 210 room hotel and an
   18-story office complex. In January, 1996, Equity Office Predecessors sold
   the condominium portion of the property which comprised the hotel. The gross
   sale price attributable to the land and building was approximately
   $14,800,000 and the gain realized was approximately $5,338,200. Pursuant to
   the terms of the loan collateralizing the property; approximately
   $10,617,7500 of the sales proceeds were applied to the outstanding note
   balances.
    
 
   
NOTE 11 - COMMITMENTS AND CONTINGENCIES:
    
 
Concentration of Credit Risk
 
     Equity Office Predecessors maintains its cash and cash equivalents at
financial institutions. The combined account balances at each institution
periodically exceeds FDIC insurance coverage, and, as a result, there is a
concentration of credit risk related to amounts on deposit in excess of FDIC
insurance coverage. Management of Equity Office Predecessors believes that the
risk is not significant. In addition, Equity Office Predecessors believes it has
limited exposure to the extent of non-performance by the swap counterparties
since each counterparty is a major U.S. financial institution, and management
does not anticipate their non-performance.
 
Environmental
 
     Equity Office Predecessors, as an owner of real estate, is subject to
various environmental laws of Federal and local governments. Compliance by
Equity Office Predecessors with existing laws has not had a material adverse
effect on Equity Office Predecessors' financial condition and results of
operations, and management does not believe it will have such an impact in the
future. However, Equity Office Predecessors cannot predict the impact of new or
changed laws or regulations on its current properties or on properties that it
may acquire in the future.
 
Litigation
 
     ZML-Chicago Parking Limited Partnership ("ZCP") and ZML-North Loop/Theatre
District Parking Limited Partnership ("NLT"), were named as defendants in an
action (the "Action") brought by an investor (the "Plaintiff") in an
unaffiliated entity owning an interest in NLT. NLT is the owner of two Parking
Facilities, North Loop Transportation Center and Theatre District Self Park
("Theatre District Garage"). The Plaintiff demands rescission of certain
transactions related to the acquisition by NLT of the Theatre District Garage. A
sustained judgment in favor of the Plaintiff could result in the loss of Equity
Office Predecessors' interest in the Theatre District Garage. This action is in
its discovery stage. Although the outcome cannot be predicted with any
certainty, Equity Office Predecessors believes that ZCP and NLT have substantial
meritorious defenses to all asserted claims and that Equity Office Predecessors
will not incur a loss in connection with the Action.
 
     During 1996, Equity Office Predecessors and certain other parties filed
actions (the "Lawsuit") against Rockefeller Center Properties, Inc. ("RCPI")
seeking specific performance of certain agreements between the parties. In
November 1996, the parties settled all matters related to the Lawsuit. The
settlement provided that RCPI pay approximately $10,274,000, of which Equity
Office Predecessors was entitled to and received approximately $8,806,500, net
of expenses, which has been recorded as other income.
 
   
     Except as described above, management of Equity Office Predecessors does
not believe there is any litigation threatened against Equity Office
Predecessors other than routine litigation arising out of the ordinary course of
business, some of which is expected to be covered by liability insurance, none
of which is expected to have a material adverse effect on the combined financial
statements of Equity Office Predecessors.
    
 
                                      F-32
<PAGE>   171
 
   
NOTE 12 - SUBSEQUENT EVENTS:
    
 
   
     The following transactions occurred subsequent to March 31, 1997:
    
 
   
Financing Activities (refer to Schedule III for information regarding the
collateralization of Capitol Commons Garage)
    
 
   
1)  In April 1997, Equity Office Predecessors amended and restated the
     $275,000,000 Line to a $475,000,000 unsecured revolving credit facility
     (the "475,000,000 Line"). Under the $475,000,000 Line, Equity Office
     Predecessors may draw amounts equal to the lesser of a) 65% or 50% of the
     purchase price of certain office buildings or parking facilities,
     respectively, or b) an amount based on net operating income for such
     property. The $475,000,000 Line will mature on October 21, 1997 and may be
     extended to April 20, 1998 upon the satisfaction of certain conditions.
     Interest only will be payable monthly with the interest based on various
     LIBOR options plus 1.625% or the prime rate. Equity Office Predecessors has
     chosen the LIBOR option. As of June 12, 1997, Equity Office Predecessors
     has drawn an additional $218,000,000 under the $475,000,000 Line bringing
     the total amount drawn to $272,625,000.
    
 
   
2)  In May 1997, Equity Office Predecessors obtained financing for the Capital
     Commons Garage in the amount of $4,500,000. The term of the loan is 10
     years with a fixed interest rate of 7.83% and with scheduled principal and
     interest payments due monthly.
    
 
   
3)  In May, 1997, Equity Office Predecessors repaid the outstanding mortgage
     indebtedness and accrued interest collateralizing the Denver Corporate
     Center Towers II and III of approximately $14,941,800.
    
 
   
4)  In June 1997, Equity Office Predecessors executed various semi-bond,
     quarterly compounding interest rate protection agreements for $700,000,000
     in indebtedness. The $700,000,000 interest rate protection agreements are
     composed of various tranches with various interest rates and maturities.
     The weighted average interest rate is approximately 6.715% and the weighted
     average maturity is 5.21 years.
    
 
   
Acquisition Activities
    
 
   
1)  In April 1997, Equity Office Predecessors, through its subsidiaries,
     purchased from an unaffiliated party, Oakbrook Terrace, an office building,
     located in Oakbrook, Illinois. The purchase price of approximately
     $130,100,000 includes acquisition related expenses.
    
 
   
2)  In April 1997, Equity Office Predecessors, through its subsidiaries,
     purchased from an unaffiliated party, a 50% interest in the St. Louis
     Parking Garages, located in St. Louis, Missouri. The purchase price of
     approximately $45,800,000 includes acquisition related expenses.
    
 
   
3)  In April, 1997, Equity Office Predecessors, through its subsidiaries,
     purchased from an unaffiliated party, One Maritime Plaza, an office
     building located in San Francisco, California. The purchase price of
     approximately $99,400,000 includes acquisition related expenses.
    
 
   
4)  In April 1997, Equity Office Predecessors, through its subsidiaries,
     purchased from an unaffiliated party, Smith Barney Tower, an office
     building located in San Diego, California. The purchase price of
     approximately $35,100,000 includes acquisition related expenses.
    
 
   
5)  In April 1997, Equity Office Predecessors, through its subsidiaries,
     purchased from an unaffiliated party, 201 Mission Street, an office
     building located in San Francisco, California. The purchase price of
     approximately $74,700,000 includes acquisition related expenses.
    
 
   
6)  In June 1997, Equity Office Predecessors, through its subsidiaries,
     purchased from an unaffiliated party, 30 N. LaSalle Street, an office
     building located in Chicago, Illinois. The purchase price of approximately
     $100,500,000 includes acquisition related expenses.
    
 
   
Disposition Activities
    
 
   
  In May 1997, Equity Office Predecessors, through its subsidiaries, sold 8383
  Wilshire, an office building located in Beverly Hills, California, for a gross
  sale price of approximately $59,000,000.
    
 
                                      F-34
<PAGE>   172
 
   
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION AS OF DECEMBER 31,
1996(7)(8)
    

   
<TABLE>
<CAPTION>
 
                                                                                                   INITIAL COST TO COMPANY
                                                                                                -----------------------------
                                                                           DECEMBER 31, 1996                   BUILDINGS AND
                   DESCRIPTION                            LOCATION           ENCUMBRANCES           LAND        IMPROVEMENTS
                   -----------                            --------         -----------------    ------------   --------------
<S>                                                 <C>                    <C>                  <C>            <C>
Office Properties:
60 Spear Street Building..........................  San Francisco, CA       $    9,302,600(5)   $  4,149,900   $   12,402,400
San Felipe Plaza (3)..............................  Houston, TX                 54,265,700        10,032,200      116,545,700
Dominion Tower....................................  Norfolk, VA                 23,440,300(5)      3,806,300       38,354,400
Summit Office Park................................  Ft. Worth, TX                5,860,100(5)        865,000        7,785,100
CIGNA Center......................................  Oklahoma City, OK              732,500(5)        206,200        1,855,400
Tampa Commons.....................................  Tampa, FL                   16,603,500(5)      2,588,600       23,305,900
Intercontinental Center...........................  Houston, TX                  6,226,300(5)      1,043,100        7,508,000
First Union Center................................  Ft. Lauderdale, FL          16,603,500(5)      4,174,100       31,352,000
Four Forest.......................................  Dallas, TX                  17,067,400(5)      3,886,900       34,981,500
Northborough Tower................................  Houston, TX                  7,032,100(5)        676,500        6,060,700
500 Marquette Building............................  Albuquerque, NM             11,329,500(5)      2,490,600       22,415,300
Atrium Towers.....................................  Oklahoma City, OK            1,611,500(5)        433,200        3,898,700
One Clearlake Centre..............................  W. Palm Beach, FL                    0         2,606,200       23,455,800
Barton Oaks Plaza II..............................  Austin, TX                   6,592,600(5)        779,600        7,016,300
Community Corporate Center........................  Columbus, OH                17,412,700         2,423,200       21,808,900
Sarasota City Center..............................  Sarasota, FL                11,720,100(5)      2,109,500       19,213,200
Denver Corporate Center Towers II and III.........  Denver, CO                  15,037,100         2,304,400       20,739,200
University Tower..................................  Durham, NC                  11,207,400(5)        916,700        8,250,400
8383 Wilshire.....................................  Beverly Hills, CA                    0         9,362,700       42,206,700
San Jacinto Center................................  Austin, TX                  18,212,300         2,753,700       24,783,800
1111 19th Street, N.W.............................  Washington DC               18,752,200(5)      3,259,400       29,343,200
Shelton Pointe....................................  Shelton, CT                          0           522,400        4,702,000
Bank One Center...................................  Indianapolis, IN            84,250,000        11,652,700      104,874,400
North Central Plaza Three.........................  Dallas, TX                  15,035,400         1,775,100       15,976,200
The Quadrant......................................  Englewood, CO               18,000,000         2,579,500       23,215,000
Canterbury Green..................................  Stamford, CT                19,250,000                 0       25,983,000
Three Stamford Plaza..............................  Stamford, CT                16,750,000         1,477,900       13,301,100
Union Square......................................  San Antonio, TX              6,750,000         1,023,000        9,206,700
One North Franklin................................  Chicago, IL                 65,150,400         4,414,800       39,723,000
1620 L Street.....................................  Washington, DC              21,328,400         2,760,900       24,848,400
One and Two Stamford Plaza........................  Stamford, CT                45,791,600         5,932,800       53,395,000
300 Atlantic Street...............................  Stamford, CT                28,309,800         3,433,500       30,901,300
Sterling Plaza....................................  Dallas, TX                  15,738,700         2,086,600       19,180,800
 
<CAPTION>
                                                        COSTS CAPITALIZED
                                                           SUBSEQUENT              GROSS AMOUNT CARRIED AT
                                                         TO ACQUISITION               DECEMBER 31, 1996
                                                    -------------------------   -----------------------------
                                                                BUILDINGS AND                  BUILDINGS AND
                   DESCRIPTION                        LAND      IMPROVEMENTS        LAND        IMPROVEMENTS       TOTAL(1)
                   -----------                      ---------   -------------   ------------   --------------   --------------
<S>                                                 <C>         <C>             <C>            <C>              <C>
Office Properties:
60 Spear Street Building..........................  $       0   $ 12,301,800    $  4,149,900   $   24,704,200   $   28,854,100
San Felipe Plaza (3)..............................          0     (2,296,200)     10,032,200      114,249,500      124,281,700
Dominion Tower....................................          0      7,191,600       3,806,300       45,546,000       49,352,300
Summit Office Park................................          0      4,077,600         865,000       11,862,700       12,727,700
CIGNA Center......................................          0        768,900         206,200        2,624,300        2,830,500
Tampa Commons.....................................     32,800      2,309,000       2,621,400       25,614,900       28,236,300
Intercontinental Center...........................          0      3,407,300       1,043,100       10,915,300       11,958,400
First Union Center................................          0      4,898,900       4,174,100       36,250,900       40,425,000
Four Forest.......................................     26,900      4,958,500       3,913,800       39,940,000       43,853,800
Northborough Tower................................    363,500      4,406,500       1,040,000       10,467,200       11,507,200
500 Marquette Building............................          0      1,965,400       2,490,600       24,380,700       26,871,300
Atrium Towers.....................................          0      1,889,300         433,200        5,788,000        6,221,200
One Clearlake Centre..............................          0      4,304,100       2,606,200       27,759,900       30,366,100
Barton Oaks Plaza II..............................          0        939,100         779,600        7,955,400        8,735,000
Community Corporate Center........................          0      3,565,700       2,423,200       25,374,600       27,797,800
Sarasota City Center..............................          0      3,308,300       2,109,500       22,521,500       24,631,000
Denver Corporate Center Towers II and III.........          0      3,829,100       2,304,400       24,568,300       26,872,700
University Tower..................................          0      1,868,900         916,700       10,119,300       11,036,000
8383 Wilshire.....................................          0      6,462,600       9,362,700       48,669,300       58,032,000
San Jacinto Center................................          0      5,494,600       2,753,700       30,278,400       33,032,100
1111 19th Street, N.W.............................          0     11,329,100       3,259,400       40,672,300       43,931,700
Shelton Pointe....................................          0      3,456,600         522,400        8,158,600        8,681,000
Bank One Center...................................          0      9,622,900      11,652,700      114,497,300      126,150,000
North Central Plaza Three.........................          0      3,158,700       1,775,100       19,134,900       20,910,000
The Quadrant......................................          0      2,406,400       2,579,500       25,621,400       28,200,900
Canterbury Green..................................          0      1,442,700               0       27,425,700       27,425,700
Three Stamford Plaza..............................          0      5,534,000       1,477,900       18,835,100       20,313,000
Union Square......................................          0      1,656,100       1,023,000       10,862,800       11,885,800
One North Franklin................................          0     27,297,800       4,414,800       67,020,800       71,435,600
1620 L Street.....................................          0      1,419,100       2,760,900       26,267,500       29,028,400
One and Two Stamford Plaza........................          0      5,958,900       5,932,800       59,353,900       65,286,700
300 Atlantic Street...............................          0      8,146,600       3,433,500       39,047,900       42,481,400
Sterling Plaza....................................          0      2,239,300       2,086,600       21,420,100       23,506,700
 
<CAPTION>
 
                                                    ACCUMULATED       DATE         DATE     DEPRECIABLE
                   DESCRIPTION                      DEPRECIATION   CONSTRUCTED   ACQUIRED    LIVES(2)
                   -----------                      ------------   -----------   --------   -----------
<S>                                                 <C>            <C>           <C>        <C>
Office Properties:
60 Spear Street Building..........................  $ 5,553,000          1967    09/29/87        40
San Felipe Plaza (3)..............................   37,243,000          1984    09/29/87        40
Dominion Tower....................................    8,142,400          1987    07/25/89        40
Summit Office Park................................    2,682,900          1974    03/01/89        40
CIGNA Center......................................      636,700          1974    03/01/89        40
Tampa Commons.....................................    5,598,100          1985    04/25/89        40
Intercontinental Center...........................    2,173,000          1983    06/28/89        40
First Union Center................................    5,402,000          1991    06/28/89        40
Four Forest.......................................    8,330,500          1985    06/29/89        40
Northborough Tower................................    1,946,500          1983    08/03/89        40
500 Marquette Building............................    4,909,000          1985    08/15/89        40
Atrium Towers.....................................    1,324,600          1980    12/15/89        40
One Clearlake Centre..............................    5,515,600          1987    12/29/89        40
Barton Oaks Plaza II..............................    1,456,200       1984-85    05/24/90        40
Community Corporate Center........................    4,956,700          1987    06/14/90        40
Sarasota City Center..............................    4,091,400          1989    09/28/90        40
Denver Corporate Center Towers II and III.........    5,137,400       1981-82    12/20/90        40
University Tower..................................    1,940,800          1987    10/16/91        40
8383 Wilshire.....................................    6,731,700          1971    11/27/91        40
San Jacinto Center................................    4,855,400          1987    12/13/91        40
1111 19th Street, N.W.............................    5,954,900          1979    12/18/91        40
Shelton Pointe....................................    1,759,200          1985    11/26/91        40
Bank One Center...................................   14,561,100          1990     3/24/92        40
North Central Plaza Three.........................    3,094,800          1986     4/21/92        40
The Quadrant......................................    3,017,200          1985     12/1/92        40
Canterbury Green..................................    2,801,100          1987    12/15/92        40
Three Stamford Plaza..............................    2,421,000          1980    12/15/92        40
Union Square......................................    1,579,100          1986    12/23/92        40
One North Franklin................................    8,432,800          1991    12/31/92        40
1620 L Street.....................................    3,087,900          1989      2/5/93        40
One and Two Stamford Plaza........................    6,165,300          1986     3/30/93        40
300 Atlantic Street...............................    3,869,000          1987     3/30/93        40
Sterling Plaza....................................    2,359,600          1984     6/25/93        40

</TABLE>
    
 
                                      F-35
<PAGE>   173
 
   
SCHEDULE III (CONTINUED)
    

