EOP OPERATING LTD PARTNERSHIP, S-4/A, 1998-05-01

EOP OPERATING LTD PARTNERSHIP
S-4/A, 1998-05-01
REAL ESTATE INVESTMENT TRUSTS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 1998

REGISTRATION NO. 333-47347

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 1 TO

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

EOP OPERATING LIMITED PARTNERSHIP
(Exact name of registrant as specified in its governing instrument)

<TABLE>
<S> <C> <C>
DELAWARE 6798 36-4156801
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)

</TABLE>

TWO NORTH RIVERSIDE PLAZA, SUITE 2200
CHICAGO, ILLINOIS 60606
(Address of principal executive offices)

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

STANLEY M. STEVENS
EXECUTIVE VICE PRESIDENT-CHIEF LEGAL COUNSEL
EQUITY OFFICE PROPERTIES TRUST
TWO NORTH RIVERSIDE PLAZA, SUITE 2200
CHICAGO, ILLINOIS 60606
(Name and address of agent for service)

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

COPIES TO:

J. WARREN GORRELL, JR.
JAMES E. SHOWEN
HOGAN & HARTSON L.L.P.
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004-1109
(202) 637-5600

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
- ------------------------------

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

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

PROSPECTUS

$1,680,000,000

EOP OPERATING LIMITED PARTNERSHIP
OFFER TO EXCHANGE
6.375% NOTES DUE 2003 FOR ANY AND ALL OUTSTANDING 6.375% NOTES DUE 2003
6.625% NOTES DUE 2005 FOR ANY AND ALL OUTSTANDING 6.625% NOTES DUE 2005
6.750% NOTES DUE 2008 FOR ANY AND ALL OUTSTANDING 6.750% NOTES DUE 2008
7.250% NOTES DUE 2018 FOR ANY AND ALL OUTSTANDING 7.250% NOTES DUE 2018
6.376% MANDATORY PAR PUT REMARKETED SECURITIES(SM) DUE 2012 FOR ANY AND
ALL OUTSTANDING 6.376% MANDATORY PAR PUT REMARKETED SECURITIES(SM) DUE 2012
7.24% SENIOR NOTES DUE 2004 FOR ANY AND ALL OUTSTANDING 7.24% SENIOR NOTES DUE
2004
7.36% SENIOR NOTES DUE 2005 FOR ANY AND ALL OUTSTANDING 7.36% SENIOR NOTES DUE
2005
7.44% SENIOR NOTES DUE 2006 FOR ANY AND ALL OUTSTANDING 7.44% SENIOR NOTES DUE
2006
7.41% SENIOR NOTES DUE 2007 FOR ANY AND ALL OUTSTANDING 7.41% SENIOR NOTES DUE
2007
------------------------

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1998 UNLESS EXTENDED.
------------------------

EOP Operating Limited Partnership, a Delaware limited partnership (the
"Company"), is making this Exchange Offer (the "Exchange Offer") to provide
holders of its outstanding 6.375% Notes due 2003 (the "2003 Notes"), 6.625%
Notes due 2005 (the "2005 Notes"), 6.750% Notes due 2008 (the "2008 Notes"),
7.250% Notes due 2018 (the "2018 Notes" and, together with the 2003 Notes, the
2005 Notes and the 2008 Notes, the "$1.25 Billion Notes"), 6.376% MandatOry Par
Put Remarketed Securities(SM) due 2012 (the "MOPPRS(SM)"), 7.24% Senior Notes
due 2004 (the "2004 Senior Notes"), 7.36% Senior Notes due 2005 (the "2005
Senior Notes"), 7.44% Senior Notes due 2006 (the "2006 Senior Notes"), and 7.41%
Senior Notes due 2007 (the "2007 Senior Notes" and, together with the 2004
Senior Notes, the 2005 Senior Notes and the 2006 Senior Notes, the "$180 Million
Notes") the opportunity to exchange such notes for the 6.375% Notes due 2003,
6.625% Notes due 2005, 6.750% Notes due 2008, 7.250% Notes due 2018, 6.376%
MandatOry Par Put Remarketed Securities(SM) due 2012, 7.24% Senior Notes due
2004, 7.36% Senior Notes due 2005, 7.44% Senior Notes due 2006, and 7.41% Senior
Notes due 2007, respectively, offered hereby (collectively, the "Exchange
Notes"). The $1.25 Billion Notes, the MOPPRS and the $180 Million Notes are
sometimes collectively referred to as the "Private Notes." The Exchange Notes
will be subject to fewer restrictions on transfer than the Private Notes, which
are not freely transferable. The Private Notes and the Exchange Notes are
sometimes collectively referred to as the "Notes."

SEE "RISK FACTORS" COMMENCING ON PAGE 18 FOR A DISCUSSION OF MATERIAL RISKS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE EXCHANGE NOTES, INCLUDING:

- Restrictions on transfer of the Private Notes will continue for holders
who do not exchange such Private Notes in the Exchange Offer, and the
$1.25 Billion Exchange Notes and the Exchange MOPPRS will only be
transferable in blocks of at least $100,000 aggregate principal amount;

- Payments due under the Notes will be effectively subordinated to mortgages
and other secured indebtedness of the Company, as well as to indebtedness
and other liabilities of the Company's subsidiaries;

- If the Company does not effectively manage its rapid growth, it may be
unable to service its debt, including the Notes;

- The Exchange Notes will not be listed on any exchange. The lack of a
public market for the Exchange Notes could adversely affect the price at
which Exchange Notes may be sold;

- If (i) the Company's assets do not generate income sufficient to pay its
expenses and maintain its properties, (ii) the Company is unable to renew
leases or relet space at favorable rents, (iii) new acquisitions fail to
perform as expected or competition results in increased prices for
acquisitions, (iv) the Company is unable to sell properties when
appropriate or (v) unidentified environmental liabilities arise or the
Company suffers uninsured losses, the Company may be unable to service its
debt, including the Notes;

[Cover page continued on next page]
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------

The date of this Prospectus is , 1998.
- -------------------------
"MandatOry Par Put Remarketed Securities" and "MOPPRS" are service marks owned
by Merrill Lynch & Co., Inc.
<PAGE> 3

[Cover page continued from prior page]

- If prevailing interest rates or other factors result in higher interest
rates, increased interest expense would adversely affect cash flow and
the Company's ability to service its debt, including the Notes;

- If principal payments on the Company's debt due at maturity cannot be
refinanced, extended or paid with proceeds of other capital transactions,
the Company's cash flow will not be sufficient in all years to repay all
maturing debt;

- Conflicts of interest between the Company and certain executive officers
and trustees could result in decisions that are not in the Company's best
interest;

- Contingent or undisclosed liabilities acquired in mergers or similar
transactions could adversely affect the Company's results of operations,
financial condition and ability to service its debt, including the Notes;

- If the Internal Revenue Service treats the Exchange MOPPRS as having
contingent interest for federal income tax purposes, holders of Exchange
MOPPRS would have to include original issue discount in their taxable
income; and

- The Exchange Notes are subject to provisions that allow them to be
redeemed prior to the stated maturity date.

The 6.375% Exchange Notes due 2003 will mature on February 15, 2003; the
6.625% Exchange Notes due 2005 will mature on February 15, 2005; the 6.750%
Exchange Notes due 2008 will mature on February 15, 2008; the 7.250% Exchange
Notes due 2018 will mature on February 15, 2018; the Exchange MOPPRS will mature
on February 15, 2012; the 7.24% Exchange Notes due 2004 will mature on September
1, 2004; the 7.36% Exchange Notes due 2005 will mature on September 1, 2005; the
7.44% Exchange Notes due 2006 will mature on September 1, 2006; and the 7.41%
Exchange Notes due 2007 will mature on September 1, 2007. The Exchange Notes
other than the Exchange MOPPRS will be redeemable at any time at the option of
the Company, in whole or in part, at a redemption price equal to the sum of (i)
the principal amount of the Exchange Notes being redeemed plus accrued interest
to the redemption date and (ii) the Make-Whole Amount (as defined in
"Description of the Exchange Notes -- Optional Redemption"), if any. The
Exchange MOPPRS will be redeemed or repurchased on February 15, 2002 (the
"Remarketing Date"). The Exchange MOPPRS are subject to mandatory tender on the
Remarketing Date to Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
Remarketing Dealer (the "Remarketing Dealer"), at 100% of their principal
amount, except in limited circumstances. If the Remarketing Dealer for any
reason does not purchase all tendered Exchange MOPPRS on the Remarketing Date or
elects not to remarket the Exchange MOPPRS, or in certain other, limited
circumstances, the Company will be required to repurchase the Exchange MOPPRS at
100% of the principal amount thereof plus accrued interest. The Exchange Notes
will not be subject to any mandatory sinking fund. See "Description of the
Exchange Notes."

Interest on the $1.25 Billion Exchange Notes and the Exchange MOPPRS will
be payable semi-annually in arrears on February 15 and August 15 of each year,
commencing August 15, 1998. Interest on the $180 Million Exchange Notes will be
payable semi-annually in arrears on March 1 and September 1 of each year,
commencing September 1, 1998.

The Private Notes are and the Exchange Notes will be senior unsecured
obligations of the Company and will rank equal with each other and with the
Company's other unsecured and unsubordinated indebtedness. The Private Notes
are, and the Exchange Notes will be, effectively subordinated to mortgages and
other secured indebtedness of the Company as well as to indebtedness and other
liabilities of the Company's subsidiaries.

The Company will accept for exchange any and all validly tendered Private
Notes not withdrawn prior to 5:00 p.m., New York City time, on ,
1998 (the "Expiration Date"), unless the Exchange Offer is extended by the
Company in its sole discretion. The Company believes that the Exchange Notes
issued pursuant to

ii
<PAGE> 4

the Exchange Offer in the exchange for the Private Notes may be offered for
resale, resold and otherwise transferred by a holder thereof (other than (i) a
broker-dealer who purchased the Private Notes directly from the Company or (ii)
a person that is an affiliate of the Company within the meaning of Rule 405
under the Securities Act of 1933, as amended (the "Securities Act")), without
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that the holder is acquiring Exchange Notes in the
ordinary course of its business and is not participating, does not intend to
participate, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes. Holders of Private Notes
wishing to accept the Exchange Offer must represent to the Company that such
conditions have been met. This Prospectus, as it may be amended or supplemented
from time to time, also may be used by a broker-dealer in connection with any
resale of the Exchange Notes received for Private Notes where such Private Notes
were acquired by a broker-dealer as a result of market-making or other trading
activities. The Company has agreed that for a period of 180 days after the
Expiration Date, it will make this Prospectus, as may be amended or supplemented
from time to time, available to any broker-dealer for use in connection with any
such resales. See "Plan of Distribution."

Any beneficial owner whose Private Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender such Private Notes in the Exchange Offer should contact such
registered holder promptly and instruct such registered holder to tender on the
beneficial owner's behalf. Any such beneficial owner that wishes to tender on
its own behalf must, prior to completing and executing the letter of transmittal
delivered herewith and delivering its Private Notes, either make appropriate
arrangements to register ownership of the Private Notes in its own name, if
permitted pursuant to the term of such Private Notes, or obtain a properly
completed bond power from the registered holder. The transfer of registered
ownership may take considerable time, and it may not be possible to complete the
transfer prior to the Expiration Date.

iii
<PAGE> 5

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary................................. 2
The Company........................... 2
Acquisition Activity.................. 3
Business and Growth Strategies........ 4
Employees............................. 5
The Properties........................ 5
Distribution of Office Properties,
Managed Properties, Parking
Facilities and Employees by Region
(as of March 31, 1998)............. 6
The Exchange Offer.................... 7
The Exchange Notes.................... 10
No Cash Proceeds to the Company....... 12
Summary Risk Factors.................. 13
Conflicts of Interest................. 14
Summary Selected Financial
Information........................ 15
Risk Factors............................ 18
Restrictions on Transfer of Private
Notes will Continue If Private
Notes Are Not Tendered or Are Not
Accepted for Exchange.............. 18
There is No Current Public Market for
Exchange Notes..................... 18
There Can Be No Assurance That We Will
Effectively Manage Our Rapid Growth
and Expansion into New Markets..... 19
Our Performance and Share Value Are
Subject to Risks Associated With
the Real Estate Industry........... 19
Debt Financing, Financial Covenants,
Degree of Leverage, and Increases
In Interest Rates Could Adversely
Affect Our Economic Performance.... 20
The Notes Are Effectively Subordinated
to Our Secured Indebtedness and
Certain Other Indebtedness of Our
Subsidiaries....................... 21
The Exchange Notes May Not Remain
Outstanding For Their Full Terms to
Maturity........................... 22
We Do Not Control Our Managed
Properties Or Management and Non-
REIT Services Businesses........... 22
Conflicts of Interest Could Result in
Decisions Not in the Company's Best
Interest........................... 23
Environmental Problems Are Possible
and Can Be Costly.................. 24
We Are Dependent On Our Key
Personnel.......................... 25
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Contingent Or Undisclosed Liabilities
Acquired In Mergers Or Similar
Transactions Could Adversely Affect
Our Financial Condition and Impair
Our Ability to Service Our Debt,
Including the Notes................ 25
Holders of Exchange MOPPRS Might Have
To Include Original Issue Discount
In Their Taxable Income............ 25
The Company............................. 26
General............................... 26
Operations............................ 26
Operational Structure................. 26
Acquisition Activity.................. 27
Business and Growth Strategies........ 27
Employees............................. 28
No Cash Proceeds to the Company......... 28
Ratios of Earnings to Fixed Charges..... 29
Capitalization.......................... 29
Selected Financial Information.......... 30
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 33
Overview.............................. 33
Results of Operations................. 34
Liquidity and Capital Resources....... 40
Cash Flows............................ 45
Capital Improvements.................. 46
Tenant Improvements and Leasing
Commission Costs...................... 46
Year 2000............................... 47
Inflation............................... 48
Funds from Operations................... 48
The Properties.......................... 50
General............................... 50
Office Properties by Region........... 50
Office Property Markets and Submarkets
-- Office Property Statistics...... 51
Parking Facilities.................... 57
Tenants............................... 57
Lease Expirations by Region as of
March 31, 1998..................... 58
Lease Expirations -- Total
Portfolio.......................... 59
Lease Distributions................... 60
Occupancy............................. 60
Legal Proceedings..................... 60
Management.............................. 61
Trustees and Executive and Senior
Officers of the Trust.............. 61
</TABLE>