<TABLE>
<CAPTION>
 
                                                                                                   INITIAL COST TO COMPANY
                                                                                                -----------------------------
                                                                           DECEMBER 31, 1996                   BUILDINGS AND
                   DESCRIPTION                            LOCATION           ENCUMBRANCES           LAND        IMPROVEMENTS
                   -----------                            --------         -----------------    ------------   --------------
<S>                                                 <C>                    <C>                  <C>            <C>
1700 Higgins Centre...............................  Des Plaines, IL             3,535,000(6)         577,800        5,200,400
Northwest Center..................................  San Antonio, TX             6,762,000(6)       1,108,000        9,971,800
Franklin Plaza....................................  Austin, TX                 35,657,600(6)       5,805,800       52,252,400
One Crosswoods Center.............................  Columbus, OH                3,608,200(6)         523,500        5,432,500
One Columbus......................................  Columbus, OH               30,739,300(6)       5,024,900       45,223,900
Westshore Center..................................  Tampa, FL                   7,377,400(6)       1,192,400       10,544,900
One Lakeway.......................................  Metairie, LA               10,144,000(6)       1,641,400       14,772,400
Two Lakeway.......................................  Metairie, LA               15,369,600(6)       2,510,600       22,601,700
Three Lakeway.....................................  Metairie, LA               17,802,800(6)       3,773,600       34,088,800
NationsBank Plaza.................................  Nashville, TN              19,008,800          2,543,800       22,894,000
Plaza at La Jolla Village.........................  San Diego, CA              59,506,700          9,406,300       66,150,000
Interco Corporate Tower...........................  Clayton, MO                22,661,200          3,603,700       32,433,100
9400 NCX..........................................  Dallas, TX                 14,301,700          1,416,800       12,750,300
Four Stamford Plaza...............................  Stamford, CT               16,000,000          1,367,200       12,303,100
1920 Main Street (Koll Center Irvine North-West
 Tower)...........................................  Irvine, CA                 30,684,900          4,196,700       37,770,200
One Paces West....................................  Atlanta, GA                19,500,000          3,289,500       29,605,800
Two Paces West....................................  Atlanta, GA                28,200,000          6,859,800       42,805,600
One Market Plaza..................................  San Francisco, CA         148,640,500         23,327,000      209,057,500
2010 Main Street (Koll Center Irvine North-East
 Tower)...........................................  Irvine, CA                 25,900,000          3,815,100       33,715,400
1100 Executive Tower..............................  Orange, CA                          0          2,887,600       25,960,500
28 State Street (4)...............................  Boston, MA                 25,808,700          2,539,200       22,925,100
850 Third Avenue..................................  New York, NY               54,200,000          7,044,200       63,398,000
161 North Clark (formerly known as Chicago Title &
 Trust Building)..................................  Chicago, IL               106,512,000         11,801,700      107,201,800
Wachovia Center...................................  Charlotte, NC              27,351,300          4,210,500       37,849,900
Central Park Office Park..........................  Atlanta, GA                57,000,000          7,573,200       68,158,900
One American Center...............................  Austin, TX                 44,250,000                  0       59,037,100
Pasadena Towers...................................  Pasadena, CA               47,839,100          8,018,700       72,104,200
580 California Street.............................  San Francisco, CA          32,067,000          5,256,400       47,268,600
1601 Market Street................................  Philadelphia, PA           24,379,600          3,521,200       31,656,900
Promenade II......................................  Atlanta, GA                97,288,900         17,994,500      132,102,800
Two California Plaza..............................  Los Angeles, CA            54,766,300                  0       99,080,800
 
<CAPTION>
                                                        COSTS CAPITALIZED
                                                           SUBSEQUENT              GROSS AMOUNT CARRIED AT
                                                         TO ACQUISITION               DECEMBER 31, 1996
                                                    -------------------------   -----------------------------
                                                                BUILDINGS AND                  BUILDINGS AND
                   DESCRIPTION                        LAND      IMPROVEMENTS        LAND        IMPROVEMENTS       TOTAL(1)
                   -----------                      ---------   -------------   ------------   --------------   --------------
<S>                                                 <C>         <C>             <C>            <C>              <C>
1700 Higgins Centre...............................          0      2,455,000         577,800        7,655,400        8,233,200
Northwest Center..................................          0      3,299,500       1,108,000       13,271,300       14,379,300
Franklin Plaza....................................          0      2,110,300       5,805,800       54,362,700       60,168,500
One Crosswoods Center.............................          0      1,165,900         523,500        6,598,400        7,121,900
One Columbus......................................          0      2,499,900       5,024,900       47,723,800       52,748,700
Westshore Center..................................          0      2,087,500       1,192,400       12,632,400       13,824,800
One Lakeway.......................................          0      5,381,900       1,641,400       20,154,300       21,795,700
Two Lakeway.......................................          0      6,917,100       2,510,600       29,518,800       32,029,400
Three Lakeway.....................................   (963,300)    (4,363,800)      2,810,300       29,725,000       32,535,300
NationsBank Plaza.................................          0      4,049,900       2,543,800       26,943,900       29,487,700
Plaza at La Jolla Village.........................          0      8,002,300       9,406,300       74,152,300       83,558,600
Interco Corporate Tower...........................          0      1,390,500       3,603,700       33,823,600       37,427,300
9400 NCX..........................................          0      6,050,400       1,416,800       18,800,700       20,217,500
Four Stamford Plaza...............................          0      7,050,200       1,367,200       19,353,300       20,720,500
1920 Main Street (Koll Center Irvine North-West
 Tower)...........................................          0      2,221,200       4,196,700       39,991,400       44,188,100
One Paces West....................................          0      1,043,200       3,289,500       30,649,000       33,938,500
Two Paces West....................................          0      1,044,700       6,859,800       43,850,300       50,710,100
One Market Plaza..................................          0     15,115,700      23,327,000      224,173,200      247,500,200
2010 Main Street (Koll Center Irvine North-East
 Tower)...........................................          0        842,400       3,815,100       34,557,800       38,372,900
1100 Executive Tower..............................          0      5,218,200       2,887,600       31,178,700       34,066,300
28 State Street (4)...............................          0     63,029,200       2,539,200       85,954,300       88,493,500
850 Third Avenue..................................          0     10,857,300       7,044,200       74,255,300       81,299,500
161 North Clark (formerly known as Chicago Title &
 Trust Building)..................................          0      7,396,400      11,801,700      114,598,200      126,399,900
Wachovia Center...................................          0        280,500       4,210,500       38,130,400       42,340,900
Central Park Office Park..........................          0      2,766,500       7,573,200       70,925,400       78,498,600
One American Center...............................          0      1,221,800               0       60,258,900       60,258,900
Pasadena Towers...................................          0        473,400       8,018,700       72,577,600       80,596,300
580 California Street.............................          0      2,479,700       5,256,400       49,748,300       55,004,700
1601 Market Street................................          0      3,771,100       3,521,200       35,428,000       38,949,200
Promenade II......................................          0         64,200      17,994,500      132,167,000      150,161,500
Two California Plaza..............................          0      4,275,100               0      103,355,900      103,355,900
 
<CAPTION>
 
                                                    ACCUMULATED       DATE         DATE     DEPRECIABLE
                   DESCRIPTION                      DEPRECIATION   CONSTRUCTED   ACQUIRED    LIVES(2)
                   -----------                      ------------   -----------   --------   -----------
<S>                                                 <C>            <C>           <C>        <C>
1700 Higgins Centre...............................      847,400          1986    11/12/93        40
Northwest Center..................................    1,454,100          1984    11/12/93        40
Franklin Plaza....................................    4,332,400          1987    11/12/93        40
One Crosswoods Center.............................      874,600          1984    11/12/93        40
One Columbus......................................    4,094,700          1987    11/12/93        40
Westshore Center..................................    1,295,700          1984    11/12/93        40
One Lakeway.......................................    1,720,400          1981    11/12/93        40
Two Lakeway.......................................    2,899,100          1984    11/12/93        40
Three Lakeway.....................................    2,761,500          1987    11/12/93        40
NationsBank Plaza.................................    2,557,400          1977     12/1/93        40
Plaza at La Jolla Village.........................    5,996,200       1987-90     3/10/94        40
Interco Corporate Tower...........................    2,446,900          1986     5/27/94        40
9400 NCX..........................................    1,345,800          1981     6/24/94        40
Four Stamford Plaza...............................    1,188,100          1979     8/31/94        40
1920 Main Street (Koll Center Irvine North-West
 Tower)...........................................    2,586,900          1988     9/29/94        40
One Paces West....................................    1,680,300          1987    10/31/94        40
Two Paces West....................................    2,500,400          1990     11/3/94        40
One Market Plaza..................................   12,071,500          1976    11/22/94        40
2010 Main Street (Koll Center Irvine North-East
 Tower)...........................................    1,797,100          1988    12/13/94        40
1100 Executive Tower..............................    1,692,700          1987    12/15/94        40
28 State Street (4)...............................            0          1968     1/23/95        40
850 Third Avenue..................................    3,143,300          1960     3/20/95        40
161 North Clark (formerly known as Chicago Title &
 Trust Building)..................................    4,171,200          1992     7/26/95        40
Wachovia Center...................................    1,231,400          1972      9/1/95        40
Central Park Office Park..........................    2,277,400          1986    10/17/95        40
One American Center...............................    1,693,600          1984     11/1/95        40
Pasadena Towers...................................    1,880,400       1990-91    12/14/95        40
580 California Street.............................    1,272,400          1984    12/21/95        40
1601 Market Street................................      947,100          1970     1/18/96        40
Promenade II......................................    1,790,700          1990     6/14/96        40
Two California Plaza..............................      984,300          1992     8/23/96        40

</TABLE>
 
                                      F-36
<PAGE>   174
 
   
SCHEDULE III (CONTINUED)
    
   
<TABLE>
<CAPTION>
 
                                                                                                   INITIAL COST TO COMPANY
                                                                                                -----------------------------
                                                                           DECEMBER 31, 1996                   BUILDINGS AND
                   DESCRIPTION                            LOCATION           ENCUMBRANCES           LAND        IMPROVEMENTS
                   -----------                            --------         -----------------    ------------   --------------
<S>                                                 <C>                    <C>                  <C>            <C>
BP Tower..........................................  Cleveland, OH                        0        14,663,700      131,982,100
Sun Trust Center..................................  Orlando, FL                          0        11,043,900       99,394,600
Reston Town Center................................  Reston, VA                  92,400,000        15,504,400      139,539,500
Colonnade I.......................................  San Antonio, TX                      0         1,228,600       11,057,200
One Phoenix Plaza.................................  Phoenix, AZ                          0         6,727,000       60,542,300
                                                                            --------------      ------------   --------------
Subtotal Office Properties........................                          $1,784,626,300      $300,525,900   $2,777,423,600
                                                                            --------------      ------------   --------------
Parking Facilities:
North Loop Transportation Center..................  Chicago, IL             $            0      $  2,994,600   $   26,959,600
Theatre District Self Park........................  Chicago, IL                 16,276,800         2,322,000       20,918,300
Capitol Commons Garage............................  Indianapolis, IN                     0                 0        5,184,700
Boston Harbor Garage..............................  Boston, MA                  36,863,800         5,560,700       50,046,200
Milwaukee Center Parking Garage...................  Milwaukee, WI                        0                 0        4,534,800
15th & Sansom Streets.............................  Philadelphia, PA                     0           650,900        5,857,600
1616 Chancellor Street............................  Philadelphia, PA                     0           638,000        5,741,700
Juniper/Locust Streets............................  Philadelphia, PA                     0           516,900        4,651,700
1616 Sansom Street................................  Philadelphia, PA                     0           382,800        3,445,800
1111 Sansom Street................................  Philadelphia, PA                     0         1,318,600                0
                                                                            --------------      ------------   --------------
Subtotal Parking Facilities.......................                          $   53,140,600      $ 14,384,500   $  127,340,400
                                                                            --------------      ------------   --------------
Investment in Real Estate.........................                          $1,837,766,900      $314,910,400   $2,904,764,000
                                                                            ==============      ============   ==============
 
<CAPTION>
                                                        COSTS CAPITALIZED
                                                           SUBSEQUENT              GROSS AMOUNT CARRIED AT
                                                         TO ACQUISITION               DECEMBER 31, 1996
                                                    -------------------------   -----------------------------
                                                                BUILDINGS AND                  BUILDINGS AND
                   DESCRIPTION                        LAND      IMPROVEMENTS        LAND        IMPROVEMENTS       TOTAL(1)
                   -----------                      ---------   -------------   ------------   --------------   --------------
<S>                                                 <C>         <C>             <C>            <C>              <C>
BP Tower..........................................          0        131,000      14,663,700      132,113,100      146,776,800
Sun Trust Center..................................          0         50,000      11,043,900       99,444,600      110,488,500
Reston Town Center................................          0         35,800      15,504,400      139,575,300      155,079,700
Colonnade I.......................................          0         12,200       1,228,600       11,069,400       12,298,000
One Phoenix Plaza.................................          0              0       6,727,000       60,542,300       67,269,300
                                                    ---------   ------------    ------------   --------------   --------------
Subtotal Office Properties........................  $(540,100)  $329,745,400    $299,985,800   $3,107,169,000   $3,407,154,800
                                                    ---------   ------------    ------------   --------------   --------------
Parking Facilities:
North Loop Transportation Center..................  $       0   $    173,100    $  2,994,600   $   27,132,700   $   30,127,300
Theatre District Self Park........................          0        115,700       2,322,000       21,034,000       23,356,000
Capitol Commons Garage............................          0        539,100               0        5,723,800        5,723,800
Boston Harbor Garage..............................          0              0       5,560,700       50,046,200       55,606,900
Milwaukee Center Parking Garage...................          0              0               0        4,534,800        4,534,800
15th & Sansom Streets.............................          0              0         650,900        5,857,600        6,508,500
1616 Chancellor Street............................          0              0         638,000        5,741,700        6,379,700
Juniper/Locust Streets............................          0              0         516,900        4,651,700        5,168,600
1616 Sansom Street................................          0              0         382,800        3,445,800        3,828,600
1111 Sansom Street................................          0              0       1,318,600                0        1,318,600
                                                    ---------   ------------    ------------   --------------   --------------
Subtotal Parking Facilities.......................  $       0   $    827,900    $ 14,384,500   $  128,168,300   $  142,552,800
                                                    ---------   ------------    ------------   --------------   --------------
Investment in Real Estate.........................  $(540,100)  $330,573,300    $314,370,300   $3,235,337,300   $3,549,707,600
                                                    =========   ============    ============   ==============   ==============
 
<CAPTION>
 
                                                    ACCUMULATED       DATE         DATE     DEPRECIABLE
                   DESCRIPTION                      DEPRECIATION   CONSTRUCTED   ACQUIRED    LIVES(2)
                   -----------                      ------------   -----------   --------   -----------
<S>                                                <C>             <C>           <C>        <C>
BP Tower..........................................      962,400          1985      9/4/96        40
Sun Trust Center..................................      724,900          1988     9/18/96        40
Reston Town Center................................      726,700          1990    10/22/96        40
Colonnade I.......................................       11,500          1983     12/4/96        40
One Phoenix Plaza.................................       63,000          1989     12/4/96        40
                                                   ------------
Subtotal Office Properties........................ $255,753,400
                                                   ------------
Parking Facilities:
North Loop Transportation Center.................. $  1,038,800          1985      6/9/95        40
Theatre District Self Park........................      819,300          1987      6/9/95        40
Capitol Commons Garage............................      209,300          1987     6/29/95        40
Boston Harbor Garage..............................       52,100          1972    12/10/96        40
Milwaukee Center Parking Garage...................            0          1988    12/18/96        40
15th & Sansom Streets.............................        6,100       1950-54    12/27/96        40
1616 Chancellor Street............................        6,000      c1945-55    12/27/96        40
Juniper/Locust Streets............................        4,800       1949-52    12/27/96        40
1616 Sansom Street................................        3,500         c1950    12/27/96        40
1111 Sansom Street................................            0           N/A    12/27/96       N/A
                                                   ------------
Subtotal Parking Facilities....................... $  2,139,900
                                                   ------------
Investment in Real Estate......................... $257,893,300
                                                   ============
</TABLE>
    
 
(1) The aggregate cost for Federal Income Tax purposes as of December 31, 1996
    was approximately $3.5 billion.
 
(2) The life to compute depreciation on building is 40 years. The life to
    compute depreciation on building improvements is 4-40 years.
 
(3) During 1995, concurrent with the restructuring of its mortgage on the
    property, Equity Office Predecessors reduced its carrying basis in San
    Felipe Plaza by recording a write down for value impairment of $20,248,500.
    This write down included adjustments against Investment in Real Estate of
    $17,512,000 and against Other Assets of $2,736,500.
 
(4) The building is currently vacant and is undergoing a major renovation to
    re-tenant the entire Property. All operating costs, including real estate
    taxes together with interest incurred during the renovation period will be
    capitalized. As of December 31, 1996 and 1995 approximately $8,189,000 and
    $4,357,100 of operating costs and interest have been capitalized,
    respectively. In addition to the amounts paid to acquire the Property,
    Equity Office Predecessors expects to incur approximately $100,000,000, of
    which approximately, $60,000,000 has been incurred. The renovation is
    expected to be completed during 1997.
 
(5) These loans are subject to cross default and collateralization provisions.
 
(6) These loans are subject to cross default and collateralization provisions.
 
                                      F-36
<PAGE>   175
 
SCHEDULE III (CONTINUED)
 
   
(7) The following significant transactions occurred during the three months
    ended March 31, 1997:
    
 
   
    Financing Activities
    
 
   
    1)  In January 1997, Equity Office Predecessors obtained financing of
        approximately $34,450,000 collateralized by the North Loop and Theatre
        District Parking Facilities. This loan has a 7.38% fixed interest rate
        and a 10-year term. The existing loan on the Theatre District Garage of
        approximately $16,276,800 was repaid with a portion of the proceeds from
        this financing.
    
 
   
    2)  In February 1997, Equity Office Predecessors obtained an $87,000,000
        mortgage loan collateralized by BP Tower. The term of the loan is seven
        years. Interest is payable monthly with the stated interest rate fixed
        at 7.34%.
    
 
   
    Acquisition Activities
    
 
   
    1)  In January 1997, Equity Office Predecessors, through its subsidiaries,
        purchased from an unaffiliated third party 177 Broad Street and the
        Biltmore Apartments, a mixed-use property located in Stamford,
        Connecticut. The all cash purchase price of approximately $36,450,000
        included acquisition related expenses.
    
 
   
    2)  In March 1997, Equity Office Predecessors, through its subsidiaries,
        purchased from an unaffiliated third party Preston Commons, an office
        building located in Dallas, Texas. The all cash purchase price of
        approximately $55,200,000 includes acquisition related expenses.
    
 
   
(8) Summary of activity of investment in real estate and accumulated
    depreciation is as follows:
    
 
        The changes in the total Equity Office Predecessors investment in real
    estate for the years ended December 31, 1996, 1995 and 1994 are as follows:
 
<TABLE>
<CAPTION>
                                                                     DECEMBER 31,           DECEMBER 31,           DECEMBER 31,
                                                                         1996                   1995                   1994
                                                                   ----------------       ----------------       ----------------
    <S>                                                            <C>                    <C>                    <C>
    Balance, beginning of year.................................    $  2,571,851,300       $  1,931,002,400       $  1,297,304,500
    Acquisitions...............................................         860,995,000            583,485,200            562,752,900
    Improvements...............................................         129,485,300             76,985,400             72,951,600
    Properties disposed of.....................................          (9,633,600)                     0                      0
    Write down for value impairment............................                   0            (17,512,000)                     0
    Write-off of fully depreciated assets which are no longer
      in service...............................................          (2,990,400)            (2,109,700)            (2,006,600)
                                                                   ----------------       ----------------       ----------------
    Balance, end of year.......................................    $  3,549,707,600       $  2,571,851,300       $  1,931,002,400
                                                                   ================       ================       ================
</TABLE>
 
    The changes in accumulated depreciation for the years ended December 31,
1996, 1995 and 1994 are as follows:
 
<TABLE>
<CAPTION>
                                                                     DECEMBER 31,           DECEMBER 31,           DECEMBER 31,
                                                                         1996                   1995                   1994
                                                                   ----------------       ----------------       ----------------
    <S>                                                            <C>                    <C>                    <C>
    Balance, beginning of year.................................    $   (178,448,600)      $   (115,842,500)      $    (77,036,900)
    Depreciation...............................................         (82,905,300)           (64,715,800)           (40,812,200)
    Properties disposed of.....................................             470,200                      0                      0
    Write-off of fully depreciated assets which are no longer
      in service...............................................           2,990,400              2,109,700              2,006,600
                                                                   ----------------       ----------------       ----------------
    Balance, end of year.......................................    $   (257,893,300)      $   (178,448,600)      $   (115,842,500)
                                                                   ================       ================       ================
</TABLE>
 
                                      F-37
<PAGE>   176
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Trustees of
Equity Office Properties Trust
 
     We have audited the accompanying Statement of Revenue and Certain Expenses
of Promenade II (the Property) for the year ended December 31, 1995. The
Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
Statement of Revenue and Certain Expenses based on our audit.
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
 
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 2 for the year ended December 31,
1995, in conformity with generally accepted accounting principles.
 
                                          ERNST & YOUNG LLP
 
Chicago, Illinois
December 17, 1996
 
                                      F-38
<PAGE>   177
 
                                  PROMENADE II
 
                   STATEMENTS OF REVENUE AND CERTAIN EXPENSES
 
<TABLE>
<CAPTION>
                                                                                  JANUARY 1, 1996 TO
                                                                 YEAR ENDED         JUNE 13, 1996
                                                              DECEMBER 31, 1995      (UNAUDITED)
                                                              -----------------   ------------------
                                                                          (IN THOUSANDS)
<S>                                                           <C>                 <C>
REVENUE
  Base rents................................................    $      10,315        $     4,619
  Tenant reimbursements.....................................            3,307              1,642
  Parking income............................................            1,701                830
  Other income..............................................              319                447
                                                                -------------            -------
  Total revenue.............................................           15,642              7,538
                                                                -------------            -------
EXPENSES
  Property operating and maintenance........................            3,325              1,696
  Real estate taxes.........................................            1,905                886
  Management fees...........................................              426                178
  Insurance.................................................               59                 27
                                                                -------------            -------
  Total expenses............................................            5,715              2,787
                                                                -------------            -------
Revenue in excess of certain expenses.......................    $       9,927        $     4,751
                                                                =============            =======
</TABLE>
 
                            See accompanying notes.
 
                                      F-39
<PAGE>   178
 
                                  PROMENADE II
 
              NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
 
1. BUSINESS
 
     The accompanying Statements of Revenue and Certain Expenses relate to the
operations of Promenade II, an office building with approximately 771,000
rentable square feet, located in Atlanta, Georgia (the "Property"). The Property
was acquired on June 14, 1996 by Equity Office Predecessors, as defined
elsewhere in this Prospectus, from an unrelated party.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
     The accompanying Statements of Revenue and Certain Expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the registration statement on Form S-11
of Equity Office Properties Trust. The statements are not representative of the
actual operations of the Property for the periods presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been excluded.
 
Revenue and Expense Recognition
 
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred.
 
Use of Estimates
 
     The preparation of the Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting periods. Actual results could differ from these
estimates.
 
Unaudited Interim Statement
 
     The interim financial statement for the 1996 interim period includes the
revenue and certain expenses for the period prior to acquisition by Equity
Office Predecessors. In the opinion of management, such financial statement
reflects all adjustments necessary for a fair presentation of the results of the
interim period. All such adjustments are of a normal, recurring nature.
 
3. RENTALS
 
     The Property has entered into tenant leases that provide for tenants to
share in the operating expenses and real estate taxes on a pro rata basis, as
defined.
 
                                      F-40
<PAGE>   179
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Trustees of
Equity Office Properties Trust
 
     We have audited the accompanying Statement of Revenue and Certain Expenses
of Two California Plaza (the Property) for the year ended December 31, 1995. The
Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
Statement of Revenue and Certain Expenses based on our audit.
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
 
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 2 for the year ended December 31,
1995, in conformity with generally accepted accounting principles.
 
                                          ERNST & YOUNG LLP
 
Chicago, Illinois
January 15, 1997
 
                                      F-41
<PAGE>   180
 
                              TWO CALIFORNIA PLAZA
 
                   STATEMENTS OF REVENUE AND CERTAIN EXPENSES
 
<TABLE>
<CAPTION>
                                                                                    JANUARY 1, 1996
                                                                  YEAR ENDED        TO JULY 31, 1996
                                                               DECEMBER 31, 1995      (UNAUDITED)
                                                               -----------------    ----------------
                                                                          (IN THOUSANDS)
<S>                                                            <C>                  <C>
REVENUE
  Base rents...............................................      $      10,622        $     6,328
  Tenant reimbursements....................................              5,845              4,602
  Parking income...........................................              2,677              1,606
  Other income.............................................                107                209
                                                                 -------------            -------
  Total revenue............................................             19,251             12,745
                                                                 -------------            -------
EXPENSES
  Property operating and maintenance.......................              7,894              4,652
  Real estate taxes........................................              2,053              1,129
  Management fees..........................................                244                113
  Insurance................................................              1,025                613
  Ground rent..............................................              3,696              2,156
                                                                 -------------            -------
  Total expenses...........................................             14,912              8,663
                                                                 -------------            -------
Revenue in excess of certain expenses......................      $       4,339        $     4,082
                                                                 =============            =======
</TABLE>
 
                            See accompanying notes.
 
                                      F-42
<PAGE>   181
 
                              TWO CALIFORNIA PLAZA
 
              NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
 
1.   BUSINESS
 
     The accompanying Statements of Revenue and Certain Expenses relate to the
operations of Two California Plaza, an office building with approximately
1,330,000 rentable square feet, located in Los Angeles, California (the
"Property"). The Property was acquired on August 23, 1996, by Equity Office
Predecessors, as defined elsewhere in this Prospectus, from an unrelated party.
 
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
     The accompanying Statements of Revenue and Certain Expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the registration statement on Form S-11
of Equity Office Properties Trust. The statements are not representative of the
actual operations of the Property for the periods presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been excluded.
 
Revenue and Expense Recognition
 
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred.
 
Use of Estimates
 
     The preparation of the Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting periods. Actual results could differ from these
estimates.
 
Unaudited Interim Statement
 
     The interim financial statement for the 1996 interim period includes the
revenue and certain expenses for the period prior to acquisition by Equity
Office Predecessors. In the opinion of management, such financial statement
reflects all adjustments necessary for a fair presentation of the results of the
interim period. All such adjustments are of a normal, recurring nature.
 
3.   RENTALS
 
     The Property has entered into tenant leases that provide for tenants to
share in the operating expenses and real estate taxes on a pro rata basis, as
defined.
 
4.   OTHER COMMITMENTS
 
     The Property is encumbered by a ground lease dated July 25, 1989, with
Community Redevelopment Agency of the City of Los Angeles acting as the lessor.
The base rent is an annual amount of $1,500,000. Every ten years beginning in
the year 2005 and ending at maturity, August 25, 2082, rent is increased based
on a defined calculation. The ground rent expense included in the Statements of
Revenue and Certain Expenses includes the effect of straight lining the future
stated increases in rental obligations.
 
                                      F-43
<PAGE>   182
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Trustees of
Equity Office Properties Trust
 
     We have audited the accompanying Statement of Revenue and Certain Expenses
of the BP Tower (the Property) for the year ended December 31, 1995. The
Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
Statement of Revenue and Certain Expenses based on our audit.
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
 
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 2 for the year ended December 31,
1995, in conformity with generally accepted accounting principles.
 
                                          ERNST & YOUNG LLP
Chicago, Illinois
November 8, 1996
 
                                      F-44
<PAGE>   183
 
                                    BP TOWER
 
                   STATEMENTS OF REVENUE AND CERTAIN EXPENSES
 
<TABLE>
<CAPTION>
                                                                                  JANUARY 1, 1996 TO
                                                                 YEAR ENDED        AUGUST 31, 1996
                                                              DECEMBER 31, 1995      (UNAUDITED)
                                                              -----------------   ------------------
                                                                          (IN THOUSANDS)
<S>                                                           <C>                 <C>
REVENUE
  Base rents................................................    $       9,308        $     8,587
  Tenant reimbursements.....................................              764                377
  Parking income............................................              308                205
  Percentage rent...........................................               45                 45
  Other income..............................................              207                184
                                                                -------------            -------
  Total revenue.............................................           10,632              9,398
                                                                -------------            -------
EXPENSES
  Property operating & maintenance..........................            5,345              3,591
  Real estate taxes.........................................            2,638              2,116
  Management fees...........................................              189                126
                                                                -------------            -------
  Total expenses............................................            8,172              5,833
                                                                -------------            -------
Revenue in excess of certain expenses.......................    $       2,460        $     3,565
                                                                =============            =======
</TABLE>
 
                            See accompanying notes.
 
                                      F-45
<PAGE>   184
 
                                    BP TOWER
 
              NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
 
1.   BUSINESS
 
     The accompanying Statements of Revenue and Certain Expenses relate to the
operations of the BP Tower, an office building with approximately 1,242,000
rentable square feet, located in Cleveland, Ohio (the "Property"). The Property
was acquired on September 4, 1996, by Equity Office Predecessors, as defined
elsewhere in this Prospectus, from an unrelated party.
 
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
     The accompanying Statements of Revenue and Certain Expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the registration statement on Form S-11
of Equity Office Properties Trust. The statements are not representative of the
actual operations of the Property for the periods presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been excluded.
 
Revenue and Expense Recognition
 
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred.
 
Use of Estimates
 
     The preparation of the Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting periods. Actual results could differ from these
estimates.
 
Unaudited Interim Statement
 
     The interim financial statement for the 1996 interim period includes the
revenue and certain expenses for the period prior to acquisition by Equity
Office Predecessors. In the opinion of management, such financial statement
reflects all adjustments necessary for a fair presentation of the results of the
interim period. All such adjustments are of a normal, recurring nature.
 
3.   RENTALS
 
     The Property has entered into tenant leases that provide for tenants to
share in the operating expenses and real estate taxes on a pro rata basis, as
defined.
 
     For the year ended December 31, 1995 and for the unaudited interim period
from January 1, 1996 to August 31, 1996, the seller occupied approximately
378,000 square feet of space in the Property. The Statements of Revenue and
Certain Expenses do not reflect rental income associated with the seller's
occupancy.
 
     As of September 1, 1996 the seller entered into a lease with Equity Office
Predecessors for approximately 378,000 square feet of space at a monthly base
rent of $344,100.
 
                                      F-46
<PAGE>   185
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Trustees of
Equity Office Properties Trust
 
     We have audited the accompanying Statement of Revenue and Certain Expenses
of SunTrust Center (the Property) as described in Note 2 for the year ended
December 31, 1995. The Statement of Revenue and Certain Expenses is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Statement of Revenue and Certain Expenses based on our audit.
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission, for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
 
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 2 for the year ended December 31,
1995, in conformity with generally accepted accounting principles.
 
                                          ERNST & YOUNG LLP
 
Chicago, Illinois
December 6, 1996
 
                                      F-47
<PAGE>   186
 
                                SUNTRUST CENTER
 
                   STATEMENTS OF REVENUE AND CERTAIN EXPENSES
 
   
<TABLE>
<CAPTION>
                                                                                  JANUARY 1, 1996 TO
                                                                 YEAR ENDED        AUGUST 31, 1996
                                                              DECEMBER 31, 1995      (UNAUDITED)
                                                              -----------------   ------------------
                                                                          (IN THOUSANDS)
<S>                                                           <C>                 <C>
REVENUE
  Base rents................................................    $      11,592       $       8,533
  Tenant reimbursements.....................................            1,012                 793
  Parking income............................................            1,743               1,175
  Other income..............................................              130                  29
                                                                -------------       -------------
  Total revenue.............................................           14,477              10,530
                                                                -------------       -------------
EXPENSES
  Property operating and maintenance........................            2,974               1,981
  Real estate taxes.........................................            1,357                 944
  Management fees...........................................              366                 276
  Insurance.................................................              346                 237
                                                                -------------       -------------
  Total expenses............................................            5,043               3,438
                                                                -------------       -------------
Revenue in excess of certain expenses.......................    $       9,434       $       7,092
                                                                =============       =============
</TABLE>
    
 
                            See accompanying notes.
 
                                      F-48
<PAGE>   187
 
                                SUNTRUST CENTER
 
              NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
 
1.   BUSINESS
 
     The accompanying Statements of Revenue and Certain Expenses relate to the
operations of SunTrust Center, an office building with approximately 640,000
rentable square feet, located in Orlando, Florida (the "Property"). The Property
was acquired on September 18, 1996, by Equity Office Predecessors, as defined
elsewhere in this Prospectus, from an unrelated party.
 
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
     The accompanying Statements of Revenue and Certain Expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the registration statement on Form S-11
of Equity Office Properties Trust. The statements are not representative of the
actual operations of the Property for the periods presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been excluded.
 
Revenue and Expense Recognition
 
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred.
 
Use of Estimates
 
     The preparation of the Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting periods. Actual results could differ from these
estimates.
 
Unaudited Interim Statement
 
     The interim financial statement for the 1996 interim period includes the
revenue and certain expenses for the period prior to acquisition by Equity
Office Predecessors. In the opinion of management, such financial statement
reflects all adjustments necessary for a fair presentation of the results of the
interim period. All such adjustments are of a normal, recurring nature.
 
3.   RENTALS
 
     The Property has entered into tenant leases that provide for tenants to
share in the operating expenses and real estate taxes on a pro rata basis, as
defined.
 
4.   RELATED PARTY TRANSACTIONS
 
     During the year ended December 31, 1995, the Property was managed by an
affiliated party to the seller. The management agreement provided for a fee of
3% of gross receipts, as defined, excluding any receipts from the parking
garage.
 
     The parking garage was leased to an affiliate of the seller, which paid
rent based upon 79% of the gross parking receipts, as defined, in excess of
$250,000 per annum. Income from this lease was approximately $1,743,000 in 1995.
 
                                      F-49
<PAGE>   188
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Trustees of
Equity Office Properties Trust
 
     We have audited the accompanying Statement of Revenue and Certain Expenses
of Reston Town Center (the Property) for the year ended December 31, 1995. The
Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
Statement of Revenue and Certain Expenses based on our audit.
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
 
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 2 for the year ended December 31,
1995, in conformity with generally accepted accounting principles.
 
                                          ERNST & YOUNG LLP
 
Chicago, Illinois
November 19, 1996
 
                                      F-50
<PAGE>   189
 
                               RESTON TOWN CENTER
 
                   STATEMENTS OF REVENUE AND CERTAIN EXPENSES
 
<TABLE>
<CAPTION>
                                                                       JANUARY 1, 1996 TO
                                               YEAR ENDED              SEPTEMBER 30, 1996
                                            DECEMBER 31, 1995             (UNAUDITED)
                                            -----------------          ------------------
                                                              (IN THOUSANDS)
<S>                                         <C>                  <C>
REVENUE
  Base rents............................      $      15,966              $      12,684
  Tenant reimbursements.................              2,518                      1,760
  Percentage rents......................              1,046                        527
  Other income..........................                265                        275
                                              -------------                 ----------
  Total revenue.........................             19,795                     15,246
                                              -------------                 ----------
EXPENSES
  Property operating and maintenance....              4,832                      3,501
  Real estate taxes.....................              1,275                      1,154
  Insurance.............................                 97                         75
  Management fees.......................                200                        150
                                              -------------                 ----------
  Total expenses........................              6,404                      4,880
                                              -------------                 ----------
Revenue in excess of certain expenses...      $      13,391              $      10,366
                                              =============                 ==========
</TABLE>
 
                            See accompanying notes.
 