iv
<PAGE> 6

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Compensation of the Trust's Board of
Trustees; Payment in Common
Shares............................. 66
Executive Compensation................ 67
Compensation Committee Interlocks and
Insider Participation.............. 69
Limitation of Liability and
Indemnification.................... 69
Certain Relationships and Related
Transactions.......................... 71
Formation Transactions................ 71
Leases and Parking Operations......... 72
Equity Group Distributions and Fees... 72
Wright Runstad Acquisition............ 72
Miscellaneous......................... 73
Policies with Respect to Certain
Activities............................ 74
Investment Policies................... 74
Financing Policies.................... 74
Lending Policies...................... 75
Conflict of Interest Policies......... 75
Policies with Respect to Other
Activities......................... 76
Principal Shareholders of the Trust..... 77
The Exchange Offer...................... 79
Purpose of the Exchange Offer......... 79
Terms of the Exchange Offer........... 80
Expiration Date; Extensions;
Amendments......................... 81
Interest on the Exchange Notes and
Accrued Interest on the Private
Notes.............................. 81
Resale of the Exchange Notes.......... 82
Procedures for Tendering.............. 82
Return of Private Notes............... 84
Book-Entry Transfer................... 85
Guaranteed Delivery Procedures........ 85
Withdrawal of Tenders................. 85
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Termination of Certain Rights......... 86
Exchange Agent........................ 86
Fees and Expenses..................... 86
Consequence of Failure to Exchange.... 87
Accounting Treatment.................. 87
Description of the Exchange Notes....... 88
General............................... 88
Principal and Interest................ 89
Optional Redemption................... 89
Tender of Exchange MOPPRS;
Remarketing........................ 91
Repurchase of Exchange MOPPRS......... 94
Redemption of Exchange MOPPRS......... 94
Certain Indenture Covenants........... 94
Merger, Consolidation or Sale......... 98
Events of Default, Notice and
Waiver............................. 98
Modification of the Indenture......... 100
Satisfaction and Discharge............ 101
No Conversion Rights.................. 101
Global Securities..................... 101
Federal Income Tax Consequences......... 103
The Exchange.......................... 104
Taxation of U.S. Holders.............. 104
Taxation of Non-U.S. Holders.......... 106
Backup Withholding and Information
Reporting.......................... 106
Plan of Distribution.................... 107
Experts................................. 108
Legal Matters........................... 108
Available Information................... 108
Glossary................................ 109
Index to Financial Statements........... F-1
</TABLE>

v
<PAGE> 7

SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial data, including
the financial statements and notes thereto, included elsewhere in this
Prospectus. The offer by the Company to exchange the $1.25 Billion Exchange
Notes, the Exchange MOPPRS and the $180 Million Exchange Notes, which have been
registered under the Securities Act, for an equal principal amount of its
outstanding $1.25 Billion Notes, MOPPRS and $180 Million Notes, respectively, is
referred to as the "Exchange Offer." The $1.25 Billion Notes, the MOPPRS and the
$180 Million Notes are sometimes collectively referred to as the "Private
Notes." The $1.25 Billion Exchange Notes, the Exchange MOPPRS and the $180
Million Exchange Notes are sometimes collectively referred to as the "Exchange
Notes." The Private Notes and the Exchange Notes are sometimes collectively
referred to as the "Notes." As used herein, "Company" means EOP Operating
Limited Partnership, a Delaware limited partnership, and one or more of its
subsidiaries, and the predecessors thereof. The Company is the "operating
partnership" of Equity Office Properties Trust (the "Trust"), a Maryland real
estate investment trust and managing general partner of the Company. See
"Glossary" for the meanings of other terms used herein. 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 March 31, 1998. All references to the historical activities of the Trust or
the Company prior to July 11, 1997 refer to the activities of the Equity Office
Predecessors.

Information contained in this Prospectus contains "forward-looking
statements" within the meaning of Section 27A of the Securities Act. The Company
intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in Section 27A of the
Securities Act and such forward-looking statements are included for purposes of
complying therewith. Such forward-looking statements relate 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.

THE COMPANY

The Company and the Trust were formed to continue and expand the national
office property business organized by Samuel Zell, Chairman of the Board of
Trustees of the Company. As of March 31, 1998, the Company owned or had an
interest in 260 office properties containing approximately 66.6 million square
feet of office space (the "Office Properties") and owned or had an interest in
17 stand-alone parking facilities containing approximately 16,749 parking spaces
(the "Parking Facilities" and, together with the Office Properties, the
"Properties"). To facilitate maintenance of the Trust's qualification as a real
estate investment trust ("REIT") for federal income tax purposes, management of
properties that are not wholly owned by the Company and its subsidiaries is
generally conducted through Equity Office Properties Management Corp., a
Delaware corporation ("EOP Management Company"), and Beacon Property Management
Corporation, a Delaware corporation ("Beacon Management Company" and together
with EOP Management Company, the "Management Companies"). The term "Company"
includes, unless the context requires otherwise, EOP Operating Limited
Partnership, its subsidiaries, and the predecessors thereof.

The Trust, a self-administered and self-managed REIT, is the managing
general partner of, and controls a majority of the partnership interests in, the
Company. On July 11, 1997, the Trust completed its initial public offering (the
"IPO") of 28,750,000 common shares of beneficial interest, $.01 par value per
share (the "Common Shares"). As of March 31, 1998, the Trust owned, directly or
indirectly, 89.6% of the outstanding common units of partnership interest in the
Company (the "Units"). The Trust owns all of its assets and conducts
substantially all of its business through the Company and its subsidiaries.

2
<PAGE> 8

The Company was formed on November 1, 1996, as a limited partnership under
The Delaware Revised Uniform Limited Partnership Act. The Company's executive
offices are located at Two North Riverside Plaza, Suite 2200, Chicago, Illinois
60606, and its telephone number is (312) 466-3300.

The following diagram depicts in summary form the Company's structure:

COMPANY'S STRUCTURE DIAGRAM

ACQUISITION ACTIVITY

During the period from 1987 through 1997, the Company invested
approximately $10 billion, averaging $2.7 billion annually (calculated on a cost
basis) for the three years ended December 31, 1997, in acquisitions of
institutional quality office properties throughout the United States. During the
period from the Trust's IPO in July 1997 through April 1998, the Company
completed a number of new acquisitions:

BEACON MERGER. On December 19, 1997, the Company, the Trust, Beacon
Properties Corporation, a Maryland corporation ("Beacon"), and Beacon
Properties, L.P., a Delaware limited partnership of which Beacon was the sole
general partner ("Beacon Partnership"), consummated the transactions
contemplated by the Agreement and Plan of Merger dated September 15, 1997, as
amended, among the Company, the Trust, Beacon and Beacon Partnership (the
"Merger Agreement"). Pursuant to the Merger Agreement, Beacon merged with and
into the Trust and Beacon Partnership merged with and into the Company (the
"Beacon Merger"). The acquisition cost of the Beacon Merger was approximately
$4.3 billion.

As a result of the Beacon Merger, the Company acquired interests in 130
Office Properties (the "Beacon Properties") containing approximately 20.9
million rentable square feet of office space. The Beacon Properties are located
in 22 submarkets in six markets: Boston, Atlanta, Chicago, Los Angeles, San Jose
and Washington, D.C.

OTHER ACQUISITIONS. On December 17, 1997, the Company acquired ten Office
Properties, containing an aggregate of approximately 3.34 million square feet,
located in Seattle, Washington, Portland, Oregon and Anchorage, Alaska, from
Wright Runstad Holdings L.P., Wright Runstad Asset Management L.P. and Mellon
Bank, N.A., as Trustee for First Plaza Group Trust ("First Plaza") (the "Wright
Runstad Acquisition"). The purchase price was approximately $640 million. In
addition to the Beacon Merger and the Wright Runstad Acquisition, during the
period from the Trust's IPO through April 30, 1998, the Company completed twelve
other acquisition transactions, and partially completed a thirteenth acquisition
transaction, in which it acquired an aggregate of 36 Office Properties,
containing an aggregate of approximately

3
<PAGE> 9

12.1 million square feet, located in Boston, New Orleans, Houston, Dallas,
Denver, Philadelphia, Los Angeles, Chicago, San Francisco, Washington, D.C. and
Fairfax and Alexandria, Virginia (the "Other Acquisitions"). The aggregate
consideration paid by the Company for the Other Acquisitions was approximately
$2.0 billion, comprised of $1.7 billion in cash, $163 million in Units and $96
million in assumed liabilities. Subsequent to the IPO, the Company also acquired
three Parking Facilities, containing approximately 2,141 parking spaces in
Chicago, New Orleans and Pittsburgh for $54.9 million. Giving effect to the
Other Acquisitions, as of April 30, 1998, the Company owned or had an interest
in 266 Office Properties containing 68.7 million square feet.

PROBABLE ACQUISITIONS. The Company has entered into agreements to acquire
an aggregate of twelve additional office properties (the "Probable
Acquisitions"). The Company expects to acquire one office property located in
Denver during May 1998, as well as four office properties located in Denver and
four office properties located in Albuquerque during July 1998. These nine
properties contain an aggregate of approximately 1.4 million square feet. The
aggregate purchase price for these nine properties is approximately $190
million, comprised of approximately $127 million in cash and approximately $63
million in the form of promissory notes of the Company, payable, at the option
of the Company, in Common Shares. The Company has also entered into an agreement
to acquire three office properties (including one office property currently in
development) located in Dallas containing an aggregate of approximately 1.0
million square feet for aggregate consideration estimated to be $150.0 million
in cash. The company expects to complete this acquisition by the end of
September 1998.

BUSINESS AND GROWTH STRATEGIES

The Company's primary business objective is to achieve sustainable
long-term growth in cash flow and portfolio 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. The
Company intends to supplement this strategy by owning parking facilities.

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 where market conditions permit, (iii) repositioning of certain
Properties which have not yet achieved stabilization, and (iv) increasing
economies of scale.

As of March 31, 1998, 3.7 million rentable square feet of Office Property
space was vacant, representing 5.6% of the Company's total Office Property
portfolio. Of this amount, 537,900 square feet was leased at an average rent of
$29.14 per square foot, with occupancy to commence in whole or in part during
1998. The Company's average operating expenses for the total vacant space were
$9.38 per square foot as of March 31, 1998.

During the period from March 31, 1998 through December 31, 2002, 4,566
leases for 36.3 million rentable square feet of space are scheduled to expire.
As of March 31, 1998, the average rent for this space was $22.18 per square foot
and the average operating expenses were $8.93 per square foot. The actual rental
rates at which available space will be renewed or relet will depend on
prevailing market factors at the time.

The Company owns certain parcels of undeveloped land acquired in connection
with the acquisition of the Office Properties. The Company is currently
proceeding with the development of two additional office properties totaling
approximately 430,000 square feet. In determining whether to develop land, the
Company considers, among other factors, whether significant pre-leasing can be
arranged or if such development is necessary to protect the Company's investment
in existing Properties.

EXTERNAL GROWTH. The Company is pursuing, and expects to continue to
actively pursue, acquisitions of additional office properties and parking
facilities. Management believes that significant opportunities for external
growth will continue to be available through strategic acquisitions of
institutional quality office properties. Properties may be acquired separately
or as part of a portfolio, and may be acquired for cash and/or

4
<PAGE> 10

in exchange for equity or debt securities of the Company or the Trust, and such
acquisitions may be customary real estate transactions and/or mergers or other
business combinations.

PARKING FACILITIES. Management believes that parking facilities offer the
Company attractive investment opportunities which are complementary to
investments in office properties. The Company intends to focus its acquisition
efforts for parking facilities 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.

EMPLOYEES

As of March 31, 1998, the Company had approximately 1,482 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 of the Trust 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 PROPERTIES

The Company's portfolio (based on revenues and square footage as of
December 31, 1997) is the largest office portfolio in the United States
controlled by any publicly traded, full-service office company. 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 six 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 the Trust's Executive Vice President -- Real
Estate Operations.