                                      F-51
<PAGE>   190
 
                               RESTON TOWN CENTER
 
              NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
 
1.   BUSINESS
 
     The accompanying Statements of Revenue and Certain Expenses relate to the
operations of Reston Town Center, an office building with approximately 725,000
rentable square feet, located in Fairfax, Virginia (the "Property"). The
Property was acquired on October 22, 1996, by Equity Office Predecessors, as
defined elsewhere in this Prospectus, from an unrelated party.
 
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
     The accompanying Statements of Revenue and Certain Expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the registration statement on Form S-11
of Equity Office Properties Trust. The statements are not representative of the
actual operations of the Property for the periods presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been excluded.
 
Revenue and Expense Recognition
 
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred. The Property is part of a multi-use and multi-owned development
community and as a result is responsible for its pro-rata share of certain
common area costs, which have been reflected as property operating expenses.
 
Use of Estimates
 
     The preparation of the Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting periods. Actual results could differ from these
estimates.
 
Unaudited Interim Statement
 
     The interim financial statement for the 1996 interim period includes the
revenue and certain expenses for the period prior to acquisition by Equity
Office Predecessors. In the opinion of management, such financial statement
reflects all adjustments necessary for a fair presentation of the results of the
interim period. All such adjustments are of a normal, recurring nature.
 
3.   RENTALS
 
     The Property has entered into tenant leases that provide for tenants to
share in the operating expenses and real estate taxes on a pro rata basis, as
defined.
 
                                      F-52
<PAGE>   191
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Trustees of
Equity Office Properties Trust
 
     We have audited the accompanying Statement of Revenue and Certain Expenses
of Colonnade I (the Property) for the period from January 1, 1996 to December 4,
1996. The Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
Statement of Revenue and Certain Expenses based on our audit.
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
 
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 2 for the period from January 1, 1996
to December 4, 1996, in conformity with generally accepted accounting
principles.
 
                                          ERNST & YOUNG LLP
Chicago, Illinois
April 16, 1997
 
                                      F-53
<PAGE>   192
 
                                  COLONNADE I
 
                   STATEMENT OF REVENUE AND CERTAIN EXPENSES
 
<TABLE>
<CAPTION>
                                                              JANUARY 1, 1996 TO
                                                               DECEMBER 4, 1996
                                                              ------------------
                                                              (IN THOUSANDS)
<S>                                                           <C>
REVENUE
  Base rent.................................................     $     1,850
  Tenant reimbursements.....................................              44
  Parking income............................................              25
  Other income..............................................              11
                                                                     -------
  Total revenue.............................................           1,930
                                                                     -------
EXPENSES
  Property operating and maintenance........................             650
  Real estate taxes.........................................             214
  Management fees...........................................              58
  Insurance.................................................              25
                                                                     -------
  Total expenses............................................             947
                                                                     -------
Revenue in excess of certain expenses.......................     $       983
                                                                     =======
</TABLE>
 
                            See accompanying notes.
 
                                      F-54
<PAGE>   193
 
                                  COLONNADE I
 
               NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
 
1.   BUSINESS
 
     The accompanying Statement of Revenue and Certain Expenses relates to the
operations of Colonnade I, an office building with approximately 169,000
rentable square feet, located in San Antonio, Texas (the "Property"). The
Property was acquired on December 4, 1996, by Equity Office Predecessors, as
defined elsewhere in this Prospectus, from an unrelated party.
 
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust. The statement is not representative of the
actual operations of the Property for the period presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been excluded.
 
Revenue and Expense Recognition
 
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred.
 
Use of Estimates
 
     The preparation of the Statement of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
 
3.   RENTALS
 
     The Property has entered into tenant leases that provide for tenants to
share in the operating expenses and real estate taxes on a pro rata basis, as
defined.
 
4.   RELATED PARTY TRANSACTIONS
 
     Insurance premiums are paid to and coverage is provided by an affiliated
party to the seller.
 
                                      F-55
<PAGE>   194
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Trustees of
Equity Office Properties Trust
 
     We have audited the accompanying Statement of Revenue and Certain Expenses
of 177 Broad Street (the Property) for the year ended December 31, 1996. The
Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
Statement of Revenue and Certain Expenses based on our audit.
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
 
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 2 for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
 
                                          ERNST & YOUNG LLP
 
Chicago, Illinois
March 28, 1997
 
                                      F-56
<PAGE>   195
 
                                177 BROAD STREET
 
                   STATEMENT OF REVENUE AND CERTAIN EXPENSES
 
   
<TABLE>
<CAPTION>
                                                                 YEAR ENDED
                                                              DECEMBER 31, 1996
                                                              -----------------
                                                               (IN THOUSANDS)
<S>                                                           <C>
REVENUE
  Base rents................................................     $     4,722
  Storage and other rental income...........................              52
  Tenant reimbursements.....................................             212
  Parking income............................................             322
  Other income..............................................             103
                                                                     -------
  Total revenue.............................................           5,411
                                                                     -------
EXPENSES
  Property operating and maintenance........................             825
  Utilities and telephone...................................             769
  Repairs and maintenance...................................             313
  Real estate taxes.........................................             864
  Management fees...........................................             153
  Insurance.................................................              46
  Administrative............................................             118
                                                                     -------
  Total expenses............................................           3,088
                                                                     -------
Revenue in excess of certain expenses.......................     $     2,323
                                                                     =======
</TABLE>
    
 
                            See accompanying notes.
 
                                      F-57
<PAGE>   196
 
                                177 BROAD STREET
 
               NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
 
1.   BUSINESS
 
     The accompanying Statement of Revenue and Certain Expenses relates to the
operations of 177 Broad Street located in Stamford, Connecticut (the
"Property"). The Property was acquired on January 28, 1997, by Equity Office
Predecessors, as defined elsewhere in this Prospectus, from an unrelated entity.
 
     The Property consists of a fifteen story office complex with approximately
188,000 rentable square feet, an enclosed 540 space parking structure, and a
161-unit residential apartment building.
 
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust. The statement is not representative of the
actual operations of the Property for the period presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been excluded.
 
Revenue and Expense Recognition
 
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred.
 
Use of Estimates
 
     The preparation of the Statement of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
 
3.   RENTALS
 
     The Property has entered into tenant leases, in the office portion of the
Property, that provide for tenants to share in the operating expenses and real
estate taxes on a pro rata basis, as defined.
 
                                      F-58
<PAGE>   197
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Trustees of
Equity Office Properties Trust
 
     We have audited the accompanying Statement of Revenue and Certain Expenses
of Preston Commons (the Property) as described in Note 2 for the year ended
December 31, 1996. The Statement of Revenue and Certain Expenses is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Statement of Revenue and Certain Expenses based on our audit.
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
   
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission, for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
    
 
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 2 for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
 
                                          ERNST & YOUNG LLP
 
Chicago, Illinois
April 16, 1997
 
                                      F-59
<PAGE>   198
 
                                PRESTON COMMONS
 
                   STATEMENT OF REVENUE AND CERTAIN EXPENSES
 
<TABLE>
<CAPTION>
                                                                   YEAR ENDED
                                                               DECEMBER 31, 1996
                                                              --------------------
                                                              (IN THOUSANDS)
<S>                                                           <C>
REVENUE
  Base rents................................................      $     6,347
  Tenant reimbursements.....................................            1,132
  Parking income............................................              216
  Other income..............................................               91
                                                                      -------
  Total revenue.............................................            7,786
                                                                      -------
EXPENSES
  Property operating & maintenance..........................            2,327
  Real estate taxes.........................................              742
  Management fees...........................................              226
  Insurance.................................................               30
                                                                      -------
  Total expenses............................................            3,325
                                                                      -------
Revenue in excess of certain expenses.......................      $     4,461
                                                                      =======
</TABLE>
 
                            See accompanying notes.
 
                                      F-60
<PAGE>   199
 
                                PRESTON COMMONS
 
               NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
 
1.   BUSINESS
 
   
     The accompanying Statement of Revenue and Certain Expenses relates to the
operations of the Preston Commons building, an office building with
approximately 419,000 rentable square feet, located in Dallas, Texas (the
"Property"). The Property was acquired on March 21, 1997, by Equity Office
Predecessors, as defined elsewhere in this Prospectus, from an unrelated entity.
    
 
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust. The statement is not representative of the
actual operations of the Property for the period presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been excluded.
 
Revenue and Expense Recognition
 
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred.
 
Use of Estimates
 
     The preparation of the Statement of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
 
3.   RENTALS
 
     The Property has entered into tenant leases that provide for tenants to
share in the operating expenses and real estate taxes on a pro rata basis, as
defined.
 
                                      F-61
<PAGE>   200
 
   
                         REPORT OF INDEPENDENT AUDITORS
    
 
   
The Board of Trustees of
Equity Office Properties Trust
    
 
   
     We have audited the accompanying Statement of Revenue and Certain Expenses
of Oakbrook Terrace Tower (the Property) as described in Note 1 for the year
ended December 31, 1996. The Statement of Revenue and Certain Expenses is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Statement of Revenue and Certain Expenses based on our audit.
    
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
   
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission, for inclusion in the registration statement on Form S-11 of
Equity Offices Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
    
 
   
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 1 for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
    
 
   
                                          ERNST & YOUNG LLP
    
 
   
Chicago, Illinois
    
   
May 30, 1997
    
 
                                      F-62
<PAGE>   201
 
   
                             OAKBROOK TERRACE TOWER
    
 
   
                   STATEMENTS OF REVENUE AND CERTAIN EXPENSES
    
 
   
<TABLE>
<CAPTION>
                                                                                 THREE MONTHS ENDED
                                                                YEAR ENDED         MARCH 31, 1997
                                                             DECEMBER 31, 1996      (UNAUDITED)
                                                             -----------------   ------------------
                                                                         (IN THOUSANDS)
<S>                                                          <C>                 <C>
REVENUE
  Base rents...............................................       $11,409             $ 3,113
  Tenant reimbursements....................................         5,282               1,366
  Garage and parking income................................           148                  37
  Other income.............................................           193                  97
                                                                  -------             -------
       Total revenue.......................................        17,032               4,613
                                                                  -------             -------
EXPENSES
  Property operating & maintenance.........................         4,276               1,037
  Real estate taxes........................................         1,259                 353
  Management fees..........................................           338                 116
  Insurance................................................           111                  17
                                                                  -------             -------
       Total expenses......................................         5,984               1,523
                                                                  -------             -------
Revenue in excess of certain expenses......................       $11,048             $ 3,090
                                                                  =======             =======


</TABLE>
    
 
   
                            See accompanying notes.
    
 
                                      F-63
<PAGE>   202
 
   
                             OAKBROOK TERRACE TOWER
    
   
              NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
    
 
   
1. BUSINESS
    
 
   
     The accompanying Statements of Revenue and Certain Expenses relate to the
operations of the Oakbrook Terrace Tower building, an office building with
approximately 773,000 rentable square feet, located in Oakbrook Terrace,
Illinois (the "Property"). The Property was acquired on April 15, 1997, by
Equity Office Predecessors, as defined elsewhere in this Prospectus, from an
unrelated entity.
    
 
   
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    
 
   
Basis of Presentation
    
 
   
     The accompanying Statements of Revenue and Certain Expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the registration statement on Form S-11
of Equity Office Properties Trust. The statements are not representative of the
actual operations of the Property for the periods presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been excluded.
    
 
   
Revenue and Expense Recognition
    
 
   
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred.
    
 
   
Use of Estimates
    
 
   
     The preparation of the Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
    
 
   
Unaudited Interim Statement
    
 
   
     In the opinion of management, the interim financial statement of revenue
and certain expenses for the three months ended March 31, 1997, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
    
 
   
3. RENTALS
    
 
   
     The Property has entered into tenant leases that provide for tenants to
share in the operating expenses and real estate taxes on a pro rata basis, as
defined.
    
 
   
4. RELATED PARTY TRANSACTIONS
    
 
   
     During the year ended December 31, 1996, the Property was managed by an
affiliated party to the seller. The management agreement provided for a fee of
2.5% of gross receipts, as defined.
    
 
                                      F-64
<PAGE>   203
 
   
                         REPORT OF INDEPENDENT AUDITORS
    
 
   
The Board of Trustees of
    
   
Equity Office Properties Trust
    
 
   
     We have audited the accompanying Statement of Revenue and Certain Expenses
of One Maritime Plaza (the Property) as described in Note 1 for the year ended
December 31, 1996. The Statement of Revenue and Certain Expenses is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Statement of Revenue and Certain Expenses based on our audit.
    
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
   
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission, for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
    
 
   
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 1 for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
    
 
   
                                          ERNST & YOUNG LLP
    
 
   
Chicago, Illinois
    
   
June 6, 1997
    
 
                                      F-65

<PAGE>   204
 
   
                               ONE MARITIME PLAZA
    
 
   
                   STATEMENTS OF REVENUE AND CERTAIN EXPENSES
    
 
   
<TABLE>
<CAPTION>
                                                                                    THREE MONTHS ENDED
                                                                  YEAR ENDED          MARCH 31, 1997
                                                               DECEMBER 31, 1996       (UNAUDITED)
                                                               -----------------    ------------------
                                                                           (IN THOUSANDS)
<S>                                                            <C>                  <C>
REVENUE
  Base rents...............................................         $13,410               $3,382
  Tenant reimbursements....................................             208                  125
  Interest income..........................................             249                   65
  Other income.............................................             428                  125
                                                                    -------              -------
       Total revenue.......................................          14,295                3,697
                                                                    =======              =======
EXPENSES
  Property operating and maintenance.......................           4,326                  887
  Real estate taxes........................................             668                  250
  Management fees..........................................             585                  146
  Insurance................................................             447                  119
                                                                    -------              -------
       Total expenses......................................           6,026                1,402
                                                                    -------              -------
Revenue in excess of certain expenses......................         $ 8,269               $2,295
                                                                    =======              =======
</TABLE>
    
 
   
                            See accompanying notes.
    
 
                                      F-66

<PAGE>   205
 
   
                               ONE MARITIME PLAZA
    
 
   
              NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
    
 
   
1. BUSINESS
    
 
   
     The accompanying Statements of Revenue and Certain Expenses relate to the
operations of the One Maritime Plaza building, an office building with
approximately 524,000 rentable square feet, located in San Francisco, California
(the "Property"). The Property was acquired on April 24, 1997, by Equity Office
Predecessors, as defined elsewhere in this Prospectus, from an unrelated entity.
    
 
   
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    
 
   
Basis of Presentation
    
 
   
     The accompanying Statements of Revenue and Certain Expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the registration statement on Form S-11
of Equity Office Properties Trust. The statements are not representative of the
actual operations of the Property for the periods presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been excluded.
    
 
   
Revenue and Expense Recognition
    
 
   
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred.
    
 
   
Use of Estimates
    
 
   
     The preparation of the Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
    
 
   
Unaudited Interim Statement
    
 
   
     In the opinion of management, the interim financial statement of revenue
and certain expenses for the three months ended March 31, 1997, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal recurring nature.
    
 
   
3. RENTALS
    
 
   
     The Property has entered into tenant leases that provide for tenants to
share in the operating expenses and real estate taxes on a pro rata basis, as
defined.
    
 
                                      F-67
<PAGE>   206
 
   
                         REPORT OF INDEPENDENT AUDITORS
    
 
   
The Board of Trustees of
    
   
Equity Office Properties Trust
    
 
   
     We have audited the accompanying Statement of Revenue and Certain Expenses
of 201 Mission Street (the Property) as described in Note 1 for the year ended
December 31, 1996. The Statement of Revenue and Certain Expenses is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Statement of Revenue and Certain Expenses based on our audit.
    
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
   
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission, for inclusion in the registration statement on Form S-11 of
Equity Office Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
    
 
   
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 1 for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
    
 
   
                                          ERNST & YOUNG LLP
    
 
   
Chicago, Illinois
    
   
April 30, 1997
    
 
                                      F-68
<PAGE>   207
 
   
                               201 MISSION STREET
    
 
   
                   STATEMENTS OF REVENUE AND CERTAIN EXPENSES
    
 
   
<TABLE>
<CAPTION>
                                                                                   THREE MONTHS
                                                                                      ENDED
                                                                 YEAR ENDED       MARCH 31, 1997
                                                              DECEMBER 31, 1996    (UNAUDITED)
                                                              -----------------   --------------
                                                                        (IN THOUSANDS)
<S>                                                           <C>                 <C>
REVENUE
  Base rents................................................       $7,423             $2,166
  Tenant reimbursements.....................................           55                  9
  Garage and parking income.................................          366                 60
  Other income..............................................           39                 11
                                                                  -------             ------
       Total revenue........................................        7,883              2,246
                                                                  -------             ------
EXPENSES
  Property operating & maintenance..........................        3,369                969
  Real estate taxes.........................................          959                264
  Management fees...........................................          106                 27
  Insurance.................................................          569                196
                                                                  -------             ------
       Total expenses.......................................        5,003              1,456
                                                                  -------             ------
Revenue in excess of certain expenses.......................       $2,880             $  790
                                                                  =======             ======
</TABLE>
    
 
   
                            See accompanying notes.
    