As of March 31, 1998, the Company owned or had an interest in 260 Office
Properties and 17 Parking Facilities. The Company managed an additional 32
office properties through the Management Companies (the "Managed Properties"),
containing 5.0 million square feet, including 29 office properties owned by

5
<PAGE> 11

certain affiliates of Mr. Zell. See "Properties." The following table shows the
distribution of the Company's Office Properties, Managed Properties, Parking
Facilities and employees by region:

DISTRIBUTION OF OFFICE PROPERTIES, MANAGED PROPERTIES,

PARKING FACILITIES AND EMPLOYEES BY REGION (AS OF MARCH 31, 1998)

<TABLE>
<CAPTION>
OFFICE PROPERTIES MANAGED PROPERTIES PARKING FACILITIES
--------------------- --------------------- -------------------
RENTABLE RENTABLE NUMBER NUMBER
REGION NUMBER SQUARE FEET NUMBER SQUARE FEET NUMBER OF SPACES OF EMPLOYEES
------ ------ ----------- ------ ----------- ------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Northeast 458
CBD.................... 23 10,022,538 1 312,000 7 3,852
Suburban............... 62 8,946,287 3 978,674 -- --
Central 511(1)
CBD.................... 12 9,359,137 1 546,835 5 4,674
Suburban............... 19 3,980,642 18 2,397,407 -- --
Pacific 133
CBD.................... 7 4,810,336 -- -- -- --
Suburban............... 36 4,887,602 5 320,468 -- --
West 90
CBD.................... 12 4,008,830 -- -- 4 7,464
Suburban............... 20 4,789,652 1 157,311 -- --
Southeast 155
CBD.................... 6 2,887,795 130,189 -- --
Suburban............... 45 5,797,339 2 207,664 -- --
Southwest 135
CBD.................... 5 2,588,819 -- -- 1 759
Suburban............... 13 4,531,473 -- --
--- ---------- -- --------- -- ------ -----
Total............... 260 66,610,450 32 5,050,548 17 16,749 1,482
=== ========== == ========= == ====== =====
</TABLE>

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

(1) 257 of these employees are located at the Company's headquarters in Chicago.

6
<PAGE> 12

THE EXCHANGE OFFER

The following is a summary of the principal terms of the Exchange Offer. A
more detailed description is contained herein under the caption "The Exchange
Offer."

The Exchange Offer............ The Company is hereby offering to exchange the
$1.25 Billion Exchange Notes, the Exchange
MOPPRS and the $180 Million Exchange Notes for
an equal aggregate principal amount of $1.25
Billion Notes, MOPPRS and $180 Million Notes,
respectively, that are properly tendered and
accepted.

Holders of Private Notes who do not validly
tender such notes and accept the Exchange Offer
will continue to hold such Private Notes and
will continue to be subject to the rights and
limitations applicable thereto, including
existing restrictions upon transfer thereof.
The Company will have no further obligation to
provide for the registration under the
Securities Act of any offering of Private Notes
which continue to be held after the Exchange
Offer. See "The Exchange Offer -- Consequences
of Failure to Exchange."

Based on interpretations set forth in no-action
letters issued to third parties by the staff of
the Securities and Exchange Commission (the
"Commission"), the Company believes that the
Exchange Notes issued pursuant to the Exchange
Offer in exchange for Private Notes may be
offered for resale, resold and otherwise
transferred by a holder thereof without
compliance with the registration and prospectus
delivery provisions of the Securities Act,
provided that the holder is acquiring Exchange
Notes in the ordinary course of its business,
is not participating, does not intend to
participate and has no arrangement or
understanding with any person to participate in
the distribution of the Exchange Notes, and is
not an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act.
See "The Exchange Offer -- Resale of the
Exchange Notes."

If the Company fails to consummate the Exchange
Offer with respect to the $1.25 Billion Notes
and the MOPPRS prior to August 17, 1998 or, if
applicable, fails to fulfill its obligations
under a registration rights agreement to obtain
and maintain effectiveness of a shelf
registration statement to cover resales of the
$1.25 Billion Notes and the MOPPRS by the
holders thereof during specified time periods,
then liquidated damages will accrue on the
principal amounts of the $1.25 Billion Notes
and the MOPPRS at an annual rate of 0.50%. See
"The Exchange Offer -- Purpose of the Exchange
Offer."

Expiration Date............... The Exchange Offer will expire at 5:00 P.M.,
New York City time, on , 1998 (the
"Expiration Date"), unless the Exchange Offer
is extended by the Company in its sole
discretion, in which case the term "Expiration
Date" shall mean the latest date and time to
which the Exchange Offer is extended. The
Company will announce any extensions of the
Exchange Offer through a press release or other
public announcement. See "The Exchange Offer --
Expiration Date; Extensions; Amendments."

7
<PAGE> 13

Procedures for Tendering
Private Notes................. Each holder of Private Notes wishing to accept
the Exchange Offer must complete, sign and date
the letter of transmittal accompanying this
Prospectus (the "Letter of Transmittal"), or a
facsimile thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with
such Private Notes and any other required
documentation, to State Street Bank and Trust
Company, as exchange agent (the "Exchange
Agent"), at the address set forth under "The
Exchange Offer -- Exchange Agent." By executing
the Letter of Transmittal, the holder will
represent to and agree with the Company that,
among other things, (i) any Exchange Notes
acquired in exchange for Private Notes tendered
thereby are being acquired in the ordinary
course of business of the person receiving such
Exchange Notes, (ii) the person receiving such
Exchange Notes is not engaging in and does not
intend to engage in a distribution of such
Exchange Notes, (iii) the person receiving such
Exchange Notes does not have an arrangement or
understanding with any person to participate in
the distribution of such Exchange Notes and
(iv) neither the holder nor any other person
receiving the Exchange Notes from the holder is
an "affiliate," as defined in Rule 405 under
the Securities Act, of the Company. Certain
brokers, dealers, commercial banks, trust
companies and other nominees may effect tenders
by book-entry transfer, including an Agent's
Message (defined below) in lieu of a Letter of
Transmittal. See "The Exchange Offer --
Procedures for Tendering."

Special Procedures for
Beneficial Owners............. Any beneficial owner whose Private Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender such Private Notes in
the Exchange Offer should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. Any such beneficial owner that
wishes to tender on its own behalf must, prior
to completing and executing the Letter of
Transmittal and delivering its Private Notes,
either make appropriate arrangements to
register ownership of the Private Notes in its
own name, if permitted pursuant to the terms of
such Private Notes, or obtain a properly
completed bond power from the registered
holder. The transfer of registered ownership
may take considerable time, and it may not be
possible to complete the transfer prior to the
Expiration Date. See "The Exchange Offer --
Procedures for Tendering."

Guaranteed Delivery
Procedures.................... Holders of Private Notes who wish to tender
their Private Notes and whose Private Notes are
not immediately available or who cannot deliver
their Private Notes, the Letter of Transmittal
or any other documentation required by the
Letter of Transmittal to the Exchange Agent
prior to the Expiration Date must tender their
Private Notes according to the guaranteed
delivery procedures described under "The
Exchange Offer -- Guaranteed Delivery
Procedures."

8
<PAGE> 14

Acceptance of the Private
Notes and Delivery of Exchange
Notes......................... Subject to the satisfaction or waiver of the
conditions to the Exchange Offer, the Company
will accept for exchange any and all Private
Notes that are properly tendered in the
Exchange Offer prior to the Expiration Date.
The Exchange Notes issued pursuant to the
Exchange Offer will be delivered on the
earliest practicable date following the
Expiration Date. See "The Exchange Offer --
Terms of the Exchange Offer."

Withdrawal Rights............. Tenders of Private Notes may be withdrawn at
any time prior to the Expiration Date by
delivering a notice of withdrawal to the
Exchange Agent prior to the Expiration Date.
Any such notice of withdrawal must (i) specify
the name of the person who deposited the
Private Notes to be withdrawn, (ii) identify
the Private Notes to be withdrawn (including
the certificate number or numbers) and (iii) be
signed by the holder in the same manner as the
original signature on the Letter of Transmittal
by which such Private Notes were tendered
(including any required signature guarantees).
See "The Exchange Offer -- Withdrawal of
Tenders."

Federal Income Tax
Consequences.................. The exchange of the Private Notes for the
Exchange Notes will not be a taxable exchange
for federal income tax purposes, and holders of
Private Notes will not recognize any taxable
gain or loss or any interest income as a result
of such exchange. See "Federal Income Tax
Consequences -- Exchange Offer." The federal
income tax treatment of debt obligations such
as the Exchange MOPPRS is not certain. It is
possible that the Exchange MOPPRS might be
characterized as having contingent interest,
which holders of Exchange MOPPRS would have to
include in income as such contingent interest
were deemed to accrue. The Company intends to
treat the Exchange MOPPRS as not having
contingent interest. See "Federal Income Tax
Consequences -- Possible Characterization of
Exchange MOPPRS as having contingent interest."

Exchange Agent................ State Street Bank and Trust Company is serving
as the Exchange Agent in connection with the
Exchange Offer. State Street Bank and Trust
Company also serves as trustee (the "Trustee")
under the indenture relating to the Notes. See
"The Exchange Offer -- Exchange Agent."

9
<PAGE> 15

THE EXCHANGE NOTES

The Exchange Offer applies to the $1.68 billion aggregate principal amount
of the Private Notes. The form and terms of the respective Exchange Notes are
identical in all material respects to the form and terms of the Private Notes,
except that the Exchange Notes will not bear legends restricting the transfer
thereof (other than, with respect to the $1.25 Billion Exchange Notes and the
Exchange MOPPRS, requiring transfers in blocks having a minimum aggregate
principal amount of $100,000) and the holders of the Exchange Notes will not be
entitled to any of the registration rights of holders of the Private Notes under
any registration rights agreement, which rights will terminate upon consummation
of the Exchange Offer. The Exchange Notes will evidence the same indebtedness as
the Private Notes (which they replace) and will be issued under, and be entitled
to the benefits of, an indenture, dated as of September 2, 1997, as amended or
supplemented, between the Company and the Trustee (the "Indenture").

All capitalized terms used herein and not defined herein have the meanings
provided in "Description of the Exchange Notes." For a more complete description
of the terms of the Exchange Notes specified in the following summary, see
"Description of the Exchange Notes."

Issuer........................ EOP Operating Limited Partnership

Exchange Notes................ $300,000,000 principal amount of 6.375% Notes
due 2003
$400,000,000 principal amount of 6.625% Notes
due 2005
$300,000,000 principal amount of 6.750% Notes
due 2008
$250,000,000 principal amount of 7.250% Notes
due 2018
$250,000,000 principal amount of 6.376% MOPPRS
due 2012
$30,000,000 principal amount of 7.24% Senior
Notes due 2004
$50,000,000 principal amount of 7.36% Senior
Notes due 2005
$50,000,000 principal amount of 7.44% Senior
Notes due 2006
$50,000,000 principal amount of 7.41% Senior
Notes due 2007

Maturity...................... Unless, in each case, redeemed prior to
maturity as described below, the 6.375%
Exchange Notes due 2003 will mature on February
15, 2003; the 6.625% Exchange Notes due 2005
will mature on February 15, 2005; the 6.750%
Exchange Notes due 2008 will mature on February
15, 2008; the 7.250% Exchange Notes due 2018
will mature on February 15, 2018; the 7.24%
Exchange Notes due 2004 will mature on
September 1, 2004; the 7.36% Exchange Notes due
2005 will mature on September 1, 2005; the
7.44% Exchange Notes due 2006 will mature on
September 1, 2006; and the 7.41% Exchange Notes
due 2007 will mature on September 1, 2007. The
stated maturity date of the Exchange MOPPRS is
February 15, 2012; however, the Exchange MOPPRS
are subject to mandatory tender by the holders
thereof on the Remarketing Date, February 15,
2002, for purchase by the Remarketing Dealer or
the Company, as described below. See
"Description of the Exchange Notes -- General."

Optional Redemption........... The Exchange Notes other than the Exchange
MOPPRS will be redeemable at any time at the
option of the Company, in whole or in part, at
a redemption price equal to the sum of (i) the
principal amount of the Exchange Notes being
redeemed plus accrued interest to the
redemption date and (ii) the Make-Whole Amount,
if any. See "Description of the Exchange Notes
-- Optional Redemption."

10
<PAGE> 16

The Exchange MOPPRS are subject to redemption
from the Remarketing Dealer, in whole but not
in part, at the option of the Company on the
Remarketing Date at the Optional Redemption
Price. The Exchange MOPPRS are not otherwise
subject to redemption by the Company.

Mandatory Tender of Exchange
MOPPRS; Remarketing and

Repurchase.................... THE EXCHANGE MOPPRS WILL BE REDEEMED OR
REPURCHASED ON THE REMARKETING DATE (WHICH IS
PRIOR TO THE STATED MATURITY DATE). Provided
that the Remarketing Dealer gives notice to the
Company and the Trustee on a Business Day not
later than five Business Days prior to the
Remarketing Date of its intention to purchase
the Exchange MOPPRS for remarketing, each
Exchange MOPPRS will be automatically tendered,
or deemed tendered, to the Remarketing Dealer
for purchase on the Remarketing Date, except in
the circumstances described under "Description
of the Exchange Notes -- Repurchase of Exchange
MOPPRS" or "--Redemption of Exchange MOPPRS."

The purchase price to be paid by the
Remarketing Dealer for the tendered Exchange
MOPPRS will equal 100% of the principal amount
thereof. When the Exchange MOPPRS are tendered
for remarketing, the Remarketing Dealer may
remarket the Exchange MOPPRS for its own
account at varying prices to be determined by
the Remarketing Dealer at the time of each
sale. If the Remarketing Dealer for any reason
does not purchase all tendered Exchange MOPPRS,
or in certain other limited circumstances
described herein, the Company will be required
to repurchase the Exchange MOPPRS from the
Beneficial Owners thereof on the Remarketing
Date, at 100% of the principal amount thereof
plus accrued interest, if any. See "Description
of the Exchange Notes -- Repurchase of Exchange
MOPPRS."

The Remarketing Dealer, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an investment
banking firm, will not receive any fees or
reimbursements of expenses from the Company in
connection with any remarketing. The
Remarketing Dealer may resign, in which case it
will on the sole obligation of the Company to
appoint a successor. See "Description of the
Exchange Notes -- Tender of Exchange MOPPRS;
Remarketing -- The Remarketing Dealer."

Interest Payment Dates........ Interest on the $1.25 Billion Exchange Notes
and the Exchange MOPPRS will be payable
semiannually in arrears on each February 15 and
August 15, commencing August 15, 1998. The
$1.25 Billion Exchange Notes and the Exchange
MOPPRS will bear interest from the later of
February 18, 1998 or the Interest Payment Date
immediately preceding the date of issuance of
the $1.25 Billion Exchange Notes and the
Exchange MOPPRS, as applicable. In the Letter
of Transmittal, holders of $1.25 Billion Notes
or MOPPRS whose $1.25 Billion Notes or MOPPRS,
as the case may be, are accepted for exchange
will waive the right to receive any payment in
respect of interest on the $1.25 Billion Notes
or MOPPRS accrued from the later of February
18, 1998 or the Interest Payment Date
immediately preceding the date of
11
<PAGE> 17

issuance of the $1.25 Billion Exchange Notes or
Exchange MOPPRS to the date of issuance of the
$1.25 Billion Exchange Notes or Exchange
MOPPRS.

Interest on the $180 Million Exchange Notes
will be payable semi-annually in arrears on
March 1 or September 1 of each year, commencing
September 1, 1998. The $180 Million Exchange
Notes will bear interest from the Interest
Payment Date immediately preceding the date of
issuance of the $180 Million Exchange Notes
(currently expected to be the Interest Payment
Date on March 1, 1998). In the Letter of
Transmittal, holders of $180 Million Notes
whose $180 Million Notes are accepted for
exchange will waive the right to receive any
payment in respect of interest on the $180
Million Notes accrued from the later of
September 3, 1997 or the Interest Payment Date
immediately preceding the date of issuance of
the $180 Million Exchange Notes (currently
expected to be the Interest Payment Date on
March 1, 1998) to the date of issuance of the
$180 Million Exchange Notes. See "Description
of the Exchange Notes -- Principal and
Interest."

Ranking....................... The Exchange Notes will be senior unsecured
obligations of the Company and will rank
equally with each other and with all other
unsecured and unsubordinated indebtedness of
the Company. The Exchange Notes will be
effectively subordinated to the prior claims of
any secured indebtedness of the Company to the
extent of the value of the property securing
such indebtedness. The Exchange Notes also will
be effectively subordinated to all existing and
future third-party indebtedness and other
liabilities of the Company's Subsidiaries. As
of December 31, 1997, on a Pro Forma Basis, the
secured indebtedness of the Company and all
other liabilities of the Company's Subsidiaries
aggregated approximately $2.6 billion and the
unsecured and unsubordinated indebtedness of
the Company aggregated approximately $2.6
billion. See "Capitalization."

Limitations on Incurrence of
Debt.......................... The Indenture contains various covenants,
including covenants limiting the ability of the
Company and its Subsidiaries to incur
additional secured and unsecured debt unless
certain financial standards are satisfied. See
"Description of the Exchange Notes -- Certain
Covenants." Except as described in "Description
of the Exchange Notes -- Certain Covenants --
Limitations on Incurrence of Debt" and "--
Merger, Consolidation or Sale," the Indenture
does not contain any other provisions that
would limit the ability of the Company to incur
indebtedness or that would afford holders of
Exchange Notes protection in the event of a
highly leveraged transaction involving the
Company and its affiliates, a change in control
of the Company or the Trust or a
reorganization, merger or similar transaction
involving the Company that may severely affect
the holders of the Exchange Notes.

NO CASH PROCEEDS TO THE COMPANY

12
<PAGE> 18

not result in any increase in the outstanding indebtedness of the Company. The
Company used the net proceeds from the issuance of the Private Notes to repay
indebtedness outstanding under the Credit Facilities and, in the case of the
$1.25 Billion Notes and the MOPPRS, the Beacon Facility, as described in the pro
forma financial statements presented in "Summary Selected Financial Data" and
"Selected Financial Data."

SUMMARY RISK FACTORS

See "Risk Factors" for a detailed discussion of the more important risks
associated with an investment in the debt of the Company, including risks
associated with exchanging or not exchanging Private Notes in the Exchange
Offer, risks associated with the manner in which the Company conducts its
business and risks associated with the Company's investments in real estate such
as the Properties. These risks, which generally could adversely affect the
financial condition and results of operations of the Company (and potentially
the Company's ability to satisfy its obligations under the Notes) or otherwise
reduce the value of the Notes, include:

- Holders of Private Notes who do not exchange those Private Notes will
hold an investment subject to restrictions on transfer not applicable to
the Exchange Notes and may have difficulty selling the Private Notes
unless a public market for the Private Notes develops. The $1.25 Billion
Exchange Notes and the Exchange MOPPRS will only be transferable in
blocks of at least $100,000 aggregate principal amount.

- Payments due under the Exchange Notes will be effectively subordinated to
mortgages and other secured indebtedness of the Company, as well as to
indebtedness and other liabilities of the Company's Subsidiaries.

- If the Company does not effectively manage its rapid growth, it may be
unable to service its debt, including the Notes.

- The Exchange Notes will not be listed on any exchange. The lack of a
public market for the Exchange Notes could adversely affect the price at
which Exchange Notes may be sold;

- If (i) the Company's assets do not generate income sufficient to pay its
expenses and maintain its properties, (ii) the Company is unable to renew
leases or relet space at favorable rents, (iii) new acquisitions fail to
perform as expected or competition results in increased prices for
acquisitions, (iv) the Company is unable to sell properties when
appropriate or (v) unidentified environmental liabilities arise or the
Company suffers uninsured losses, the Company may not be able to service
its debt, including the Notes;

- Conflicts of interest between the Company and certain executive officers
and trustees could result in decisions that are not in the Company's best
interest;

- The Exchange Notes are subject to provisions that allow them to be
redeemed prior to the stated maturity date.

13
<PAGE> 19

CONFLICTS OF INTEREST

- The transactions pursuant to which the Company was formed in July 1997
were not negotiated at arm's length. As a result, representations and
warranties made by contributors of properties to the Company and the
indemnification provided for the breach thereof may not be as good as if
such representation and warranty had been negotiated at arm's length. If
the Company incurs losses attributable to breaches of these
representations and warranties in excess of the indemnification limit,
such losses would be paid out of the Company's assets, with the potential
consequence of decreasing cash available to service the Company's debt,
including the Notes.

- Mr. Zell and several other executive officers and trustees who have a
substantial economic interest in the companies that contributed
properties and the management business to the Company in connection with
its formation and, therefore, have a conflict of interest in pursuing any
claims the Company might have arising out of the transactions surrounding
its formation.

- Mr. Zell's affiliates control the Management Companies and most of the
Managed Properties, which may result in a conflict of interest with
respect to the Company's dealings with the Management Companies and any
Managed Properties controlled by Mr. Zell.

- Mr. Zell and Ms. Rosenberg (one of the trustees of the Trust) each own
significant interests in the Company and the Trust. They also exercise
significant influence on the management and operation of the Company,
which influence might be exercised in a manner that is inconsistent with
the interests of the Company's other securityholders.

- Although Mr. Zell entered into a noncompetition agreement at the time of
the IPO, he and his affiliates have a broad and varied range of
investment interests, including interests in other real estate investment
companies. Mr. Zell's continued involvement in other investment
activities could result in competition to the Company as well as
management decisions that are inconsistent with the interests of other
securityholders.

14
<PAGE> 20

SUMMARY SELECTED FINANCIAL INFORMATION

The following sets forth summary selected consolidated and combined
financial and operating information on a pro forma basis for the Company and on
an historical basis for the Company and the Company's predecessors ("Equity
Office Predecessors"). The following historical information should be read in
conjunction with the consolidated and combined financial statements and notes
thereto of the Company and Equity Office Predecessors included elsewhere in this
Prospectus. The summary selected consolidated historical and operating
information of the Company at December 31, 1997, and for the period from July
11, 1997 to December 31, 1997, has been derived from the historical consolidated
financial and operating information of the Company audited by Ernst & Young LLP,
independent auditors, whose report with respect thereto is included elsewhere in
this Prospectus. The summary selected combined historical and operating
information at December 31, 1996 and for the period from January 1, 1997 to July
10, 1997 and the years ended December 31, 1996 and 1995, has been derived from
the historical combined financial and operating information 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 financial and operating information of Equity Office
Predecessors at December 31, 1995 and for the year ended December 31, 1994 has
been derived from the historical audited combined financial statements not
included herein. The summary selected combined financial and operating
information of Equity Office Predecessors at December 31, 1994 and 1993, and for
the year ended December 31, 1993, has been derived from the historical unaudited
combined financial statements of Equity Office Predecessors. Unaudited pro forma
operating information for the year ended December 31, 1997 is presented as if
the borrowings under the Credit Facilities at the end of the period,
acquisitions (including the Beacon Merger) that occurred during and subsequent
to the period, the Probable Acquisitions, the IPO and Consolidation, the Private
Debt Offering, the February 1998 Notes Offering, the UIT Offering and the Series
B Preferred Offering had occurred on January 1, 1997 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
borrowings under the Credit Facilities that occurred subsequent to December 31,
1997, the February 1998 Notes Offering, the Series B Preferred Offering, the
acquisitions that occurred subsequent to December 31, 1997, and the Probable
Acquisitions had occurred on December 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.

15
<PAGE> 21

<TABLE>
<CAPTION>
EQUITY OFFICE PREDECESSORS (COMBINED HISTORICAL)
---------------------------------------------------------------
COMPANY COMPANY FOR FOR THE
PRO FORMA THE PERIOD PERIOD FROM
FOR THE YEAR FROM JULY 11, JANUARY 1,
ENDED 1997 TO 1997 TO FOR THE YEARS ENDED DECEMBER 31,
DECEMBER 31, DECEMBER 31, JULY 10, -------------------------------------------------
1997 1997 1997 1997 1996 1995 1994
------------ ------------- ----------- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Rental, parking and other...... $ 1,515,398 $ 406,713 $ 327,017 $ 493,396 $ 356,959 $ 230,428 $ 150,315
----------- -------------- --------- ---------- ---------- ---------- ----------
Total revenues............. $ 1,546,966 $ 412,968 $ 339,104 $ 508,124 $ 371,457 $ 240,878 $ 159,246
----------- -------------- --------- ---------- ---------- ---------- ----------
Expenses:
Interest....................... $ 324,694 $ 76,675 $ 80,481 $ 119,595 $ 100,566 $ 59,316 $ 36,755
Depreciation and
amortization................. 280,180 70,346 66,034 96,237 74,156 46,905 29,752
Property operating(1).......... 556,501 155,679 127,285 201,067 151,488 107,412 74,028
General and administrative..... 56,048 17,690 17,201 23,145 21,987 15,603 12,012
Provision for value
impairment................... -- -- -- -- 20,248 -- --
----------- -------------- --------- ---------- ---------- ---------- ----------
Total expenses............. $ 1,217,423 $ 320,390 $ 291,001 $ 440,044 $ 368,445 $ 229,236 $ 152,547
----------- -------------- --------- ---------- ---------- ---------- ----------
Income before (income) loss
allocated to minority
interests, income from
investments in unconsolidated
joint ventures, gain on sales
of real estate, and
extraordinary items............ $ 329,543 $ 92,578 $ 48,103 $ 68,080 $ 3,012 $ 11,642 $ 6,699
Minority interests allocation... (1,744) (789) (912) (2,086) (2,129) 1,437 1,772
Income from investments in
unconsolidated joint
ventures....................... 12,823 3,173 1,982 2,093 2,305 1,778 --
Gain/(Loss) on sales of real
estate and extraordinary
items(2)....................... (16,240) 12,236 5,338 31,271 1,705 --
----------- -------------- --------- ---------- ---------- ---------- ----------
Net income before preferred
distributions.................. 340,622 78,722 61,409 73,425 34,459 16,562 8,471
Preferred distributions......... (33,710) (649) -- -- -- -- --
----------- -------------- --------- ---------- ---------- ---------- ----------
Net income available to Units... $ 306,912 $ 78,073 $ 61,409 $ 73,425 $ 34,459 $ 16,562 $ 8,471
=========== ============== ========= ========== ========== ========== ==========
Net income available per
weighted average Unit
outstanding -- Basic........... $1.09 $.44
=========== ==============
Net income available per
weighted average Unit
outstanding -- Diluted......... $1.08 $.43
=========== ==============
Weighted average Units
outstanding -- Basic........... 280,318,729 178,647,562
=========== ==============
Weighted average Units
outstanding -- Diluted......... 285,343,812 180,014,027
=========== ==============
BALANCE SHEET DATA: (at
end of period)
Investment in real estate after
accumulated depreciation....... $11,923,009 $ 10,976,319 -- $3,291,815 $2,393,403 $1,815,160 $1,220,268
Total assets.................... $12,518,783 $ 11,751,672 -- $3,912,565 $2,650,890 $2,090,933 $1,318,644
Mortgage debt, unsecured notes
and lines of credit............ $ 4,717,769 $ 4,284,317 -- $1,964,892 $1,434,827 $1,261,156 $ 798,897
Total liabilities............... $ 5,025,149 $ 4,591,697 -- $2,174,483 $1,529,334 $1,350,552 $ 845,315
Minority interests.............. $ 29,612 $ 29,612 -- $ 11,080 $ 31,587 $ 9,283 $ (15,298)
Partners' Capital/Owners'
equity......................... $ 7,464,022 $ 7,130,363 -- $1,727,002 $1,089,969 $ 731,098 $ 488,627
</TABLE>

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<PAGE> 22

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

(1) Includes property operating expenses, real estate taxes, insurance, as well
as repair and maintenance expenses.