 
                                      F-69
<PAGE>   208
 
   
                               201 MISSION STREET
    
 
   
              NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
    
 
   
1. BUSINESS
    
 
   
     The accompanying Statements of Revenue and Certain Expenses relate to the
operations of the 201 Mission Street building, an office building with
approximately 483,000 rentable square feet, located in San Francisco, California
(the "Property"). The Property was acquired on April 30, 1997, by Equity Office
Predecessors, as defined elsewhere in this Prospectus, from an unrelated entity.
    
 
   
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    
 
   
Basis of Presentation
    
 
   
     The accompanying Statements of Revenue and Certain Expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the registration statement on Form S-11
of Equity Office Properties Trust. The statements are not representative of the
actual operations of the Property for the periods presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been included.
    
 
   
Revenue and Expense Recognition
    
 
   
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred.
    
 
   
Use of Estimates
    
 
   
     The preparation of the Statement of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
    
 
   
Unaudited Interim Statement
    
 
   
     In the opinion of management, the interim financial statement of revenue
and certain expenses for the three months ended March 31, 1997, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
    
 
   
3. RENTALS
    
 
   
     The property has entered into tenant leases that provide for tenants to
share in the operating expenses and real estate taxes on a pro rata basis, as
defined.
    
 
                                      F-70

<PAGE>   209
 
   
                         REPORT OF INDEPENDENT AUDITORS
    
 
   
The Board of Trustees of
Equity Office Properties Trust
    
 
   
     We have audited the accompanying Statement of Revenue and Certain Expenses
of 30 N. LaSalle (the Property) as described in Note 1 for the year ended
December 31, 1996. The Statement of Revenue and Certain Expenses is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Statement of Revenue and Certain Expenses based on our audit.
    
 
   
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
    
 
   
     The accompanying Statement of Revenue and Certain Expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission, for inclusion in the registration statement on Form S-11 of
Equity Offices Properties Trust as described in Note 2 and is not intended to be
a complete presentation of the Property's revenue and expenses.
    
 
   
     In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of the Property described in Note 1 for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
    
 
   
                                          ERNST & YOUNG LLP
    
 
   
Chicago, Illinois
    
   
June 13, 1997
    
 
                                      F-71
<PAGE>   210
 
   
                                 30 N. LASALLE
    
   
                   STATEMENTS OF REVENUE AND CERTAIN EXPENSES
    
 
   
<TABLE>
<CAPTION>
                                                                                      THREE MONTHS
                                                                                         ENDED
                                                                   YEAR ENDED        MARCH 31, 1997
                                                                DECEMBER 31, 1996     (UNAUDITED)
                                                                -----------------    --------------
                                                                          (IN THOUSANDS)
<S>                                                             <C>                  <C>
REVENUE
  Base rents................................................         $ 9,317             $1,870
  Tenant reimbursements.....................................           9,164              2,194
  Other income..............................................             237                 55
                                                                     =======             ======
       Total revenue........................................          18,718              4,119
                                                                     -------             ------
EXPENSES
  Property operating and maintenance........................           4,336              1,047
  Real estate taxes.........................................           5,155              1,327
  Management fees...........................................             374                 79
  Insurance.................................................             160                 39
  Ground rent...............................................             165                 42
                                                                     -------             ------
       Total expenses.......................................          10,190              2,534
                                                                     -------             ------
Revenue in excess of certain expenses.......................         $ 8,528             $1,585
                                                                     =======             ======
</TABLE>
    
 
   
                            See accompanying notes.
    
 
                                      F-72
<PAGE>   211
 
   
                                 30 N. LASALLE
    
 
   
              NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
    
 
   
1. BUSINESS
    
 
   
     The accompanying Statements of Revenue and Certain Expenses relate to the
operations of the 30 N. LaSalle building, an office building with approximately
926,000 rentable square feet, located in Chicago, Illinois (the "Property"). The
Property was acquired on June 13, 1997, by Equity Office Predecessors, as
defined elsewhere in this Prospectus, from an unrelated entity.
    
 
   
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    
 
   
Basis of Presentation
    
 
   
     The accompanying Statements of Revenue and Certain Expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the registration statement on Form S-11
of Equity Office Properties Trust. The statements are not representative of the
actual operations of the Property for the periods presented nor indicative of
future operations of the Property for the periods presented nor indicative of
future operations as certain expenses, primarily depreciation, amortization and
interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the Property,
have been excluded.
    
 
   
Revenue and Expense Recognition
    
 
   
     Revenue is recognized on a straight-line basis over the terms of the
related leases. Expenses are recognized in the period in which they are
incurred.
    
 
   
Use of Estimates
    
 
   
     The preparation of the Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
    
 
   
Unaudited Interim Statement
    
 
   
     In the opinion of management, the interim financial statement of revenue
and certain expenses for the three months ended March 31, 1997, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
    
 
   
3. RENTALS
    
 
   
     The Property has entered into tenant leases that provide for tenants to
share in the operating expenses and real estate taxes on a pro rata basis, as
defined.
    
 
   
4. RELATED PARTY TRANSACTIONS
    
 
   
     During the year ended December 31, 1996, the Property was managed by an
affiliated party to the seller. The management agreement provided for a fee of
2% of gross receipts, as defined.
    
 
   
5. GROUND LEASE
    
 
   
     The Property is subject to a ground lease on a portion of the land under
the building which expires November 30, 2067. The ground lease provides for
escalation payments in intervals of approximately 10 years, with the next
escalation scheduled for January 1, 2000. Through 1999, the minimum annual
rental payments required under the ground lease are $165,000.
    
 
                                      F-73
<PAGE>   212
NINETY OFFICE PROPERTIES IN 20 STATES

<TABLE>
<S>                                           <C>

[PHOTOS]

Sterling Plaza, Dallas, TX                    Promenade II, Atlanta, GA
Intercontinental Center, Houston, TX          580 California, San Francisco, CA
Franklin Plaza, Austin, TX                    161 North Clark, Chicago, IL
Union Square, San Antonio, TX                 One Stamford Plaza, Stamford, CT
1100 Executive Tower, Orange, CA              Two Stamford Plaza, Stamford, CT
Northwest Center, San Antonio, TX             Three Stamford Plaza, Stamford, CT
Bank One Center, Indianapolis, IN             Four Stamford Plaza, Stamford, CT
Two California Plaza, Los Angeles, CA         9400 NCX, Dallas, TX
Central Park, Atlanta, GA                     Interco Corporate Tower, St. Louis, MO
The Plaza at Lajolla Village, San Diego, CA   San Jacinto Center, Austin, TX
                                              Community Corporate Center, Columbus, OH
                                              Maritime Plaza, San Francisco,CA


                                              FOCUS ON CUSTOMER SERVICE
</TABLE>


<PAGE>   213

<TABLE>
<S>                             <C>                               <C>                                <C>
[PHOTO]                         [PHOTO]                           [PHOTO]                            [PHOTO]         

1620 L  Street                  One North Franklin                Pasadena Towers                    One Phoenix Plaza 
Washington,D.C.                 Chicago, IL                       pasadena, CA                       Phoenix, AZ


</TABLE>

                      32.2 MILLION SQUARE FEET NATIONWIDE

ARIZONA
ONE PHOENIX PLAZA

CALIFORNIA
60 SPEAR STREET
201 MISSION
500 ORANGE TOWER
580 CALIFORNIA
1100 EXECUTIVE TOWER
1920 & 2010 MAIN PLAZA
MARITIME PLAZA
ONE MARKET
PASADENA TOWERS
THE PLAZA AT LAJOLLA VILLAGE
TWO CALIFORNIA PLAZA

COLORADO
DENVER CORPORATE CENTER II &III
THE QUADRANT

CONNECTICUT
177 BROAD STREET
300 ATLANTIC
CANTERBURY GREEN
SHELTON POINTE 
STAMFORD PLAZA I, II, III, IV

FLORIDA
FIRST UNION CENTER
ONE CLEARLAKE CENTRE
SARASOTA CITY CENTER
SUNTRUST CENTER
TAMPA COMMONS 
WESTSHORE CENTER

GEORGIA
CENTRAL PARK
ONE & TWO PACES WEST
PROMENADE II

ILLINOIS
30 NORTH LASALLE
161 NORTH CLARK
1700 HIGGINS
NORTH LOOP TRANSPORTATION*
OAKBROOK TERRACE TOWER
ONE NORTH FRANKLIN 
THEATRE DISTRICT GARAGE*

INDIANA
BANK ONE CENTER
CAPITOL COMMONS GARAGE*

LOUISIANA 
LAKEWAY CENTER I,II,III

MASSACHUSETTS
28 STATE STREET
BOSTON HARBOUR GARAGE*

MISSOURI
INTERCO CORPORATE CENTER
ST. LOUIS PARKING FACILITIES I-IV*

NEW MEXICO
500 MARQUETTE

NEW YORK
850 THIRD AVENUE

NORTH CAROLINA
UNIVERSITY TOWER
WACHOVIA CENTER

OHIO
BP TOWER
COMMUNITY CORPORATE CENTER
ONE COLUMBUS
ONE CROSSWOODS CENTER

OKLAHOMA
ATRIUM TOWERS
CIGNA CENTER


PENNSYLVANIA
1601 MARKET STREET
PHILADELPHIA GARAGES I-V*

TENNESSEE
NATIONSBANK PLAZA

TEXAS
9400 NCX
COLONNADE I
FOUR FOREST
FRANKLIN PLAZA
INTERCONTINENTAL CENTER
NORTH CENTRAL PLAZA THREE
NORTHBOROUGH TOWER
NORTHWEST CENTER
ONE AMERICAN CENTER
PRESTON COMMONS
SAN FELIPE PLAZA
SAN JACINTO CENTER 
STERLING PLAZA
SUMMIT OFFICE PARK
UNION SQUARE

VIRGINIA
DOMINION TOWER
RESTON TOWN CENTER

WISCONSIN
MILWAUKEE CENTER*

WASHINGTON, D.C.
1111 19TH STREET
1620 L STREET



*PARKING FACILITY






[EQUITY OFFICE PROPERTIES TRUST LOGO]
<PAGE>   214
 
======================================================
  NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON SHARES IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
                               ------------------
                           SUMMARY TABLE OF CONTENTS
 
   
<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
Summary...............................    1
Risk Factors..........................   12
The Company...........................   23
Business and Growth Strategies........   26
Use of Proceeds.......................   27
Distributions.........................   28
Capitalization........................   34
Dilution..............................   35
Selected Combined Financial Data......   36
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................   38
The Properties........................   47
Management............................   74
Structure and Formation of the
  Company.............................   81
Policies with Respect to Certain
  Activities..........................   86
Certain Relationships and Related
  Transactions........................   89
Principal Shareholders................   90
Shares of Beneficial Interest.........   92
Certain Provisions of Maryland Law and
  the Company's Declaration of Trust
  and Bylaws..........................   96
Partnership Agreement.................   99
Shares Available for Future Sale......  102
Federal Income Tax Considerations.....  103
ERISA Considerations..................  117
Underwriting..........................  120
Experts...............................  122
Legal Matters.........................  122
Additional Information................  123
Glossary of Terms.....................  124
Index to Financial Statements.........  F-1
</TABLE>
    
 
                               ------------------
UNTIL             , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON SHARES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
 
======================================================
 
   
                            25,000,000 COMMON SHARES
    
 
                                 EQUITY OFFICE
                                PROPERTIES TRUST
 
                                 COMMON SHARES
   
                                       OF
    
   
                              BENEFICIAL INTEREST
    
 
                          ---------------------------
 
                                   PROSPECTUS
                          ---------------------------
                              MERRILL LYNCH & CO.
   
                                LEHMAN BROTHERS
    
   
                               J.P. MORGAN & CO.
    
   
                       PRUDENTIAL SECURITIES INCORPORATED
    
   
                               SMITH BARNEY INC.
    
                                           , 1997
 
======================================================
<PAGE>   215
 
     INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
     REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
     SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
     MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
     BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
     THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
     SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
     UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
     OF ANY SUCH STATE.
 
   
                  ALTERNATE PAGES FOR INTERNATIONAL PROSPECTUS
    
   
                   SUBJECT TO COMPLETION, DATED JUNE 23, 1997
    
 
PROSPECTUS
- ---------------------
 
   
                            25,000,000 COMMON SHARES
    
 
                         EQUITY OFFICE PROPERTIES TRUST
                      COMMON SHARES OF BENEFICIAL INTEREST
                             ---------------------
 
   
    Equity Office Properties Trust (together with its subsidiaries, the
"Company") has been formed to continue and expand the national office property
business organized by Mr. Samuel Zell, Chairman of the Board of Trustees of the
Company. The Company will be a fully integrated, self-administered and
self-managed real estate company and expects to qualify as a real estate
investment trust ("REIT") for federal income tax purposes. Upon completion of
the offering (the "Offering"), the Company will own 90 office properties
containing approximately 32.2 million rentable square feet and 14 parking
facilities containing approximately 14,785 parking spaces, located in 47 markets
throughout the United States. The Company expects to control the largest office
portfolio (based on revenues and square footage) of any publicly traded, full
service office company in the United States.
    
 
   
    All of the common shares of beneficial interest, $.01 par value per share,
of the Company ("Common Shares") offered hereby are being sold by the Company
and will represent approximately 15.7% of the Company's outstanding common
equity. The remaining common equity in the Company will be beneficially owned
75% by existing investors and 9.3% by officers and trustees of the Company and
certain other affiliated parties. Of the 25,000,000 Common Shares being offered
hereby, 5,000,000 Common Shares are being offered initially outside the United
States and Canada by the International Managers and 20,000,000 Common Shares are
being offered initially in the United States and Canada by the U.S.
Underwriters. See "Underwriting."
    
 
   
    Prior to the Offering, there has been no public market for the Common
Shares. It is currently anticipated that the initial public offering price per
share will be between $19.00 and $21.00. See "Underwriting" for a discussion of
the factors to be considered in determining the initial public offering price.
The Common Shares have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance, under the symbol "EOP". There is no
assurance that a public trading market will develop or be sustained.
    
                             ---------------------
 
   
     SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE COMMON SHARES, INCLUDING:
    
 
    - The possibility that the consideration paid by the Company for the
     properties and other assets contributed to the Company in its formation may
     exceed their fair market value, and the fact that there were no arm's
     length negotiations or third-party appraisals of such properties and other
     assets in connection with the formation of the Company;
   
    - Conflicts of interest in connection with the Company's formation and
     operation, including the receipt by Mr. Zell and other trustees and
     officers of the Company of equity interests therein;
    
    - Real estate investment and property management risks, such as the need to
     renew leases or relet space upon lease expirations, the potential
     instability of cash flows and changes in the value of office properties
     owned by the Company due to economic and other conditions;
   
    - The possibility that the Company may not be able to refinance outstanding
     indebtedness (approximately $1.6 billion on a pro forma basis as of March
     31, 1997) upon maturity, that indebtedness might be refinanced on less
     favorable terms, interest rates might increase on variable rate
     indebtedness, and the lack of limitations in the Company's organizational
     documents on the amount of indebtedness that the Company may incur; and
    
   
    - Taxation of the Company as a regular corporation if it fails to qualify as
     a REIT, and the resulting decrease in cash available for distribution.
    
                             ---------------------
 
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
 
<TABLE>
<CAPTION>
======================================================================================================================
                                                    PRICE TO               UNDERWRITING             PROCEEDS TO
                                                     PUBLIC                DISCOUNT(1)               COMPANY(2)
- ----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                      <C>                      <C>
Per Common Share...........................            $                        $                        $
- ----------------------------------------------------------------------------------------------------------------------
Total(3)...................................            $                        $                        $
======================================================================================================================
</TABLE>
 
(1) The Company has agreed to indemnify the several Underwriters against certain
    liabilities, including liabilities under the Securities Act of 1933, as
    amended. See "Underwriting."
(2) Before deducting estimated expenses of $         payable by the Company.
   
(3) The Company has granted the International Managers a 30-day option to
    purchase up to an additional 750,000 Common Shares and has granted the U.S.
    Underwriters a 30-day option to purchase up to an additional 3,000,000
    Common Shares, on the same terms and conditions as set forth above, solely
    to cover over-allotments, if any. If such options are exercised in full, the
    total Price to Public, Underwriting Discount and Proceeds to Company will be
    $         , $         and $         , respectively. See "Underwriting."
    
                             ---------------------
 
    The Common Shares are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them, subject to approval of
certain legal matters by counsel to the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Common Shares offered hereby will be made in New York, New York,
on or about             , 1997.
                             ---------------------
 
   
MERRILL LYNCH INTERNATIONAL LIMITED
    
   
                                     CREDIT LYONNAIS
    
   
                                                   UBS LIMITED
    
                             ---------------------
              The date of this Prospectus is              , 1997.
<PAGE>   216
 
                                  UNDERWRITING
 
   
     Subject to the terms and conditions in the International purchase agreement
(the "International Purchase Agreement"), between the Company and each of the
underwriters named below (the "International Managers"), and concurrently with
the sale of the 20,000,000 Common Shares to the U.S. Underwriters (as defined
below), the Company has agreed to sell to each of the International Managers,
for whom Merrill Lynch International Limited, Credit Lyonnais and UBS Limited,
are acting as Lead Managers (the "Lead Managers"), and each of the International
Managers has severally agreed to purchase from the Company, the respective
number of Common Shares set forth below opposite their respective names:
    
 
   
<TABLE>
<CAPTION>
                        UNDERWRITER                           NUMBER OF COMMON SHARES
                        -----------                           -----------------------
<S>                                                           <C>
Merrill Lynch International Limited.........................
Credit Lyonnais.............................................
UBS Limited ................................................
                                                                    ----------
             Total .........................................         5,000,000
                                                                    ==========
</TABLE>
    
 
   
     The Company has also entered into a purchase agreement (the "U.S. Purchase
Agreement" and, together with the International Purchase Agreement, the
"Purchase Agreements") with certain underwriters in the United States and Canada
(the "U.S. Underwriters" and, together with the International Managers, the
"Underwriters") for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Lehman Brothers Inc., J.P. Morgan & Co., Prudential Securities Incorporated and
Smith Barney Inc. are acting as representatives. Subject to the terms and
conditions set forth in the U.S. Purchase Agreement and concurrently with the
sale of 5,000,000 Common Shares to the International Managers pursuant to the
International Purchase Agreement, the Company has agreed to sell to the U.S.
Underwriters, and the U.S. Underwriters have severally agreed to purchase from
the Company, an aggregate of 20,000,000 Common Shares. The initial public
offering price per share and the total underwriting discount per share are
identical under the U.S. Purchase Agreement and the International Purchase
Agreement.
    
 
     In each Purchase Agreement, the several U.S. Underwriters and the several
International Managers have agreed, respectively, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the Common
Shares being sold pursuant to such Purchase Agreement if any of such Common
Shares are purchased. Under certain circumstances, the commitments of
non-defaulting U.S. Underwriters or International Managers (as the case may be)
may be increased. The sale of Common Shares pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement are conditioned upon each
other.
 
   
     The Lead Managers have advised the Company that the International Managers
propose initially to offer the Common Shares to the public at the public
offering price per share set forth on the cover page of this Prospectus, and to
certain Banks, Brokers and Dealers (the "Selling Group") at such price less a
concession not in excess of $.       per share. The International Managers may
allow, and such dealers may re-allow, a discount not in excess of $.       per
share on sales to certain other International Managers and members of the
Selling Group. After the date of this Prospectus, the initial public offering
price, concession and discount may be changed. The Company has been informed
that the U.S. Underwriters and the International Managers have entered into an
agreement (the "Intersyndicate Agreement") providing for the coordination of
their activities. Under the terms of the Intersyndicate Agreement, the U.S.
Underwriters and the International Managers are permitted to sell Common Shares
to each other for purposes of resale at the initial public offering price, less
an amount not greater than the selling concession. Under the terms of the
Intersyndicate Agreement, the International Managers and any dealer to whom they
sell Common Shares will not offer to sell or sell Common Shares to persons who
are United States persons or Canadian persons or to persons they believe intend
to resell to persons who are United States persons or Canadian persons, and the
U.S. Underwriters and any dealer to whom they sell Common Shares will not offer
to sell or sell Common Shares to persons who are non-United States and
non-Canadian persons or to persons they believe intend to resell to non-United
States and non-Canadian persons, except in each case for transactions pursuant
to such agreement.
    
 
                                       121
<PAGE>   217
 
   
     The Company has granted to the International Managers an option,
exercisable for 30 days after the date of this Prospectus, to purchase up to
750,000 additional Common Shares to cover over-allotments, if any, at the
initial public offering price, less the underwriting discount set forth on the
cover page of this Prospectus. If the International Managers exercise this
option, each International Manager will have a firm commitment, subject to
certain conditions, to purchase approximately the same percentage thereof which
the number of Common Shares to be purchased by it shown in the foregoing table
bears to such International Managers initial amount reflected in the foregoing
table. The Company also has granted an option to the U.S. Underwriters,
exercisable during the 30-day period after the date of this Prospectus, to
purchase up to 3,000,000 additional Common Shares to cover overallotments, if
any, on terms similar to those granted to the International Managers.
    
 
     At the request of the Company, the U.S. Underwriters have reserved up to
1,250,000 Common Shares (the "Reserved Shares") for sale at the public offering
price to certain employees of the Company, the Company's business affiliates and
other parties who have expressed an interest in purchasing Common Shares. The
number of Common Shares available to the general public will be reduced to the
extent these persons purchase the Reserved Shares. Any Reserved Shares that are
not so purchased by such persons at the completion of the Offering will be
offered by the U.S. Underwriters to the general public on the same terms as the
other shares offered by this Prospectus.
 
   
     Each of the Company and the International Managers has represented and
agreed that (a) it has not offered or sold, and prior to the date six months
after the date of this Prospectus will not offer or sell any Common Shares to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purpose of their businesses or otherwise in
circumstances which do not constitute an offer to the public in the United
Kingdom for the purposes of the Public Offers of Securities Regulations 1995,
(b) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in relation to
the Common Shares in, from or otherwise the United Kingdom and (c) it has only
issued or passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue or sale of the Common
Shares to a person who is of a kind described in Article II(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a
person to whom the document may otherwise lawfully be issued or passed on.
    
 
     Until the distribution of the Common Shares is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Common Shares. As an
exception to these rules, the U.S. Representatives are permitted to engage in
certain transactions that stabilize the price of the Common Shares. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Common Shares.
 
     If the Underwriters create a short position in the Common Shares in
connection with the Offering, i.e., if they sell more Common Shares than are set
forth on the cover page of this Prospectus, the U.S. Representatives and the
International Managers, respectively, may reduce that short position by
purchasing Common Shares in the open market. The U.S. Representatives and the
International Managers, respectively, may also elect to reduce any short
position by exercising all or part of the over-allotment option described above.
 
     The U.S. Representatives and the International Managers, respectively, may
also impose a penalty bid on certain Underwriters and selling group members.
This means that if the U.S. Representatives or the International Managers
purchase Common Shares in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Shares, they may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the offering.
 
     In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
 
                                       122
<PAGE>   218
 
     Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Shares. In addition, neither
the Company nor any of the Underwriters makes any representation that the U.S.
Representatives or the International Managers will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.
 
     In the Purchase Agreements, the Company has agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act. Insofar as indemnification of the Underwriters for liabilities
arising under the Securities Act may be permitted pursuant to the foregoing
provision, the Company has been informed that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
 
     The Company and the Operating Partnership have agreed, subject to certain
exceptions, not to sell, offer or contract to sell, grant any option for the
sale of, or otherwise dispose of any Common Shares or Units or any securities
convertible into or exchangeable for Common Shares or Units for a period of one
year from the date of the Prospectus, without the prior written consent of
Merrill Lynch.
 
     The Underwriters do not intend to confirm sales to any account over which
they exercise discretionary authority.
 
     Prior to the Offering, there has been no public market for the Common
Shares of the Company. The initial public offering price will be determined
through negotiations between the Company and the U.S. Representatives. Among the
factors to be considered in such negotiations, in addition to prevailing market
conditions, will be dividend yields and financial characteristics of publicly
traded REITs that the Company and the U.S. Representatives believe to be
comparable to the Company, the expected results of operations of the Company
(which will be based on the results of operations of the Properties and the
management and leasing businesses in recent periods), estimates of the future
business potential and earnings prospects of the Company as a whole and the
current state of the real estate market in the Company's primary markets and the
economy as a whole.
 
     Affiliates of Merrill Lynch served as placement agent in connection with
the offer and sale of interests in each of the ZML Funds. In addition,
affiliates of Merrill Lynch regularly provide investment banking services to
affiliates of the Equity Group Owners.
 
     Affiliates of Merrill Lynch currently are limited partners of the ZML
Partners and in such capacity have received fees in the amount of $3,068,000 for
the year ended December 31, 1996 and expect to receive $777,000 for 1997 from
the Company and its predecessors. Such affiliates will receive less than 1% of
the ownership interest in the Company (on a fully diluted basis) upon
consummation of the Consolidation (without giving effect to the Offering).
Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of Merrill
Lynch is the lead managing underwriter of the Offering and will receive standard
underwriter's compensation in connection therewith.
 
                                    EXPERTS
 
     The combined financial statements of Equity Office Predecessors at December
31, 1996 and 1995, and for each of the three years in the period ended December
31, 1996, the statements of revenue and certain expenses for Promenade II, Two
California Plaza, BP Tower, SunTrust Center, Reston Town Center, Colonnade I,
177 Broad Street, Preston Commons, Oakbrook Terrace Tower, One Maritime Plaza,
201 Mission and 30 N. LaSalle and the balance sheet of Equity Office Properties
Trust, a Maryland real estate investment trust as of December 31, 1996, all
appearing in this Prospectus and Registration Statement, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere herein, and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
 
                                       123
<PAGE>   219
 
======================================================
  NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON SHARES IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
                               ------------------
                           SUMMARY TABLE OF CONTENTS
 
   
<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
Summary...............................    1
Risk Factors..........................   12
The Company...........................   23
Business and Growth Strategies........   26
Use of Proceeds.......................   27
Distributions.........................   28
Capitalization........................   34
Dilution..............................   35
Selected Combined Financial Data......   36
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................   38
The Properties........................   47
Management............................   74
Structure and Formation of the
  Company.............................   82
Policies with Respect to Certain
  Activities..........................   87
Certain Relationships and Related
  Transactions........................   89
Principal Shareholders................   91
Shares of Beneficial Interest.........   93
Certain Provisions of Maryland Law and
  the Company's Declaration of Trust
  and Bylaws..........................   97
Partnership Agreement.................  100
Shares Available for Future Sale......  103
Federal Income Tax Considerations.....  104
ERISA Considerations..................  118
Underwriting..........................  121
Experts...............................  123
Legal Matters.........................  123
Additional Information................  124
Glossary of Terms.....................  125
Index to Financial Statements.........  F-1
</TABLE>
    
 
                               ------------------
UNTIL             , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON SHARES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
 
======================================================
 
   
                            25,000,000 COMMON SHARES
    
 
                                 EQUITY OFFICE
                                PROPERTIES TRUST
 
                                 COMMON SHARES
   
                                       OF
    
   
                              BENEFICIAL INTEREST
    
 
                          ---------------------------
 
                                   PROSPECTUS
                          ---------------------------
   
                      MERRILL LYNCH INTERNATIONAL LIMITED
    
   
                                CREDIT LYONNAIS
    
   
                                  UBS LIMITED
    
                                           , 1997
 
======================================================
<PAGE>   220
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 30.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table itemizes the expenses incurred by the Company in
connection with the Offering. All amounts are estimated except for the
Registration Fee and the NASD Fee.
 
   
<TABLE>
<S>                                                           <C>
Registration Fee............................................  $  177,727
NASD Fee....................................................      30,500
New York Stock Exchange Listing Fee.........................      84,600
Printing and Engraving Expenses.............................     500,000
Legal Fees and Expenses.....................................     775,000
Accounting Fees and Expenses................................     750,000
Blue Sky Fees and Expenses..................................      15,000
Environmental and Engineering Expenses......................     210,000
Miscellaneous...............................................     457,173
                                                              ----------
          TOTAL.............................................  $3,000,000
                                                              ==========
Indemnification Insurance Costs (see Item 33)...............     250,000
                                                              ----------
</TABLE>
    
 
- ---------------
 
* To be completed by amendment.
 
ITEM 31.  SALES TO SPECIAL PARTIES
 
     See Item 32.
 
ITEM 32.  RECENT SALES OF UNREGISTERED SECURITIES
 
     Prior to the Offering, the Company sold 1,000 unregistered Common Shares to
Mr. Zell for a purchase price of $25.00 per Common Share.
 
   
     Immediately prior to the closing of the Offering, pursuant to the
Contribution Agreement, (i) each ZML Opportunity Partnership will contribute to
the Operating Partnership substantially all of its assets and liabilities in
exchange for an aggregate of 126,294,295 Units and (ii) EGI and EOH, each of
which is owned by affiliates of Mr. Zell and which are referred to collectively
as the "Equity Group," will contribute the Management Business, and EOH will
contribute 95% of the economic value of that portion of the Management Business
that relates to the Managed Property Business, to the Operating Partnership in
exchange for 8,485,105 Units. EOH and the Operating Partnership then will
jointly contribute the Managed Property Business to the Management Corp., with
EOH receiving voting stock representing 5% of the economic value of the
Management Corp. and the Operating Partnership receiving non-voting stock
representing 95% of the economic value of the Management Corp. As a part of the
contribution of the Management Business, EGI and EOH will contribute their asset
management contracts relating to the Office Properties and the Parking
Facilities to the Operating Partnership in exchange for Units.
    
 
   
     Immediately prior to the closing of the Offering, pursuant to the Merger
Agreement, each ZML REIT will merge with and into the Company and the Company
will issue 122,852,200 Common Shares to the ZML REIT shareholders, 11,408,240 of
which Common Shares will be deposited into the corresponding ZML REIT Escrows,
as described below. As part of the Consolidation, each ZML Opportunity
Partnership will admit the Company as its sole managing general partner and each
ZML Partner will become a non-managing general partner of its ZML Opportunity
Partnership. As a result, the Company will become the 1% managing general
partner in each ZML Opportunity Partnership, the sole limited partner in ZML
Opportunity Partnerships I, III and IV, and the majority limited partner in ZML
Opportunity Partnerships II, owning 98.8% of the capital interests in that
partnership. See "Structure and Formation of the Company -- Formation
Transactions."
    
 
                                      II-1
<PAGE>   221
 
ITEM 33.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     The Company's officers and directors are and will be indemnified under
Maryland and Delaware law, the Declaration of Trust and Bylaws of the Company
and the Partnership Agreement of the Operating Partnership against certain
liabilities. The Declaration of Trust of the Company requires it to indemnify
its directors and officers to the fullest extent permitted from time to time
under Maryland law.
 
     The Declaration of Trust of the Company authorizes it, to the maximum
extent permitted by Maryland law, to obligate itself to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any present or former trustee or officer or (b) any individual who, while a
trustee of the Company and at the request of the Company, serves or has served
as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or any
other enterprise from and against any claim or liability to which such person
may become subject or which such person may incur by reason of his or her status
as a present or former trustee or officer of the Company. The Bylaws of the
Company obligate it, to the maximum extent permitted by Maryland law, to
indemnify and to pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to (a) any present or former trustee or officer who
is made party to the proceeding by reason of his service in that capacity or (b)
any individual who, while a trustee or officer of the Company and at the request
of the Company, serves or has served another real estate investment trust,
corporation, partnership, joint venture, trust, employee benefit plan or any
other enterprise as a trustee, director, officer or partner of such real estate
investment trust, corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise and who is made a party to the proceeding by
reason of his service in that capacity, against any claim or liability to which
he may become subject by reason of such status. The Declaration of Trust and
Bylaws also permit the Company to indemnify and advance expenses to any person
who served as a predecessor of the Company in any of the capacities described
above and to any employee or agent of the Company or a predecessor of the
Company. The Bylaws require the Company to indemnify a trustee or officer who
has been successful, on the merits or otherwise, in the defense of any
proceeding to which he is made a party by reason of his service in that
capacity.
 
     The Maryland REIT Law permits a Maryland real estate investment trust to
indemnify and advance expenses to its trustees, officers, employees and agents
to the same extent as permitted by the MGCL for directors and officers of
Maryland corporations. The MGCL permits a corporation to indemnify its present
and former directors and officers, among others, against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities unless it is established that (a) the
act or omission of the director or officer was material to the matter giving
rise to the proceeding and (i) was committed in bad faith or (ii) was the result
of active and deliberate dishonesty, (b) the director or officer actually
received an improper personal benefit in money, property or services or (c) in
the case of any criminal proceeding, the director or officer had reasonable
cause to believe that the act or omission was unlawful. However, under the MGCL,
a Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation. In accordance with the MGCL, the Bylaws of the
Company require it, as a condition to advancing expenses, to obtain (a) a
written affirmation by the director or officer of his good faith belief that he
has met the standard of conduct necessary for indemnification by the Company as
authorized by the Bylaws and (b) a written statement by or on his behalf to
repay the amount paid or reimbursed by the Company if it shall ultimately be
determined that the standard of conduct was not met.
 
   
     The Company has entered into indemnification agreements with each of its
trustees and executive officers. The indemnification agreements require, among
other things, that the Company indemnify its trustees and executive officers to
the fullest extent permitted by law and advance to the trustees and executive
officers all related expenses, subject to reimbursement if it is subsequently
determined that indemnification is not permitted. Under these agreements, the
Company must also indemnify and advance all expenses incurred by trustees and
executive officers seeking to enforce their rights under the indemnification
agreements and may cover trustees and executive officers under the Company's
trustees and officers' liability insurance. Although the form of indemnification
agreement offers substantially the same scope of coverage afforded by law, as a
traditional form of contract it may provide greater assurance to trustees and
executive officers that indemnification will be available.
    
 
ITEM 34.  TREATMENT OF PROCEEDS FROM STOCK BEING REGISTERED
 
     Not Applicable.
 