(2) The column entitled "Company Pro Forma for the year ended December 31, 1997"
excludes the effect of any gain (loss) on sales of real estate and
extraordinary items.

(3) The pro forma number of Office Properties as of December 31, 1997, includes
Office Properties acquired subsequent to December 31, 1997 and Probable
Acquisitions.

(4) 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 distributors. 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."

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<PAGE> 23

RISK FACTORS

An investment in the Exchange Notes involves various risks. Prospective
investors should carefully consider the following material risks in conjunction
with the other information contained in this Prospectus before deciding whether
to tender Private Notes in exchange for Exchange Notes pursuant to the Exchange
Offer.

RESTRICTIONS ON TRANSFER OF PRIVATE NOTES WILL CONTINUE IF PRIVATE NOTES ARE NOT
TENDERED OR ARE NOT ACCEPTED FOR EXCHANGE

We will issue Exchange Notes in exchange for Private Notes timely received
by the Exchange Agent and accompanied by a properly completed and duly executed
Letter of Transmittal and all other required documentation. Therefore, if you
want to tender your Private Notes in exchange for Exchange Notes, you must
properly complete all required documentation and allow sufficient time to ensure
timely delivery. Neither we nor the Exchange Agent is under any duty to give
notification of defects or irregularities with respect to your tender of Private
Notes for exchange.

If you do not tender your private Notes or they are not accepted by the
Exchange Agent, your Private Notes will continue to be subject to the existing
restrictions upon transfer thereof even after the Exchange Offer is consummated.
Moreover, if you tender in the Exchange Offer for the purpose of participating
in a distribution of the Exchange Notes, you will be required, in the absence of
an applicable exemption, to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
See "The Exchange Offer." In addition, the $1.25 Billion Exchange Notes and the
Exchange MOPPRS will only be transferable in blocks of at least $100,000
aggregate principal amount.

To the extent that Private Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Private
Notes could be adversely affected due to the limited principal amount of the
Private Notes that is expected to remain outstanding following the Exchange
Offer. A small outstanding amount of Private Notes could result in less demand
to purchase Private Notes and could, therefore, result in lower prices for
Private Notes. Moreover, if you do not tender your Private Notes, you will hold
an investment subject to certain restrictions on transfer not applicable to the
Exchange Notes and, as a result, you may only be able to sell your Private Notes
at a price that is less than the price available to sellers of the
freely-tradeable Exchange Notes.

The Exchange Notes and any Private Notes that remain outstanding after
consummation of the Exchange Offer will vote together as a single series for
purposes of determining whether holders of the requisite percentage in principal
amount have taken certain actions or exercised certain rights under the
Indenture.

THERE IS NO CURRENT PUBLIC MARKET FOR EXCHANGE NOTES

We do not intend to apply for listing of the Exchange Notes on any
securities exchange or to seek approval through any automated quotation system.
A market for the Exchange Notes may not develop, or, if, such a market were to
develop, the Exchange Notes could trade at prices that may be higher or lower
than the initial offering prices of the Private Notes depending on many factors,
including prevailing interest rates, our operating results and financial
condition, the market for similar securities and other factors beyond our
control, including general economic conditions. If no such market develops, you
may not be able to sell your Exchange Notes or you may only be able to sell them
at a price that is less than the initial offering price of the related Private
Notes. Further, to the extent that a large amount of Private Notes are not
tendered or are tendered and not accepted in the Exchange Offer, the trading
market for the Exchange Notes could be adversely affected. See "Plan of
Distribution."

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<PAGE> 24

THERE CAN BE NO ASSURANCE THAT WE WILL EFFECTIVELY MANAGE OUR RAPID GROWTH AND
EXPANSION INTO NEW MARKETS

We are currently growing rapidly. As of March 31, 1998, we owned interests
in 260 Office Properties containing 66.6 million square feet. We also owned
interests in 17 Parking Facilities containing approximately 16,749 parking
spaces. Our office portfolio grew by 107% (on a square footage basis) and our
parking portfolio grew by 13% (based on the number of parking spaces) from the
time of our IPO in July 1997 through the end of the year. Additionally, the
Beacon Merger, which closed in December 1997, substantially expanded our
operations in Boston and extended our operations to San Jose. The Wright Runstad
Acquisition, which also closed in December 1997, extended our operations to
Seattle, Washington, Portland, Oregon and Anchorage, Alaska. Other recent
acquisitions extended our operations to downtown New Orleans, suburban
Philadelphia, Minneapolis and Pittsburgh. We plan to continue this rapid growth
for the foreseeable future. We plan on managing this growth by applying our
experience to new markets and properties and expect to be successful in that
effort. If we do not effectively manage our rapid growth, however, we may not be
able to service our debt, including the Notes.

OUR PERFORMANCE AND SHARE VALUE ARE SUBJECT TO RISKS ASSOCIATED WITH THE REAL
ESTATE INDUSTRY

GENERAL. If our assets do not generate income sufficient to pay our
expenses and maintain our Properties, we may not be able to service our debt,
including the Notes. Several factors may adversely affect the economic
performance and value of our Properties. These factors include changes in the
national, regional and local economic climate, local conditions such as an
oversupply of office properties or a reduction in demand for office properties,
the attractiveness of our Properties to tenants, competition from other
available office properties, changes in market rental rates and the need to
periodically repair, renovate and relet space. Our performance also depends on
our ability to collect rent from tenants and to pay for adequate maintenance,
insurance and other operating costs (including real estate taxes), which could
increase over time. Also, the expenses of owning and operating a property are
not necessarily reduced when circumstances such as market factors and
competition cause a reduction in income from the property. If a property is
mortgaged and we are unable to meet the mortgage payments, the lender could
foreclose on the mortgage and take the property. In addition, interest rate
levels, the availability of financing, changes in laws and governmental
regulations (including those governing usage, zoning and taxes) and the
possibility of bankruptcies of tenants may adversely affect our financial
condition and results of operations.

WE MAY BE UNABLE TO RENEW LEASES OR RELET SPACE AS LEASES EXPIRE. When our
tenants decide not to renew their leases upon expiration, we may be unable to
relet the space. Even if the tenants do renew or we can relet the space, the
terms of renewal or reletting (including the cost of required renovations) may
be less favorable than current lease terms. Over the next five years (through
the end of 2002), leases will expire on a total of 55% of the rentable square
feet at our current properties. If we are unable to promptly renew the leases or
relet this space, or if the rental rates upon such renewal or reletting are
significantly lower than expected rates, then our results of operations and
financial condition will be adversely affected. Consequently, our cash flow and
ability to service our debt, including the Notes, would be adversely affected.

NEW ACQUISITIONS MAY FAIL TO PERFORM AS EXPECTED AND COMPETITION FOR
ACQUISITIONS MAY RESULT IN INCREASED PRICES FOR PROPERTIES. We intend to
continue to actively acquire office and parking properties. Newly acquired
properties may fail to perform as expected. We may underestimate the costs
necessary to bring an acquired property up to standards established for its
intended market position. Additionally, we expect other major real estate
investors with significant capital will compete with us for attractive
investment opportunities. These competitors include publicly traded REITs,
private REITs, investment banking firms and private institutional investment
funds. This competition has increased prices for office properties. We expect to
acquire properties with cash from secured or unsecured financings and proceeds
from offerings of equity or debt. We may not be in a position or have the
opportunity in the future to make suitable property acquisitions on favorable
terms. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."

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<PAGE> 25

BECAUSE REAL ESTATE INVESTMENTS ARE ILLIQUID, WE MAY NOT BE ABLE TO SELL
PROPERTIES WHEN APPROPRIATE. Real estate investments generally cannot be sold
quickly. We may not be able to vary our portfolio promptly in response to
economic or other conditions. This inability to respond promptly to changes in
the performance of our investments could adversely affect our financial
condition, results of operations and ability to service our debt, including the
Notes.

SOME POTENTIAL LOSSES ARE NOT COVERED BY INSURANCE. We carry comprehensive
liability, fire, extended coverage and rental loss insurance on all of our
Properties. We believe the policy specifications and insured limits of these
policies are adequate and appropriate. However, certain types of losses, such as
lease and other contract claims, generally are not insured. Should an uninsured
loss or a loss in excess of insured limits occur, we could lose all or a portion
of the capital we have invested in a property, as well as the anticipated future
revenue from the property. In such an event, we might nevertheless remain
obligated for any mortgage debt or other financial obligations related to the
property.

We carry earthquake insurance on all of our Properties, including those
located in California. Our earthquake policies are subject to coverage
limitations which we believe are commercially reasonable. In light of the
California earthquake risk, California building codes since the early 1970s have
established construction standards for all new buildings. The current and
strictest construction standards were adopted in 1987. Of the 43 properties (as
of March 31, 1998) located in California, 12 have been built since January 1,
1988 and we believe they were constructed in full compliance with the applicable
standards existing at the time of construction. It is nevertheless a possibility
that material losses in excess of insurance proceeds will occur in the future.

DEBT FINANCING, FINANCIAL COVENANTS, DEGREE OF LEVERAGE, AND INCREASES IN
INTEREST RATES COULD ADVERSELY AFFECT OUR ECONOMIC PERFORMANCE

SCHEDULED DEBT PAYMENTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION. Our
business is subject to risks normally associated with debt financing. Cash flow
could be insufficient to pay distributions at expected levels and meet required
payments of principal and interest. We may not be able to refinance existing
indebtedness (which in virtually all cases requires substantial principal
payments at maturity) and, if we can, the terms of such refinancing might not be
as favorable as the terms of existing indebtedness. The total principal amount
of our outstanding indebtedness was $4.0 billion as of March 31, 1998. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Debt Financing." If principal
payments due at maturity cannot be refinanced, extended or paid with proceeds of
other capital transactions, such as new equity capital, our cash flow will not
be sufficient in all years to repay all maturing debt. If prevailing interest
rates or other factors result in higher interest rates, the increased interest
expense would adversely affect cash flow and our ability to service our debt,
including the Notes.

FINANCIAL COVENANTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION. If a
property is mortgaged to secure payment of indebtedness and we are unable to
meet mortgage payments, the mortgagee could foreclose on the property, resulting
in loss of income and asset value. The mortgages on our properties contain
customary negative covenants which, among other things, limit our ability,
without the prior consent of the lender, to further mortgage the property, to
enter into new leases or materially modify existing leases, and to discontinue
insurance coverage. In addition, our Credit Facilities contain certain customary
restrictions, requirements and other limitations on our ability to incur
indebtedness, including total debt to assets ratios, secured debt to total
assets ratios, debt service coverage ratios and minimum ratios of unencumbered
assets to unsecured debt. The Indenture under which our senior unsecured
indebtedness is issued contains certain financial and operating covenants
including, among other things, certain coverage ratios, as well as limitations
on our ability to incur secured and unsecured indebtedness, sell all or
substantially all of our assets and engage in mergers and consolidations and
certain acquisitions. Foreclosure on mortgaged properties or an inability to
refinance existing indebtedness would likely have a negative impact on our
financial condition, results of operations and ability to service our debt,
including the Notes.

20
<PAGE> 26

OUR DEGREE OF LEVERAGE COULD LIMIT OUR ABILITY TO OBTAIN ADDITIONAL
FINANCING. Our Debt to Market Capitalization Ratio (total debt as a percentage
of total debt plus the market value of the outstanding Common Shares and Units)
was approximately 30.8% as of March 31, 1998. The Trust has a policy of
incurring indebtedness for borrowed money only through the Operating Partnership
and its subsidiaries and only if upon such incurrence our Debt to Market
Capitalization Ratio would be approximately 50% or less. The degree of leverage
could have important consequences to securityholders, including affecting our
ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, development or other general corporate
purposes and making us more vulnerable to a downturn in business or the economy
generally.