                                      II-2
<PAGE>   222
 
ITEM 35.  FINANCIAL STATEMENTS AND EXHIBITS
 
     (a) Financial Statements, all of which are included in the Prospectus:
 
     EQUITY OFFICE PROPERTIES TRUST
   
       Pro Forma Condensed Combined Financial Statements (unaudited):
    
          Pro Forma Condensed Combined Financial Statements
   
          Pro Forma Condensed Combined Balance Sheet as of March 31, 1997
    
   
          Pro Forma Condensed Combined Statement of Operations for the three
          months ended
    
   
          March 31, 1997
    
   
          Pro Forma Condensed Combined Statement of Operations for the year
          ended
    
          December 31, 1996
          Notes to Pro Forma Condensed Combined Financial Statements
 
       Historical:
          Report of Independent Auditors
   
          Balance Sheet as of March 31, 1997 (unaudited) and December 31, 1996
    
          Notes to Balance Sheet
 
     EQUITY OFFICE PREDECESSORS
       Report of Independent Auditors
   
       Combined Balance Sheets as of March 31, 1997 (unaudited), December 31,
       1996 and 1995
    
   
       Combined Statements of Operations for the three months ended March 31,
       1997 and 1996,
    
   
        (unaudited) and the years ended December 31, 1996, 1995 and 1994
    
   
       Combined Statements of Owners' Equity for the three months ended March
       31, 1997 (unaudited) and
    
   
        the years ended December 31, 1996, 1995 and 1994
    
   
       Combined Statements of Cash Flows for the three months ended March 31,
       1997 and 1996,
    
   
        (unaudited) and the years ended December 31, 1996, 1995 and 1994
    
       Notes to Combined Financial Statements
       Schedule III -- Real Estate and Accumulated Depreciation as of December
       31, 1996
 
     PROMENADE II
       Report of Independent Auditors
   
       Statements of Revenue and Certain Expenses for the period from January 1,
       1996 to
    
   
        June 13, 1996 (unaudited) and the year ended December 31, 1995
    
       Notes to Statements of Revenue and Certain Expenses
 
     TWO CALIFORNIA PLAZA
       Report of Independent Auditors
   
       Statements of Revenue and Certain Expenses for the period from January 1,
       1996 to
    
   
        July 31, 1996 (unaudited) and the year ended December 31, 1995
    
       Notes to Statements of Revenue and Certain Expenses
 
     BP TOWER
       Report of Independent Auditors
   
       Statements of Revenue and Certain Expenses for the period from January 1,
       1996 to
    
   
        August 31, 1996 (unaudited) and the year ended December 31, 1995
    
       Notes to Statements of Revenue and Certain Expenses
 
     SUNTRUST CENTER
       Report of Independent Auditors
   
       Statements of Revenue and Certain Expenses for the period from January 1,
       1996 to
    
   
        August 31, 1996 (unaudited) and the year ended December 31, 1995
    
       Notes to Statements of Revenue and Certain Expenses
 
                                      II-3
<PAGE>   223
 
     RESTON TOWN CENTER
       Report of Independent Auditors
   
       Statements of Revenue and Certain Expenses for the period from January 1,
       1996 to
    
   
        September 30, 1996 (unaudited) and the year ended December 31, 1995
    
       Notes to Statements of Revenue and Certain Expenses
 
     COLONNADE I
       Report of Independent Auditors
   
       Statement of Revenue and Certain Expenses for the period from January 1,
       1996 to
    
        December 4, 1996
       Notes to Statement of Revenue and Certain Expenses
 
     177 BROAD STREET
       Report of Independent Auditors
   
       Statement of Revenue and Certain Expenses for the year ended December 31,
       1996
    
       Notes to Statement of Revenue and Certain Expenses
 
     PRESTON COMMONS
       Report of Independent Auditors
   
       Statement of Revenue and Certain Expenses for the year ended December 31,
       1996
    
       Notes to Statement of Revenue and Certain Expenses
 
   
     OAKBROOK TERRACE TOWER
    
   
       Report of Independent Auditors
    
   
       Statements of Revenue and Certain Expenses for the three months ended
       March 31, 1997 (unaudited)
    
   
        and the year ended December 31, 1996
    
   
       Notes to Statements of Revenue and Certain Expenses
    
 
   
     ONE MARITIME PLAZA
    
   
       Report of Independent Auditors
    
   
       Statements of Revenue and Certain Expenses for the three months ended
       March 31, 1997 (unaudited)
    
   
        and the year ended December 31, 1996
    
   
       Notes to Statements of Revenue and Certain Expenses
    
 
   
     201 MISSION STREET
    
   
       Report of Independent Auditors
    
   
       Statements of Revenue and Certain Expenses for the three months ended
       March 31, 1997 (unaudited)
    
   
        and the year ended December 31, 1996
    
   
       Notes to Statements of Revenue and Certain Expenses
    
 
   
     30 N. LASALLE
    
   
       Report of Independent Auditors
    
   
       Statements of Revenue and Certain Expenses for the three months ended
       March 31, 1997 (unaudited)
    
   
        and the year ended December 31, 1996
    
   
       Notes to Statements of Revenue and Certain Expenses
    
 
                                      II-4
<PAGE>   224
 
     (b) Exhibits
 
   
<TABLE>
<S>      <C>  <S>
 1.1*     --  Form of Purchase Agreement
 3.1*     --  Amended and Restated Declaration of Trust of the Company
 3.2*     --  Form of Bylaws of the Company
 5.1      --  Form of Opinion of Rosenberg & Liebentritt, P.C. regarding
              the validity of the securities being registered
 8.1      --  Form of Opinion of Hogan & Hartson L.L.P. regarding certain
              tax matters
10.1*     --  Form of Agreement of Limited Partnership of the Operating
              Partnership
10.2*     --  Form of Registration Rights Agreement between the Company
              and the persons named therein
10.3**    --  1997 Share Option and Share Award Plan
10.4**    --  1997 Non-qualified Employee Share Purchase Plan
10.5**    --  Noncompetition Agreement between the Company and Samuel Zell
10.6*     --  Form of Contribution Agreement
10.7*     --  Merger Agreement
10.8*     --  Form of Indemnification Agreement
21.1      --  List of Subsidiaries
23.1      --  Consent of Rosenberg & Liebentritt, P.C. (included as part
              of Exhibit 5.1)
23.2      --  Consent of Ernst & Young LLP
23.3      --  Consent of Hogan & Hartson L.L.P. (included as part of
              Exhibit 8.1)
23.4      --  Consent of Mr. Dobrowski
23.5      --  Consent of Mr. Harper
23.6      --  Consent of Mr. Linneman
23.7      --  Consent of Mr. Reinsdorf
24.1*     --  Power of Attorney (included in the Signature Page at page
              II-6)
27.1*     --  Financial Data Schedule
</TABLE>
    
 
- ---------------
   
 * Previously filed.
    
   
** To be filed by amendment.
    
 
ITEM 36.  UNDERTAKINGS
 
     The Registrant hereby undertakes:
 
          (1) For purposes of determining any liability under the Securities Act
     of 1933, as amended (the "Act"), the information omitted from the form of
     Prospectus filed as part of the Registration Statement in reliance upon
     Rule 430A and contained in the form of Prospectus filed by the Registrant
     pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed
     to be part of the Registration Statement as of the time it was declared
     effective.
 
          (2) For the purpose of determining any liability under the Act, 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.
 
          (3) The undersigned registrant hereby undertakes to provide to the
     Underwriter at the closing specified in the Underwriting Agreement
     certificates in such denominations and registered in such names as required
     by the Underwriter to permit prompt delivery of each purchaser.
 
          (4) 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 foregoing provisions,
     or otherwise, the registrant has been advised that in the opinion of the
     Securities and Exchange Commission such indemnification is against public
     policy as expressed in the Act and is, therefore, unenforceable. In the
     event that a claim for indemnification against such liabilities (other than
     the payment by the registrant of expenses incurred or paid by a director,
     officer or controlling person of the registrant in the successful defense
     of any action, suit or proceeding) is asserted by such director, officer or
     controlling person in connection with the securities being registered, the
     registrant will, unless in the opinion of its counsel the matter has been
     settled by controlling precedent, submit to a court of appropriate
     jurisdiction the question whether such indemnification by it is against
     public policy as expressed in the Act and will be governed by the final
     adjudication of such issue.
 
                                      II-5
<PAGE>   225
 
                                   SIGNATURES
 
   
     Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable ground to believe that it meets all of the
requirements for filing on Form S-11 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Chicago, Illinois on this 23 day of June, 1997.
    
 
                                          Equity Office Properties Trust
 
                                          By:    /s/ TIMOTHY H. CALLAHAN
                                            ------------------------------------
                                                    Timothy H. Callahan
                                               President and Chief Executive
                                                           Officer
 
   
     Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities indicated as of the 23 day of June, 1997.
    
 
<TABLE>
<CAPTION>
                      SIGNATURE                                         NAME & TITLE
                      ---------                                         ------------
<C>                                                    <S>
               /s/ Timothy H. Callahan                 Timothy H. Callahan, President, Chief
- -----------------------------------------------------    Executive Officer and Trustee
 
               /s/ Timothy H. Callahan                 Richard Kincaid, Chief Financial Officer
- -----------------------------------------------------    (principal financial officer and principal
                                                         accounting officer)
 
               /s/ Timothy H. Callahan                 Samuel Zell, Chairman of the Board of Trustees
- -----------------------------------------------------
 
               /s/ Timothy H. Callahan                 Sheli Z. Rosenberg, Trustee
- -----------------------------------------------------
</TABLE>
 
                                      II-6
<PAGE>   226
 
                                 EXHIBIT INDEX
 
   
<TABLE>
<CAPTION>
                                                                                 PAGE
EXHIBIT NO.                           DESCRIPTION OF EXHIBIT                     NO.
- -----------                           ----------------------                     ----
<C>           <S>  <C>                                                           <C>
    1.1*      --   Form of Purchase Agreement..................................
    3.1*      --   Amended and Restated Declaration of Trust of the Company....
    3.2*      --   Form of Bylaws of the Company...............................
    5.1       --   Form of Opinion of Rosenberg & Liebentritt, P.C. regarding
                   the validity of the securities being registered.............
    8.1       --   Form of Opinion of Hogan & Hartson L.L.P. regarding certain
                   tax matters.................................................
   10.1*      --   Form of Agreement of Limited Partnership of the Operating
                   Partnership.................................................
   10.2*      --   Form of Registration Rights Agreement between the Company
                   and the persons named therein...............................
   10.3**     --   1997 Share Option and Share Award Plan......................
   10.4**     --   1997 Non-qualified Employee Share Purchase Plan.............
   10.5**     --   Noncompetition Agreement between the Company and Samuel
                   Zell........................................................
   10.6*      --   Form of Contribution Agreement..............................
   10.7*      --   Merger Agreement............................................
   10.8*      --   Form of Indemnification Agreement...........................
   21.1       --   List of Subsidiaries........................................
   23.1       --   Consent of Rosenberg & Liebentritt, P.C. (included as part
                   of Exhibit 5.1).............................................
   23.2       --   Consent of Ernst & Young LLP................................
   23.3       --   Consent of Hogan & Hartson L.L.P. (included as part of
                   Exhibit 8.1)................................................
   23.4       --   Consent of Mr. Dobrowski....................................
   23.5       --   Consent of Mr. Harper.......................................
   23.6       --   Consent of Mr. Linneman.....................................
   23.7       --   Consent of Mr. Reinsdorf....................................
   24.1*      --   Power of Attorney (included in the Signature Page at page
                   II-6).......................................................
   27.1*      --   Financial Data Schedule.....................................
</TABLE>
    
 
- ---------------
 
   
 * Previously filed.
    
   
** To be filed by amendment.
    

<PAGE>   1
                                                                EXHIBIT 5.1

                 [ROSENBERG & LIEBENTRITT, P.C. LETTERHEAD]


RUTH PINKHAM HARING                                 

WRITER'S DIRECT DIAL NUMBER                          WRITER'S DIRECT FAX NUMBER 

      312.466.3612                                          312.906.9293

                                 June __, 1997



Board of Trustees
Equity Office Properties Trust
Two North Riverside Plaza, Suite 2200
Chicago, Illinois  60606


       Re:  Registration Statement on Form S-11
            (Registration No. 333-26629)
            -----------------------------------


Ladies and Gentlemen:

     We have served as Maryland counsel to Equity Office Properties Trust, a
Maryland real estate investment trust (the "Company"), in connection with
certain matters of Maryland law arising out of the registration of 28,750,000
common shares of beneficial interest (the "Shares"), $.01 par value per share,
of the Company ("Common Shares") (including up to 3,750,000 Shares which may be
issued pursuant to the exercise of an overallotment option granted by the
Company to the Underwriters), covered by the above-referenced Registration
Statement, and all amendments thereto (the "Registration Statement"), filed by
the Company with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "1933 Act").  Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in the Registration Statement.

     In connection with our representation of the Company, and as a basis for
the opinion hereinafter set forth, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the following
documents (collectively, the "Documents"):

     1. The Registration Statement and the related form of prospectus included
therein in the form in which it was transmitted to the Commission under the
1933 Act;

     2. The Articles of Amendment and Restatement of Declaration of Trust of
the Company (the "Declaration of Trust"), certified as of a recent date by the
State Department of Assessments and Taxation of Maryland (the "SDAT");

     3. The Bylaws of the Company, certified as of a recent date by an officer
of the Company;

     4. Resolutions adopted by the Board of Trustees of the Company (the
"Board") relating to the sale, issuance and registration of the Shares,
certified as of a recent date by an officer of the Company (the "Resolutions");



<PAGE>   2





Board of Trustees
Equity Office Properties Trust
June __, 1997
Page 2



     5. The form of certificate representing a Common Share, certified as of a
recent date by an officer of the Company;

     6. A certificate of the SDAT as to the good standing of the Company, dated
as of a recent date;

     7. A certificate executed by an officer of the Company, dated as of a
recent date; and

     8. Such other documents and matters as we have deemed necessary or
appropriate to express the opinion set forth in this letter, subject to the
assumptions, limitations and qualifications stated herein.

     In expressing the opinion set forth below, we have assumed, and so far as
is known to us there are no facts inconsistent with the following:

     1. Each individual executing any of the Documents, whether on behalf of
such individual or another person, is legally competent to do so.

     2. Each individual executing any of the Documents on behalf of a party
(other than the Company) is duly authorized to do so.

     3. Each of the parties (other than the Company) executing any of the
Documents has duly and validly executed and delivered each of the Documents to
which such party is a signatory, and such party's obligations set forth herein
are legal, valid and binding.

     4. All Documents submitted to us as originals are authentic.  All
Documents submitted to us as certified or photostatic copies conform to the
original documents.  All signatures on all such Documents are genuine.  All
public records reviewed or relied upon by us or on our behalf are true and
complete.  All statements and information contained in the Documents are true
and complete.  There are no oral or written modifications or amendments to the
Documents, by action or conduct of the parties or otherwise.

     5. The outstanding shares of beneficial interest of the Company have not
been and will not be transferred in violation of any restriction or limitation
contained in the Declaration of Trust.  The Shares will not be transferred in
violation of any restriction or limitation contained in the Declaration of
Trust.

     6. As contemplated by the Resolutions, the Board or a duly authorized
committee thereof will adopt resolutions including all information required by
Section 2-203 of the Maryland General Corporation Law prior to the issuance of
the Shares.




<PAGE>   3





Board of Trustees
Equity Office Properties Trust
June __, 1997
Page 3



     The phrase "known to us" is limited to the actual knowledge, without
independent inquiry, of the lawyers at our firm who have performed legal
services in connection with the issuance of this opinion.

     Based upon the foregoing, and subject to the assumptions, limitations and
qualifications stated herein, it is our opinion that:

     1. The Company is a real estate investment trust duly formed and existing
under and by virtue of the laws of the State of Maryland and is in good
standing with the SDAT.

     2. Upon the completion of all Corporate Proceedings relating to the Shares
and the due execution, countersignature and delivery of certificates
representing the Shares and assuming that that sum of (a) all Common Shares
issued as of the date thereof, (b) any Common Shares issued between the date
hereof and the date on which the Shares are actually issued (not including any
of the Shares), and (c) the Shares will not exceed the total number of Common
Shares that the Company is authorized to issue, the Shares are duly authorized
with the Resolutions, will be validly issued, fully paid and nonassessable.

     We call your attention to the fact that our firm only requires lawyers to
be qualified to practice law in the State of Illinois and, in rendering the
foregoing opinions, we express no opinion with respect to any laws relevant to
this opinion other than the laws and regulations identified herein.  With
respect to the opinions below that relate to the laws of the State of Maryland,
with your consent, we rely solely on the opinion of Ballard Spahr Andrews and
Ingersoll, a copy of which is attached hereto as Exhibit A.

     We assume no obligation to supplement this opinion if any applicable law
changes after the date hereof or if we become aware of any fact that might
change the opinion expressed herein after the date hereof.

     This opinion is being furnished to you solely for submission to the
Commission as an exhibit to the Registration Statement and, accordingly, may
not be relied upon by, quoted in any manner to, or delivered to any other
person or entity without, in each instance, our prior written consent.

     We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm therein.  In
giving this consent, we do not



<PAGE>   4





Board of Trustees
Equity Office Properties Trust
June __, 1997
Page 4


admit that we are within the category of persons whose consent is required by
Section 7 of the 1933 Act.

                                        Very truly yours,




<PAGE>   5
                                                                EXHIBIT A


               [LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL]





                                 June __, 1997


Board of Trustees
Equity Office Properties Trust
Two North Riverside Plaza, Suite 2200
Chicago, Illinois 60606

                 Re:      Registration Statement on Form S-11
                          (Registration No. 333-26629)       
                                        

Ladies and Gentlemen:

                 We have served as Maryland counsel to Equity Office Properties
Trust, a Maryland real estate investment trust (the "Company"), in connection
with certain matters of Maryland law arising out of the registration of
28,750,000 common shares of beneficial interest (the "Shares"), $.01 par
value per share, of the Company ("Common Shares") covered by the above-
referenced Registration Statement (including up to 3,750,000 Shares which may 
be issued pursuant to the exercise of an over-allotment option granted by the 
Company to the Underwriters), and all amendments thereto (the "Registration 
Statement"), filed by the Company with the Securities and Exchange Commission 
(the "Commission") under the Securities Act of 1933, as amended (the "1933 
Act").  Unless otherwise defined herein, capitalized terms used herein shall 
have the meanings assigned to them in the Registration Statement.
        
                 In connection with our representation of the Company, and as a
basis for the opinion hereinafter set forth, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of the following
documents (collectively, the "Documents"):





<PAGE>   6

Equity Office Properties
June __, 1997
Page 2




                 1.       The Registration Statement and the related form of
prospectus included therein in the form in which it was transmitted to the
Commission under the 1933 Act;

                 2.       The Articles of Amendment and Restatement of
Declaration of Trust of the Company (the "Declaration of Trust"), certified as
of a recent date by the State Department of Assessments and Taxation of
Maryland (the "SDAT");

                 3.       The Bylaws of the Company, certified as of a recent
date by an officer of the Company;

                 4.       Resolutions adopted by the Board of Trustees of the
Company (the "Board") relating to the sale, issuance and registration of the
Shares, certified as of a recent date by an officer of the Company (the
"Resolutions");

                 5.       The form of certificate evidencing a Common Share,
certified as of a recent date by an officer of the Company;

                 6.       A certificate of the SDAT as to the good standing of
the Company, dated as of a recent date;

                 7.       A certificate executed by an officer of the
Company, dated as of a recent date; and

                 8.       Such other documents and matters as we have deemed
necessary or appropriate to express the opinion set forth in this letter,
subject to the assumptions, limitations and qualifications stated herein.

                 In expressing the opinion set forth below, we have assumed,
and so far as is known to us there are no facts inconsistent with, the
following:

                 1.       Each individual executing any of the Documents,
whether on behalf of such individual or another person, is legally competent to
do so.

                 2.       Each individual executing any of the Documents on
behalf of a party (other than the Company) is duly authorized to do so.





<PAGE>   7

Equity Office Properties
June __, 1997
Page 3




                 3.       Each of the parties (other than the Company)
executing any of the Documents has duly and validly executed and delivered each
of the Documents to which such party is a signatory, and such party's
obligations set forth therein are legal, valid and binding.

                 4.       All Documents submitted to us as originals are
authentic.  All Documents submitted to us as certified or photostatic copies
conform to the original documents.  All signatures on all such Documents are
genuine.  All public records reviewed or relied upon by us or on our behalf are
true and complete.  All statements and information contained in the Documents
are true and complete.  There are no oral or written modifications or
amendments to the Documents, by action or conduct of the parties or otherwise.

                 5.       The outstanding shares of beneficial interest of the 
Company have not been and will not be transferred in violation of any
restriction or limitation contained in the Declaration of Trust.  The 
Shares will not be transferred in violation of any restriction or 
limitation contained in the Declaration of Trust. 
        
                 6.       As contemplated by the Resolutions, the Board of
Trustees or a duly authorized committee thereof will adopt resolutions
including all information required by Section 2-203 of the Maryland General
Corporation Law prior to the issuance of the Shares.
        
                 The phrase "known to us" is limited to the actual knowledge,
without independent inquiry, of the lawyers at our firm who have performed
legal services in connection with the issuance of this opinion.

                 Based upon the foregoing, and subject to the assumptions,
limitations and qualifications stated herein, it is our opinion that:

                 1.       The Company is a real estate investment trust duly
formed and existing under and by virtue of the laws of the State of Maryland
and is in good standing with the SDAT.
        




<PAGE>   8

Equity Office Properties
June __, 1997
Page 4





                 2.       Upon the due execution, countersignature and delivery
of certificates representing the Shares and assuming that the sum of (a) all
Common Shares issued as of the date hereof, (b) any Common Shares issued
between the date hereof and the date on which the Shares are actually issued
(not including any of the Shares), and (c) the Shares will not exceed the total
number of Common Shares that the Company is authorized to issue, the Shares are
duly authorized and, when and if delivered against payment therefor in
accordance with the Resolutions, will be validly issued, fully paid and
nonassessable.
        
                 The foregoing opinion is limited to the laws of the State of
Maryland and we do not express any opinion herein concerning any other law.
The opinion expressed herein is subject to the effect of judicial decisions
which may permit the introduction of parol evidence to modify the terms or the
interpretation of agreements.  We express no opinion as to compliance with the
securities (or "blue sky") laws of the State of Maryland.

                 We assume no obligation to supplement this opinion if any
applicable law changes after the date hereof or if we become aware of any fact
that might change the opinion expressed herein after the date hereof.

                 This opinion is being furnished to you solely for submission
to the Commission as an exhibit to the Registration Statement and, accordingly,
may not be relied upon by, quoted in any manner to, or delivered to any other
person or entity without, in each instance, our prior written consent.

                 We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of the name of our firm therein.
In giving this consent, we do not admit that we are within the category of
persons whose consent is required by Section 7 of the 1933 Act.

                                        Very truly yours,






<PAGE>   1
                                                                     EXHIBIT 8.1
   



                [FORM OF OPINION REGARDING CERTAIN TAX MATTERS]






                              _____________, 1997




Equity Office Properties Trust
Two North Riverside Plaza
Chicago, Illinois  60606

Ladies and Gentlemen:


     We have acted as special tax counsel to Equity Office Properties Trust, a
Maryland real estate investment trust (the "Company"), in connection with the
initial public offering (the "IPO") of common shares of beneficial interest,
$.01 par value per share, of the Company (the "Shares"), as more fully
described in the Company's Registration Statement on Form S-11 as filed with
the Security and Exchange Commission on May 7, 1997, (the "Registration
Statement"), as amended through the date hereof.  In connection with the IPO,
we have been asked to provide you with opinions on certain federal income tax
matters.  Capitalized terms used in this letter and not otherwise defined
herein shall have the meanings set forth in the Registration Statement.


BASES FOR OPINIONS

     The opinions set forth in this letter are based on relevant current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury Regulations thereunder (including proposed and temporary Treasury
Regulations), and interpretations of the foregoing as expressed in court
decisions, the legislative history, and administrative determinations
(including its practices and policies in issuing private letter rulings, which
are not binding on the Internal Revenue Service (the "IRS") except with respect
to a taxpayer that receives such a ruling), all as of the date hereof.  These
provisions and interpretations are subject to changes,
    
<PAGE>   2
   
Equity Office Properties Trust
______, 1997
Page 2


which may or may not be retroactive in effect, that might result in material
modifications of our opinions.  Our opinion does not foreclose the
possibility of a contrary determination by the IRS or a court of competent
jurisdiction, or of a contrary position by the IRS or the Treasury Department
in regulations or rulings issued in the future.  In this regard, an opinion of
counsel with respect to an issue merely represents counsel's best judgment with
respect to the probable outcome on the merits with respect to such issue, is
not binding on the IRS or the courts, and is not a guarantee that the IRS will
not assert a contrary position with respect to such issue or that a court will
not sustain such a position asserted by the IRS.

     In rendering the following opinions, we have examined such statutes,
regulations, records, certificates and other documents as we have considered
necessary or appropriate as a basis for such opinions, including the following:
(1) the Registration Statement; (2) the Contribution Agreement (including the
various exhibits thereto); (3)  the Agreement of Limited Partnership of the
Operating Partnership, dated as of ___________________, 1997; (4) the
Declaration of Trust of the Company dated as of October 9, 1996; (5) the
agreements of limited partnership, as amended to the date hereof, of each of
the ZML Opportunity Partnerships; (6) the articles of incorporation or
declaration of trust, as applicable, as amended to the date hereof, of each of
the ZML REITs; (7) the form of partnership agreement or limited liability
company operating agreement, as applicable, used by the ZML Opportunity
Partnerships to organize and operate the partnerships and limited liability
companies in which one or more of the ZML Opportunity Partnerships owns an
interest (collectively, the "Partnership Subsidiaries"); (8) the articles of
organization and stock ownership records of each corporation in which one or
more of the ZML Opportunity Partnerships owns stock (collectively, the
"Corporate Entities"); (9) the articles of incorporation and by-laws and stock
ownership information for the Management Corporation; (10) other necessary
documents; and (11) the facts as we have deemed necessary to render the
opinions set forth in this letter.  The opinions set forth in this letter also
are premised on certain written representations of the Company and each of the
ZML REITs contained in letters to us regarding the assets, operations and
activities of each of the ZML REITs in the past and as to the contemplated
assets, operations and activities of the Company in the future (collectively,
the "Management Representation Letters").

     We have made such legal and factual inquiries, including examination of
the documents set forth above, as we have deemed necessary or appropriate for
purposes of these opinions.  For purposes of rendering our opinion, however, we
have not made an independent investigation or audit of the facts set forth in
any of
    


<PAGE>   3
   
Equity Office Properties Trust
______, 1997
Page 3



the above-referenced documents, including the Registration Statement and the
Management Representation Letters.  We consequently have relied upon
representations in the Management Representation Letters that the information
presented in such documents or otherwise furnished to us is accurate and
complete in all material respects.  We are not, however, aware of any material
facts or circumstances contrary to, or inconsistent with, the representations
we have relied upon as described herein, or other assumptions set forth herein.

     Moreover, we have assumed that (i) each of the ZML REITs, the ZML
Opportunity Partnerships, the Partnership Subsidiaries, and the Corporate
Entities in which a ZML Opportunity Partnership owns an interest have been
operated in the manner described in the relevant partnership agreement,
articles (or certificate) of incorporation, declaration of trust or other
organizational documents; (ii) each of the Company, the Operating Partnership,
the ZML Opportunity Partnerships, the Partnership Subsidiaries, and the
Corporate Entities has and will be operated in the manner described in the
relevant partnership agreement, declaration of trust, articles (or certificate)
of incorporation, or other organizational documents and in the Registration
Statement; (iii) as represented by the Company, there are no agreements or
understandings between the Company or the Operating Partnership, on the one
hand, and the entities that own the voting stock of the Management Corp. and
the other Corporate Entities (the "Voting Stock Entities") or their respective
owners, on the other, that are inconsistent with the Voting Stock Entities
being considered to be both the record and beneficial owner of more than 90% of
the outstanding voting stock of each of the Corporate Entities; and (iv) the
Company is a validly organized and duly incorporated real estate investment
trust under the laws of the State of Maryland, each of the Corporate Entities
are validly organized and duly incorporated corporations under the laws of the
state in which they were purported to be organized (as applicable), the
Operating Partnership is a duly organized and validly existing limited
partnership under the laws of the State of Delaware, each of the ZML
Opportunity Partnerships is a duly organized and validly existing limited
partnership under the laws of the State of Illinois, and each of the
Partnership Subsidiaries is a duly organized and validly existing partnership
or limited liability company, as the case may be, under the applicable laws of
the state in which they were purported to be organized.

     In our review, we have assumed that all of the representations and
statements set forth in the documents that we reviewed (including the
Management Representation Letters) are true and correct, and all of the
obligations imposed by any such documents on the parties thereto, including
obligations imposed under the 
    


<PAGE>   4
   
Equity Office Properties Trust
______, 1997
Page 4

Declaration of Trust of the Company, have been and will continue to be performed
or satisfied in accordance with their terms.  We also have assumed the
genuineness of all signatures, the proper execution of all documents, the
authenticity of all documents submitted to us as originals, the conformity to
originals of documents submitted to us as copies, and the authenticity of the
originals from which any copies were made.

OPINIONS

     Based upon, subject to, and limited by the assumptions and qualifications
set forth herein, we are of the opinion as follows:

        1. The Company is organized in conformity with the requirements for
qualification and taxation as a real estate investment trust ("REIT") under the
Code, and the Company's proposed method of operation, as of the date hereof,
should enable it to continue to meet the requirements for qualification and
taxation as a REIT for its taxable year ending December 31, 1997 and subsequent
taxable years.

        2. The discussions in the Registration Statement under the heading
"FEDERAL INCOME TAX CONSIDERATIONS," to the extent that such discussions
describe matters of law or legal conclusions, are correct in all material
respects.

        3. The Operating Partnerships and each of the Opportunity Partnerships
will be treated as a partnership for federal income tax purposes and will not
be subject to federal tax as a corporation or an association taxable as a
corporation.

     We assume no obligation to advise you of any changes in our opinion
subsequent to the deliveries of this opinion letter.  The Company's
qualification and taxation as a REIT depends upon both (i) the ZML REITs'
satisfaction in the past, and (ii) the Company's ability to meet on a
continuing basis in the future, through actual annual operating and other
results, the various requirements under the Code and described in the
Registration Statement with regard to, among other things, the sources of their
gross income, the composition of their assets, the level of its distributions
to shareholders, and the diversity of their stock ownership.  Hogan & Hartson
L.L.P. has relied upon representations of the Company and the ZML REITs with
respect to these matters (including those set forth in the Management
Representation Letters) and will not review the Company's compliance with these
requirements on a continuing basis.  Accordingly, no assurance can be given
that 
    
<PAGE>   5

   
Equity Office Properties Trust
______, 1997
Page 5


the actual results of the Company's operations, the sources of its income, the
nature  of its assets, the level of its distributions to shareholders and the
diversity of its share ownership for any given taxable year will satisfy the
requirements under the Code for qualification and taxation as a REIT.

     This opinion letter has been prepared solely for your use in connection
with the IPO and should not be quoted in whole or in part or otherwise be
referred to, nor filed with or furnished to any governmental agency or other
person or entity, without the prior written consent of this firm.

     We hereby consent to the filing of this opinion letter as Exhibit 8.1 to
the Registration Statement and to the reference to this firm under the captions
"Legal Matters" and "Federal Income Tax Considerations" in the Registration
Statement.  In giving this consent, we do not thereby admit that we are an
"expert" within the meaning of the Securities Act of 1933, as amended.
    



                                        Very truly yours,



                                        Hogan & Hartson L.L.P.






<PAGE>   1
                                                                EXHIBIT 21.1


        EOP Operating Limited Partnership, a Delaware limited partnership

        Equity Office Properties Management Corp., a Delaware corporation

        In addition, the Company has interests in 90 entities which hold title 
or interests in the Company's Properties.




<PAGE>   1


                                                                EXHIBIT 23.2



                        CONSENT OF INDEPENDENT AUDITORS


We consent to the reference to our firm under the captions "Summary Selected
Combined Financial Information," "Selected Combined Financial Data" and
"Experts" and to the use of our reports indicated below in this Registration
Statement (Form S-11) and related Prospectus of Equity Office Properties Trust
for the registration of shares of its common stock.



           Financial Statements                         Date of Auditors Report
           --------------------                         -----------------------
Balance sheet of Equity Office Properties Trust             April 28, 1997
as of December 31, 1996

Combined balance sheets of Equity Office 
Predecessors as of December 31, 1996 and 1995 and
the related combined statements of operations,
owners' equity and cash flows for each of three 
years in the period ended December 31, 1996                 March 25, 1997

Statement of Revenue and Certain Expenses of
Promenade II for the year ended December 31, 1995           December 17, 1996

Statement of Revenue and Certain Expenses of Two
California Plaza for the year ended December 31, 1995       January 15, 1997    

Statement of Revenue and Certain Expenses of BP Tower
for the year ended December 31, 1995                        November 8, 1996

Statement of Revenue and Certain Expenses of SunTrust
Center for the year ended December 31, 1995                 December 6, 1996

Statement of Revenue and Certain Expenses of Reston
Town Center for the year ended December 31, 1995            November 19, 1996

        
<PAGE>   2




Statement of Revenue and Certain Expenses of Colonnade I
for the period from January 1, 1996 to December 4, 1996         April 16, 1997
                                            
Statement of Revenue and Certain Expenses of 177 Broad
Street for the year ended December 31, 1996                     March 28, 1997

Statement of Revenue and Certain Expenses of Preston
Commons for the year ended December 31, 1996                    April 16, 1997

Statement of Revenue and Certain Expenses of Oakbrook
Terrace Tower for the year ended December 31, 1996              May 30, 1997

Statement of Revenue and Certain Expenses of One
Maritime Plaza for the year ended December 31, 1996             June 6, 1997
                                            
Statement of Revenue and Certain Expenses of 201
Mission Street for the year ended December 31, 1996             April 30, 1997

Statement of Revenue and Certain Expenses of 30
N. LaSalle for the year ended December 31, 1996                 June 13, 1997






                                                Ernst & Young LLP


Chicago, Illinois
June 20, 1997

<PAGE>   1
                                                                 EXHIBIT 23.4


                          CONSENT OF THOMAS DOBROWSKI

        I consent to the use of my name as a Trustee Nominee in the section
"Management" in the Registration Statement, SEC File No. 333-26629 and all
amendments and post-effective amendments or supplements thereto, including the
Prospectus contained therein, of Equity Office Properties Trust.




June 13,1997                             /s/ Thomas Dobrowski
                                         -----------------------
                                         Thomas Dobrowski 
 

<PAGE>   1
                                                                    EXHIBIT 23.5

                                      
                         CONSENT OF JAMES D. HARPER JR.


        I consent to the use of my name as a Trustee Nominee in the section
"Management" in the Registration Statement, SEC File No. 333-26629 and all
amendments and post-effective amendments or supplements thereto, including the
Prospectus contained therein, of Equity Office Properties Trust.


                                        /s/James D. Harper Jr.
                                        -----------------------
                                        James D. Harper Jr.

June 13, 1997

<PAGE>   1
                                                                    EXHIBIT 23.6


                          CONSENT OF PETER LINNEMAN


        I consent to the use of my name as a Trustee Nominee in the section
"Management" in the Registration Statement, SEC File No. 333-26629 and all
amendments and post-effective amendments or supplements thereto, including the
Prospectus contained therein, of Equity Office Properties Trust.



June 13, 1997                                 /s/ Peter Linneman 
                                               --------------------------
                                               Peter Linneman 

<PAGE>   1
                                                                 EXHIBIT 23.7


                          CONSENT OF JERRY M. REINSDORF

        I consent to the use of my name as a Trustee Nominee in the section
"Management" in the Registration Statement, SEC File No. 333-26629 and all
amendments and post-effective amendments or supplements thereto, including the
Prospectus contained therein, of Equity Office Properties Trust.




June 20,1997                             /s/ Jerry M. Reinsdorf
                                         -----------------------
                                         Jerry M. Reinsdorf 
 


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