RISING INTEREST RATES COULD ADVERSELY AFFECT CASH FLOW. We obtained the
$600 Million Credit Facility in July 1997 and the $1.5 Billion Credit Facility
in October 1997 and sold the $180 Million Notes in September 1997 and the $1.25
Billion Notes and MOPPRS in the February 1998 Notes Offering. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources -- Debt Financing." The $180 Million Notes,
$1.25 Billion Notes and MOPPRS have fixed interest rates, but advances under the
Credit Facilities bear interest at a variable rate based upon one-month LIBOR.
We had, as of December 31, 1997, interest rate hedging agreements for
approximately $1.0 billion of our floating rate debt to limit our exposure to
rising interest rates, but terminated these agreements when we paid down the
Credit Facilities with the proceeds of the $1.25 Billion Notes Offering, the
MOPPRS Offering and the PIERS Offering. Although hedging agreements enable us to
convert floating rate liabilities to fixed rate liabilities, they expose us to
the risk that the counterparties to such hedge agreements may not perform, which
could increase our exposure to rising interest rates. Generally, however, the
counterparties to hedging agreements which the Company would enter into are
major financial institutions. We may borrow additional money with variable
interest rates in the future, and enter into other transactions to limit our
exposure to rising interest rates as appropriate and cost effective. Increases
in interest rates, or the loss of the benefits of hedging agreements, would
increase our interest expenses, which would adversely affect cash flow and our
ability to service our debt, including the Notes.

THE NOTES ARE EFFECTIVELY SUBORDINATED TO OUR SECURED INDEBTEDNESS AND CERTAIN
OTHER INDEBTEDNESS OF

OUR SUBSIDIARIES

We derive substantially all our operating income from our Subsidiaries. The
Holders of the Exchange Notes will have, and you have, no direct claim against
our Subsidiaries for payment under the Notes. We must rely on dividends and
other payments from our Subsidiaries or must raise funds in public or private
equity (either directly or through the Trust) or debt offerings or sell assets
to generate the funds necessary to meet our obligations, including the payment
of principal and interest on the Notes. If the dividends and other payments from
Subsidiaries were insufficient to meet such obligations, there could be no
assurance that we would be able to obtain such funds on acceptable terms or at
all.

Given a bankruptcy at the Subsidiary level, the Exchange Notes and the
Private Notes would be effectively subordinated in right of payment to all
existing and future indebtedness and liabilities of our Subsidiaries. As of
December 31, 1997, on a Pro Forma Basis, the total liabilities of our
Subsidiaries (after the elimination of loans and advances to us by our
Subsidiaries) was approximately $5.2 billion. In addition, the Indenture permits
us and our Subsidiaries to incur additional indebtedness, both secured and
unsecured, provided certain conditions are met. See "Description of the Exchange
Notes -- Certain Covenants." Consequently, in the event of a bankruptcy,
liquidation, dissolution, reorganization or similar proceeding with respect to
our Subsidiaries, the holders of any indebtedness of our Subsidiaries will be
entitled to payment thereof from the assets of such Subsidiaries prior to the
holders of any of our general unsecured obligations, including the Notes.

The Exchange Notes will be, and the Private Notes are, unsecured and
effectively subordinated to any of our secured indebtedness to the extent of the
value of the assets securing such indebtedness. As of December 31, 1997, on a
Pro Forma Basis, our total secured indebtedness, including that of our
Subsidiaries, was approximately $2.3 billion. The Indenture permits us and our
Subsidiaries to incur additional secured indebtedness provided certain
conditions are met. See "Description of the Exchange Notes -- Certain

21
<PAGE> 27

Covenants." Consequently, in the event we are involved in a bankruptcy,
liquidation, dissolution, reorganization or similar proceeding, the holders of
any secured indebtedness will be entitled to proceed against the collateral that
secures such secured indebtedness and such collateral will not be available for
satisfaction of any amounts owed under our unsecured indebtedness, including the
Notes.

THE EXCHANGE NOTES MAY NOT REMAIN OUTSTANDING FOR THEIR FULL TERMS TO MATURITY

We may redeem the $1.25 Billion Exchange Notes and the $180 Million
Exchange Notes at any time at our option. If we choose to redeem your $1.25
Billion Exchange Notes or $180 Million Exchange Notes, you will not be able to
hold such Notes for their full terms to maturity. In addition, the Exchange
MOPPRS will be automatically deemed tendered to the Remarketing Dealer for
purchase or repurchased by the Company on the Remarketing Date. Thus, you may
only hold your exchange MOPPRS until the Remarketing Date.

WE DO NOT CONTROL OUR MANAGED PROPERTIES OR MANAGEMENT AND NON-REIT SERVICES
BUSINESSES

WE DO NOT CONTROL OUR MANAGEMENT AND SERVICES BUSINESS. To facilitate
maintenance of our REIT qualification, we have Noncontrolled Subsidiaries that
provide management and other services for properties that we do not wholly own.
As of December 31, 1997, we had five Noncontrolled Subsidiaries: Equity Office
Properties Management Corp. and Beacon Property Management Corporation (which we
refer to together as the "Management Companies"), which manage the Managed
Properties and certain properties which are held in partnerships or subject to
participation agreements with unaffiliated third parties (the "Joint Venture
Properties"); Beacon Design Company, which provides third-party tenant design
services; Beacon Construction Company, which provides third-party construction
services; and EOP Office Company, which owns a noncontrolling interest in Wright
Runstad Asset Limited Partnership, which provides third-party development
services. While we generally own substantially all (95% or 99%) of the economic
interest in the Noncontrolled Subsidiaries, their voting stock is owned directly
or indirectly by private companies controlled by Mr. Zell. See "-- Conflicts of
Interest Could Result in Decisions Not in the Company's Best Interest -- Mr.
Zell's Affiliates Control Our Management Companies and Most of the Managed
Properties" below. We therefore do not control the timing or amount of
distributions or the management and operation of the Noncontrolled Subsidiaries.
As a result, decisions relating to the declaration and payment of distributions
and the business policies and operations of the Noncontrolled Subsidiaries could
be adverse to our interests or could lead to adverse financial results, which
could adversely affect our financial condition and results of operations and the
ability to service our debt, including the Notes. Also, there are certain
services for our tenants that we would like to provide but are prohibited from
doing so by the REIT tax laws and regulations. Certain such services are being
provided by Tenant Services Corp., which is owned entirely by affiliates of Mr.
Zell. We have no control over, or ownership interest in, Tenant Services Corp.,
which operates as an independent contractor. Consequently, we are not able to
assure that this service corporation will conduct its day-to-day operations in a
manner consistent with our best interests. We may, however, terminate the
services of this service corporation at any time upon 30 days' notice.

CONFLICTS OF INTEREST COULD RESULT IN DECISIONS NOT IN THE COMPANY'S BEST
INTEREST

THERE WERE NO ARM'S LENGTH NEGOTIATIONS IN THE FORMATION TRANSACTIONS. The
transactions pursuant to which we formed the Company in July 1997, which we
sometimes refer to as the "Formation Transactions," were not negotiated at arm's
length. The representations and warranties made by the contributors of
properties to the Company in the Formation Transactions and the indemnification
provided for breach of such representations and warranties may not be as good as
they might have been had they been negotiated at arm's length. Such
indemnification is limited generally to an amount equal to 1% of the value of
consideration paid for the properties and to $15 million with respect to pre-IPO
liabilities of the management business contributed by affiliates of Mr. Zell. If
we incur losses attributable to breaches of the representations and warranties
made by the contributors of properties in the Formation Transactions and such
losses are in excess of the indemnification limit, they would have to be paid
for out of our assets, with the potential consequence of decreasing cash
available to service our debt, including the Notes. To date, we have no
knowledge of any

22
<PAGE> 28

material breaches of the agreements (which we refer to collectively as the
"Contribution Agreement") pursuant to which the Formation Transactions occurred.

WE COULD SUFFER MONETARY LOSSES IF WE FAIL TO ENFORCE THE CONTRIBUTION
AGREEMENT. Mr. Zell has a substantial economic interest in the companies that
contributed properties and the management business to the Company in the
Formation Transactions. Consequently, Mr. Zell has a conflict of interest with
respect to his obligation as one of our officers and trustees to enforce the
terms of the Contribution Agreement. If circumstances arise where we should seek
to enforce such agreement, particularly the indemnification provisions and the
remedy provisions for breaches of representations and warranties, Mr. Zell might
assert a position contrary to the Company's. If this happens and Mr. Zell were
to prevail, we would not collect money we might otherwise be entitled to. Also,
the Common Shares and Units that are available to satisfy claims for such
indemnification will be, to the extent not used for this purpose, available for
distribution to entities in which Mr. Zell and several other of our executive
officers and trustees have an economic interest. This is in accordance with the
Contribution Agreement. Consequently, these executive officers and trustees also
have a conflict of interest in pursuing any claim the Company might have arising
out of the Formation Transactions.

MR. ZELL'S AFFILIATES CONTROL OUR MANAGEMENT COMPANIES AND MOST OF THE
MANAGED PROPERTIES. The Management Companies and Beacon Property Management,
L.P. provide property management services and, in most cases, asset management
services to the 37 Joint Venture Properties and to the 32 Managed Properties, 29
of which are owned or controlled by affiliates of Mr. Zell and three of which
are owned by unrelated parties. Most of these management contracts were not
negotiated on an arm's length basis. While we believe that the management fees
we receive from these properties are at current market rates, there is no
assurance that these management fees will equal at all times those fees that
would be charged by an unaffiliated third party. In this regard, Mr. Zell
controls and has a substantial interest in the private company which has voting
control of the Management Companies. See "We Do Not Control Our Managed
Properties or Management and Non-REIT Services Businesses" above.

CERTAIN TRUSTEES AND OFFICERS HAVE CONFLICTS OF INTEREST AND COULD EXERCISE
INFLUENCE IN A MANNER INCONSISTENT WITH SHAREHOLDERS' BEST INTEREST. As of March
1, 1998, Mr. Zell and Ms. Rosenberg own (as determined in accordance with the
Commission's rules) approximately 3.3%, and all other trustees and executive
officers of the Company as a group own approximately 2.4%, of the outstanding
Common Shares (in each case including Common Shares issuable upon exchange of
Units). In addition, Mr. Zell and his affiliates may receive distributions of up
to approximately 9.4 million additional Units (representing approximately 3.4%
of the outstanding Common Shares on a fully diluted basis) on or prior to July
11, 1999. These Units were set aside at the time of the IPO and are issuable if
we achieve certain performance objectives, based on the market price of the
Common Shares. Mr. Zell and Ms. Rosenberg have significant influence on the
management and operation of the Company. Such influence might be exercised in a
manner that is inconsistent with the interests of other securityholders.

MR. ZELL AND HIS AFFILIATES CONTINUE TO BE INVOLVED IN OTHER INVESTMENT
ACTIVITIES. Although Mr. Zell entered into a noncompetition agreement at the
time of the IPO, he and his affiliates have a broad and varied range of
investment interests, including interests in other real estate investment
companies. Mr. Zell and his affiliates may acquire interests in other companies.
He may not be able to control whether any such company competes with the
Company. Consequently, Mr. Zell's continued involvement in other investment
activities could result in competition to the Company as well as management
decisions which might not reflect the interests of our securityholders.

We did not obtain noncompetition agreements with any of the former Beacon
officers or directors in connection with the Beacon Merger. Consequently, any
former officer or director of Beacon could engage in activities in competition
with activities of the Company except, in the case of Mr. Sidman, who became one
of our trustees, to the extent that his actions would violate his fiduciary
duties.

WE LEASE OUR CORPORATE OFFICES FROM AN AFFILIATE OF MR. ZELL. Our corporate
offices are at Two North Riverside Plaza in Chicago. We lease our office space
there from one of Mr. Zell's affiliates. We believe, however, that the lease
terms, including the rental rates, reflect current market terms.

23
<PAGE> 29

ENVIRONMENTAL PROBLEMS ARE POSSIBLE AND MAY BE COSTLY

Federal, state and local laws and regulations relating to the protection of
the environment may require a current or previous owner or operator of real
estate to investigate and clean up hazardous or toxic substances or petroleum
product releases at such property. The owner or operator may have to pay a
governmental entity or 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. Even if more than one person may have been responsible for
the contamination, each person covered by the environmental laws may be held
responsible for all of the clean-up costs incurred. In addition, third parties
may sue the owner or operator of a site for damages and costs resulting from
environmental contamination emanating from that site.

Environmental laws also govern the presence, maintenance and removal of
asbestos. Such laws require that owners or operators of buildings containing
asbestos properly manage and maintain the asbestos, that they notify and train
those who may come into contact with asbestos and that they undertake special
precautions, including removal or other abatement, if asbestos would be
disturbed during renovation or demolition of a building. Such laws may impose
fines and penalties on building owners or operators who fail 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 Phase I environmental
site assessments at all of our properties. These assessments 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 property basis, these consultants have conducted
additional testing, 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 environmental problem, and for
contamination in groundwater.

These environmental assessments have not revealed any environmental
liabilities at the properties that we believe would have a material adverse
effect on our business, assets, financial condition or results of operations nor
are we aware of any such material environmental liability. Asbestos is in a
number of the office properties, but most of these buildings contain only minor
amounts. We believe this asbestos is in good condition and almost none of it is
easily crumbled. We are currently properly managing and maintaining all of the
asbestos and we are following other requirements relating to asbestos. The
presence of asbestos should not present a significant risk as long as compliance
with these requirements continues.

For a few of the properties, the environmental assessments note potential
offsite sources of contamination, such as underground storage tanks. For some of
the properties, the environmental assessments note previous uses, such as the
former presence of underground storage tanks. In most of these cases, follow-up
soil and/or groundwater sampling has not identified evidence of significant
contamination. In the few cases where contamination has been found, existing
plans to mitigate and monitor the sites and/or financial commitments from
certain prior owners and tenants to cover costs related to mitigation should
prevent the contamination from becoming a significant liability.

We believe that our properties are in compliance in all material respects
with applicable environmental laws. We believe that the issues identified in the
environmental reports will not have a material adverse effect if we continue to
comply with environmental laws and with the recommendations set forth in these
reports. Unidentified environmental liabilities could arise, however, and could
have an adverse effect on our financial condition, results of operations and
ability to service our debt, including the Notes.

WE ARE DEPENDENT ON OUR KEY PERSONNEL

We depend on the efforts of our executive officers, particularly Messrs.
Zell and Callahan. If they resigned, our operations could be adversely effected.
We do not have employment agreements with either of these officers.

24
<PAGE> 30

CONTINGENT OR UNDISCLOSED LIABILITIES ACQUIRED IN MERGERS OR SIMILAR
TRANSACTIONS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND IMPAIR OUR
ABILITY TO SERVICE OUR DEBT, INCLUDING THE NOTES

When we formed the Company, we acquired all the assets of the ZML
Opportunity Partnerships (four real estate investment funds sponsored by Mr.
Zell) and certain assets of affiliates of Mr. Zell. These assets were acquired
subject to existing liabilities. Each of the ZML Opportunity Partnerships will
liquidate over the two-year period ending on or prior to July 11, 1999, and the
Units and other assets (including cash from distributions), net of liabilities,
will be distributed to affiliates of Mr. Zell and the limited partners of the
ZML Opportunity Partnerships during such time period. Our recourse against
affiliates of Mr. Zell with respect to liabilities relating to the management
business they contributed when we formed the Company is limited to $15 million.
Our recourse for any unknown liabilities in connection with the contribution of
properties when we formed the Company is limited to 1% of the value of the
consideration paid for those assets and must be asserted prior to July 11, 1999.
Similarly, the assets we acquired in the Beacon Merger were acquired subject to
liabilities and without any recourse with respect to unknown liabilities.
Unknown liabilities with respect to properties acquired when we formed the
Company or in the Beacon Merger might include liabilities for clean-up or
remediation of undisclosed environmental conditions, claims of tenants, vendors
or other persons dealing with the entities prior to the IPO or the Beacon Merger
(if such claims had not been asserted prior to the respective closings of such
transactions), accrued but unpaid liabilities incurred in the ordinary course of
business, and claims for indemnification by general partners, directors,
officers and others indemnified by the ZML Opportunity Partnerships or Beacon.
Similarly, we succeeded to any liabilities that the ZML REITs may have had for
periods prior to the IPO and that Beacon may have had prior to the Beacon
Merger. We also succeeded to any liabilities, including claims for property
transfer taxes, arising out of the contribution to us of properties when we
formed the Company and in connection with the Beacon Merger. In the future, we
may face additional risks of contingent or undisclosed liabilities as a result
of mergers, other business combinations or similar transactions.

HOLDERS OF EXCHANGE MOPPRS MIGHT HAVE TO INCLUDE ORIGINAL ISSUE DISCOUNT IN
THEIR TAXABLE INCOME

The federal income tax treatment of debt obligations such as the Exchange
MOPPRS is not certain. The Internal Revenue Service (the "IRS") could seek to
treat Exchange MOPPRS as having contingent interest for federal income tax
purposes. The Company does not intend to treat the Exchange MOPPRS as having
contingent interest. If the Exchange MOPPRS are treated as having contingent
interest, a holder of Exchange MOPPRS would be required to include in his
taxable income the original issue discount on the Exchange MOPPRS that would be
deemed to accrue at an estimated yield (based on a projected payment schedule
prepared by the Company in accordance with the applicable Treasury Regulations)
during the holder's taxable year. Moreover, because the original issue discount
that a holder might be required to include in taxable income is based on the
estimated yield (described above) and not on actual cash payments received
during the taxable year, it is possible that a holder would be required to pay
federal income tax on an amount of original issue discount that exceeds the
income that he actually received from the Exchange MOPPRS in that taxable year.
See "Federal Income Tax Consequences -- Possible Characterization of Exchange
MOPPRS as Having Contingent Interest."

25
<PAGE> 31

THE COMPANY

GENERAL

The Company and the Trust were formed to continue and expand the national
office property business organized by Mr. Zell, Chairman of the Board of
Trustees of the Company. As of March 31, 1998, the Company owned or had an
interest in 260 Office Properties containing approximately 66.6 million rentable
square feet of office space and owned or had an interest in 17 Parking
Facilities containing approximately 16,749 parking spaces. To facilitate
maintenance of the Trust's qualification as a REIT for federal income tax
purposes, management of properties that are not wholly owned by the Company and
its subsidiaries is generally conducted through EOP Management Company and
Beacon Management Company.

The Trust, a self-administered and self-managed REIT, is the managing
general partner of, and controls a majority of the partnership interests in, the
Company. On July 11, 1997, the Trust completed its IPO of 28,750,000 Common
Shares. As of March 31, 1998, the Trust owned, directly or indirectly, 89.6% of
the outstanding Units in the Company. The Trust owns all of its assets and
conducts substantially all of its business through the Company and its
subsidiaries.

OPERATIONS

The operation of the Properties is under the direction of six 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 the Trust's Executive Vice President -- Real
Estate Operations.

OPERATIONAL STRUCTURE

The Company is the entity through which the Trust owns the Properties. The
ownership and management structure of the Trust is intended to (i) enable the
Trust to acquire assets in transactions that may defer some or all of the
sellers' tax consequences and (ii) enable the Trust 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 Companies provide office property and asset management
services to 31 Managed Properties, 29 of which are owned by affiliates of Mr.
Zell. The Management Companies and Beacon Property Management, L.P., a Delaware
limited partnership ("BPMLP") provide office property and asset management
services to 37 Joint Venture Properties. The Management Companies and BPMLP
collect property management fees for the performance of such services. See "Risk
Factors -- We Do Not Control Our Managed Properties or Management Business and
Non-REIT Services Business."

The 37 Joint Venture Properties are held in partnerships or are subject to
participation agreements with unaffiliated third parties. Thirty of the Joint
Venture Properties are Office Properties and seven are Parking Facilities. The
Company or a subsidiary is the managing general partner of each of the Joint
Venture Properties (except for Civic Parking L.L.C., where a subsidiary of the
Company is one of two managing members).

The Company's acquisition and oversight of its Parking Facilities is
administered through a wholly owned subsidiary, Equity Capital Holdings, L.P.
All but one of the Parking Facilities are leased to and operated by third-party
parking garage service companies under leases where such service companies bear
the operating expenses.

The principal executive offices of the Trust and the Company are located at
Two North Riverside Plaza, 22nd Floor, Chicago, Illinois 60606, and their
telephone number is (312) 466-3300. The Company maintains regional offices in
Los Angeles, Denver, Houston, Chicago, Atlanta and Washington, D.C.

26
<PAGE> 32

ACQUISITION ACTIVITY

During the period from 1987 through 1997, the Company invested
approximately $10.2 billion, averaging $2.7 billion annually (calculated on a
cost basis) for the three years ended December 31, 1997, in acquisitions of
institutional quality office properties throughout the United States. During the
period from the Trust's IPO in July 1997 through April 1998, the Company
completed a number of new acquisitions:

BEACON MERGER. On December 19, 1997, the Company, the Trust, Beacon and
Beacon Partnership consummated the transactions contemplated by the Merger
Agreement. Pursuant to the Merger Agreement, Beacon merged with and into the
Trust and Beacon Partnership merged with and into the Company. The acquisition
cost of the Beacon Merger was approximately $4.3 billion.

As a result of the Beacon Merger, the Company acquired interests in 130
Office Properties containing approximately 20.9 million rentable square feet of
office space. The Beacon Properties are located in 22 submarkets in six markets:
Boston, Atlanta, Chicago, Los Angeles, San Jose and Washington, D.C.

OTHER ACQUISITIONS. On December 17, 1997, the Company consummated the
Wright Runstad Acquisition in which it acquired ten Office Properties,
containing an aggregate of approximately 3.34 million square feet, located in
Seattle, Washington, Portland, Oregon and Anchorage, Alaska, from Wright Runstad
Holdings L.P., Wright Runstad Asset Management L.P. and Mellon Bank, N.A., as
Trustee for First Plaza. The purchase price was approximately $640 million. In
addition to the Beacon Merger and the Wright Runstad Acquisition, during the
period from the Trust's IPO through April 30, 1998, the Company completed the
Other Acquisitions in which it acquired 36 Office Properties, containing an
aggregate of approximately 12.1 million square feet, located in Boston, New
Orleans, Houston, Dallas, Philadelphia, Los Angeles, Chicago, Washington, D.C.
and Fairfax and Alexandria, Virginia. The aggregate consideration paid by the
Company for the Other Acquisitions was approximately $2.0 billion, comprised of
$1.7 billion in cash, $163 million in Units and $96 million in assumed
liabilities. Subsequent to the IPO, the Company also acquired three Parking
Facilities, containing approximately 2,141 parking spaces in Chicago, New
Orleans and Pittsburgh for $54.9 million. Giving effect to the Other
Acquisitions, as of April 30, 1998, the Company owned or had an interest in 266
Office Properties containing 68.7 million square feet.

PROBABLE ACQUISITIONS. The Company has entered into agreements to acquire
an aggregate of twelve additional office properties in the Probable
Acquisitions. The Company expects to acquire one office property located in
Denver during May 1998, as well as four office properties located in Denver and
four office properties located in Albuquerque during July 1998. These nine
properties contain an aggregate of approximately 1.4 million square feet. The
aggregate purchase price for these nine properties is approximately $190
million, comprised of approximately $127 million in cash, and approximately $63
million in the form of promissory notes of the Company, payable, at the option
of the Company, in Common Shares. The Company has also entered into an agreement
to acquire three office properties (including one office property currently in
development) located in Dallas containing an aggregate of approximately 1.0
million square feet for aggregate consideration estimated to be $150.0 million
in cash. The Company expects to complete this acquisition by the end of
September 1998.

BUSINESS AND GROWTH STRATEGIES

The Company's primary business objective is to achieve sustainable
long-term growth in cash flow and portfolio 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 owning parking facilities.

27
<PAGE> 33

average rent of $29.14 per square foot, with occupancy to commence in whole or
in part during 1998. The Company's average operating expenses for the total
vacant space were $9.38 per square foot as of March 31, 1998.

During the period from March 31, 1998 through December 31, 2002, 4,566
leases for 36.3 million rentable square feet of space are scheduled to expire.
As of March 31, 1998, the average rent for this space was $22.18 per square foot
and the weighted average operating expenses were $8.93 per square foot. The
actual rental rates at which available space will be renewed or relet will
depend on prevailing market factors at the time.

EMPLOYEES

NO CASH PROCEEDS TO THE COMPANY

The Company will not receive any proceeds from the issuance of the Exchange
Notes offered hereby and has agreed to pay the expenses of the Exchange Offer.
Private Notes surrendered in exchange for Exchange Notes will be retired and
canceled and cannot be reissued. Accordingly, issuance of the Exchange Notes
will not result in any increase in the outstanding indebtedness of the Company.
The Company used the net proceeds from the issuance of the Private Notes to
repay indebtedness outstanding under the Credit Facilities and, in the case of
the $1.25 Billion Notes and the MOPPRS, the Beacon Facility, as described in the
financial statements presented in "Summary Selected Financial Data" and
"Selected Financial Data." As of December 31, 1997, the outstanding amounts of
indebtedness which were repaid with the proceeds from the issuance of the
Private Notes, which bore interest at various floating rates, had a weighted
average annual rate of 6.9% and had a weighted average maturity of two years.

28
<PAGE> 34

RATIOS OF EARNINGS TO FIXED CHARGES

The Company's ratios of earnings to fixed charges are as follows:

<TABLE>
<CAPTION>
EQUITY OFFICE
PREDECESSORS EQUITY OFFICE PREDECESSORS
COMPANY (COMBINED (COMBINED HISTORICAL)
(HISTORICAL) HISTORICAL) YEARS ENDED DECEMBER 31,
JULY 11, 1997 TO JANUARY 1, 1997 --------------------------------
DECEMBER 31, 1997 TO JULY 10, 1997 1996 1995 1994 1993 1992
----------------- ---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges......... 2.11 1.52 1.49 1.21 1.24 1.23 1.24
</TABLE>

The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income (loss) before
gains from sales of property and extraordinary items plus fixed charges. Fixed
charges consist of interest expense (including interest costs capitalized), the
amortization of debt issuance costs and rental expense deemed to represent
interest expense.

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
December 31, 1997 on a historical basis and a Pro Forma Basis. The information
set forth in the table should be read in conjunction with the financial
statements 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>
DECEMBER 31, 1997
-------------------------
PRO FORMA
HISTORICAL BASIS
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt:
Mortgage Debt(1).......................................... $ 2,063,017 $ 2,111,126
Credit Facilities(1)...................................... 2,041,300 858,761
Notes Payable............................................. 180,000 1,747,882
Owners' Equity.............................................. 7,130,363 7,464,022
----------- -----------
Total Capitalization................................... $11,414,680 $12,181,791
=========== ===========
</TABLE>

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

(1) See Notes 7 and 8 of the notes to the December 31, 1997 Historical
Consolidated and Combined Financial Statements of the Company and the Equity
Office Predecessors for information relating to the indebtedness.

29
<PAGE> 35

SELECTED FINANCIAL INFORMATION

The following sets forth selected consolidated and combined financial and
operating information on a pro forma basis for the Company and on an historical
basis for the Company and the Equity Office Predecessors. The following
historical information should be read in conjunction with the consolidated and
combined financial statements and notes thereto of the Company and Equity Office
Predecessors included elsewhere in this Prospectus. The selected consolidated
historical and operating information of the Company at December 31, 1997, and
for the period from July 11, 1997 to December 31, 1997, has been derived from
the historical consolidated financial and operating information of the Company
audited by Ernst & Young LLP, independent auditors, whose report with respect
thereto is included elsewhere in this Prospectus. The selected combined
historical and operating information at December 31, 1996 and for the period
from January 1, 1997 to July 10, 1997 and the years ended December 31, 1996 and
1995, has been derived from the historical combined financial and operating
information 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 financial and operating information of
Equity Office Predecessors at December 31, 1995 and for the year ended December
31, 1994 has been derived from the historical audited combined financial
statements not included herein. The selected combined financial and operating
information of Equity Office Predecessors at December 31, 1994 and 1993, and for
the year ended December 31, 1993, has been derived from the historical unaudited
combined financial statements of Equity Office Predecessors. Unaudited pro forma
operating information for the year ended December 31, 1997 is presented as if
the borrowings under the Credit Facilities at the end of the period,
acquisitions (including the Beacon Merger) that occurred during and subsequent
to the period, the Probable Acquisitions, the IPO and Consolidation, the Private
Debt Offering, the February 1998 Notes Offering, the UIT Offering and the Series
B Preferred Offering had occurred on January 1, 1997 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
borrowings under the Credit Facilities that occurred subsequent to December 31,
1997, the February 1998 Notes Offering, the Series B Preferred Offering, the
acquisitions that occurred subsequent to December 31, 1997, and the Probable
Acquisitions had occurred on December 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.

30
<PAGE> 36

<TABLE>
<CAPTION>
EQUITY OFFICE PREDECESSORS (COMBINED HISTORICAL)
---------------------------------------------------------------
COMPANY COMPANY FOR FOR THE
PRO FORMA THE PERIOD PERIOD FROM
FOR THE YEAR FROM JULY 11, JANUARY 1,
ENDED 1997 TO 1997 TO FOR THE YEARS ENDED DECEMBER 31,
DECEMBER 31, DECEMBER 31, JULY 10, -------------------------------------------------
1997 1997 1997 1996 1995 1994 1993
----------------- ------------- ----------- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Rental, parking and
other................... $ 1,515,398 $ 406,713 $ 327,017 $ 493,396 $ 356,959 $ 230,428 $ 150,315
----------- ----------- --------- ---------- ---------- ---------- ----------
Total revenues........ $ 1,546,966 $ 412,968 $ 339,104 $ 508,124 $ 371,457 $ 240,878 $ 159,246
----------- ----------- --------- ---------- ---------- ---------- ----------
Expenses:
Interest.................. $ 324,694 $ 76,675 $ 80,481 $ 119,595 $ 100,566 $ 59,316 $ 36,755
Depreciation and
amortization............ 280,180 70,346 66,034 96,237 74,156 46,905 29,752
Property operating(1)..... 556,501 155,679 127,285 201,067 151,488 107,412 74,028
General and
administrative.......... 56,048 17,690 17,201 23,145 21,987 15,603 12,012
Provision for value
impairment.............. -- -- -- -- 20,248 -- --
----------- ----------- --------- ---------- ---------- ---------- ----------
Total expenses........ $ 1,217,423 $ 320,390 $ 291,001 $ 440,044 $ 368,445 $ 229,236 $ 152,547
----------- ----------- --------- ---------- ---------- ---------- ----------
Income before (income) loss
allocated to minority
interests, income from
investments in
unconsolidated joint
ventures, gain on sales of
real estate, and
extraordinary items....... $ 329,543 $ 92,578 $ 48,103 $ 68,080 $ 3,012 $ 11,642 $ 6,699
Minority interests
allocation................ (1,744) (789) (912) (2,086) (2,129) 1,437 1,772
Income from investments in
unconsolidated joint
ventures.................. 12,823 3,173 1,982 2,093 2,305 1,778 --
Gain/(Loss) on sales of real
estate and extraordinary
items(2).................. (16,240) 12,236 5,338 31,271 1,705 --
----------- ----------- --------- ---------- ---------- ---------- ----------
Net income before preferred
distributions............. 340,622 78,722 61,409 73,425 34,459 16,562 8,471
Preferred distributions..... (33,710) (649) -- -- -- -- --
----------- ----------- --------- ---------- ---------- ---------- ----------
Net income available to
Units..................... $ 306,912 $ 78,073 $ 61,409 $ 73,425 $ 34,459 $ 16,562 $ 8,471
=========== =========== ========= ========== ========== ========== ==========
Net income available per
weighted average Unit
outstanding -- Basic...... $1.09 $.44
================= ===========
Net income available per
weighted average Unit
outstanding -- Diluted.... $1.08 $.43
================= ===========
Weighted average Units
outstanding -- Basic...... 280,318,729 178,647,562
=========== ===========
Weighted average Units
outstanding -- Diluted.... 285,343,812 180,014,027
=========== ===========
BALANCE SHEET DATA: (at
end of period)
Investment in real estate
after accumulated
depreciation.............. $11,923,009 $10,976,319 -- $3,291,815 $2,393,403 $1,815,160 $1,220,268
Total assets................ $12,518,783 $11,751,672 -- $3,912,565 $2,650,890 $2,090,933 $1,318,644
Mortgage debt, unsecured
notes and lines of
credit.................... $ 4,717,769 $ 4,284,317 -- $1,964,892 $1,434,827 $1,261,156 $ 798,897
Total liabilities........... $ 5,025,149 $ 4,591,697 -- $2,174,483 $1,529,334 $1,350,552 $ 845,315
Minority interests.......... $ 29,612 $ 29,612 -- $ 11,080 $ 31,587 $ 9,283 $ (15,298)
Partners' Capital/Owners'
equity.................... $ 7,464,022 $ 7,130,363 -- $1,727,002 $1,089,969 $ 731,098 $ 488,627
</TABLE>

31
<PAGE> 37

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

(1) Includes property operating expenses, real estate taxes, insurance, as well
as repair and maintenance expenses.

(2) The column entitled "Company Pro Forma for the year ended December 31, 1997"
excludes the effect of any gain (loss) on sales of real estate and
extraordinary items.

(3) The pro forma number of Office Properties as of December 31, 1997 includes
Office Properties acquired subsequent to December 31, 1997 and Probable
Acquisitions.

(4) 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."

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<PAGE> 38

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The following discussion and analysis of the consolidated and combined
financial condition and results of operations should be read in conjunction with
the Consolidated Financial Statements of the Company and the Combined Financial
Statements of Equity Office Predecessors and Notes thereto contained herein. All
references to the historical activities of the Company prior to July 11, 1997,
the date of the Trust's initial public offering (the "IPO") contained in this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" refer to the activities of the Equity Office Predecessors. Terms
employed herein as defined terms, but without definition, shall have the meaning
set forth in the financial statements. Statements contained in this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" which are not historical facts may be forward-looking statements
within the meaning of Section 27A of the Securities Act. The Company intends
such forward-=looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in Section 27A of the Securities Act and
are included for purposes of complying therewith. 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 December 31,
1997.

On July 11, 1997, following the completion of the Trust's IPO and the
related formation transactions, the Company owned 90 office properties
containing approximately 32.2 million rentable square feet and 14 parking
facilities containing 14,785 spaces. During the period from July 11, 1997 to
December 31, 1997, the Company acquired an additional 168 office properties
containing approximately 33.1 million square feet and three parking facilities
containing 1,964 spaces. The aggregate purchase price for these acquisitions was
in excess of $6 billion. These acquisitions, which included the successful
completion of the Trust's merger with Beacon and the Company's merger with
Beacon Partnership in December, effectively doubled the size of the Company's
portfolio in the first six months after the Trust became a public company,
giving it a total of 258 office buildings with approximately 65.3 million
rentable square feet, and 17 parking facilities with approximately 16,749
spaces. At December 31, 1997, the Trust owned approximately 89.5% of the Units.

In addition to the acquisition activity detailed above, the Company was
also active in the capital markets. Below is a schedule of significant capital
events which have taken place since the Trust's IPO on July 11, 1997 (see
"Liquidity and Capital Resources" below for the details of these transactions):

- On July 15, 1997, the Company closed on a $600 million revolving line of
credit (the "$600 Million Credit Facility").

- On September 3, 1997, the Company closed on a private placement of $180
million senior unsecured notes (the "$180 Million Notes Offering").

- On October 2, 1997, the Company closed on a $1.5 billion unsecured term
loan (the "$1.5 Billion Credit Facility" and, together with the $600
Million Credit Facility, the "Credit Facilities").

- In October 1997, the Trust completed two private placements of a total of
9,685,034 Restricted Common Shares and the Trust contributed the net
proceeds to the Company in exchange for a corresponding number of Units.

- In connection with the Beacon Merger and other acquisitions which took
place after the Trust's IPO, the Trust issued a total of 87,861,544
Common Shares, 8,000,000 8.98% Series A Cumulative Redeemable Preferred
Shares, liquidation value of $25 per share, and warrants to purchase
5,000,000 Restricted Common Shares and the Company issued 17,282,043
Units and 8,000,000 8.98% Series A Cumulative Redeemable Preference
Units.

- In February 1998, the Company completed a private placement of $1.25
billion senior unsecured notes (the "$1.25 Billion Notes Offering") and a
private placement of $250 million MandatOry Par Put Remarketed
Securities(SM) ("MOPPRS") (the "$250 Million MOPPRS Offering").

33
<PAGE> 39

- In February 1998, the Trust completed a private placement of $300 million
5.25% Preferred Income Equity Redeemable Shares, designated by the Trust
as 5.25% Series B Convertible, Cumulative Redeemable Preferred Shares of
Beneficial Interest, $.01 par value, $50.00 liquidation preference per
share (the "Series B Preferred Shares"), liquidation value of $50 per
share (the "Series B Preferred Offering"), and the Trust contributed the
net proceeds to the Company in exchange for 5.25% Series B Convertible,
Cumulative Preference Units (the "Series B Preferred Units").

- In April 1998, the Trust completed a private placement of $44 million
Restricted Common Shares (the "UIT Offering") and contributed the net
proceeds to the Company in exchange for Units.

RESULTS OF OPERATIONS

GENERAL

The following discussion is based primarily on the Consolidated Financial
Statements of the Company and the Combined Financial Statements of Equity Office
Predecessors, as applicable, as of December 31, 1997 and 1996 and for each of
the years ended December 31, 1997, 1996 and 1995.

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, fees from noncombined affiliates for the management of the
Managed Properties.

As of December 31, 1997, the Company owned or had an interest in 258 Office
Properties totaling approximately 65.3 million square feet, and 17 stand-alone
Parking Facilities with approximately 16,749 spaces, including properties
acquired through the Beacon Merger (the "Total Portfolio"). Of the Total
Portfolio, 71 of these Office Properties, totaling approximately 22.6 million
square feet and three Parking Facilities were acquired prior to January 1, 1996;
11 Office Properties, totaling approximately 6.1 million square feet, and seven
Parking Facilities were acquired in 1996; and 176 Office Properties, totaling
approximately 36.6 million square feet, and seven Parking Facilities were
acquired during the year ended December 31, 1997. As a result of this rapid
growth in the size of the Total 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 is
comparable. Therefore, the analysis below shows changes resulting from
Properties that were held during the entire period for the years being compared
(the "Core Portfolio") and the changes in Total Portfolio. The Core Portfolio
for the comparison between the year ended December 31, 1997 and 1996 consists of
70 Office Properties and three Parking Facilities acquired prior to January 1,
1996. The Core Portfolio for these comparisons excludes Barton Oaks Plaza II, a
118,529 square foot Office Property which was sold in January 1997, 8383
Wilshire, a 417,463 square foot Office Property, which was sold in May 1997, and
28 State Street, a 570,040 square foot Office Property, which was undergoing
major redevelopment for the periods discussed. 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. The Core Portfolio for
these comparisons includes Barton Oaks Plaza II and 8383 Wilshire.

34
<PAGE> 40

YEARS ENDED DECEMBER 31, 1997 AND 1996

The table below represents selected operating information for the Total
Portfolio and for the Core Portfolio.

<TABLE>
<CAPTION>
TOTAL PORTFOLIO CORE PORTFOLIO
----------------------------------------- -----------------------------------------
INCREASE/ % INCREASE/ %
1997 1996 (DECREASE) CHANGE 1997 1996 (DECREASE) CHANGE
---- ---- ---------- ------ ---- ---- ---------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Property revenues........... $733,730 $493,396 $240,334 48.7% $458,968 $427,936 $ 31,032 7.3%
Interest income............. 13,392 9,608 3,784 39.4 1,056 1,882 (826) (43.9)
Fees from noncombined
affiliates................ 4,950 5,120 (170) (3.3) -- -- -- --
-------- -------- -------- ------ -------- -------- -------- -----
Total revenues.............. 752,072 508,124 243,948 48.0 460,024 429,818 30,206 7.0
-------- -------- -------- ------ -------- -------- -------- -----
Interest expense............ 157,156 119,595 37,561 31.4 93,606 110,566 (16,960) (15.3)
Depreciation and
amortization.............. 136,380 96,237 40,143 41.7 85,999 84,411 1,588 1.9
Property operating
expenses.................. 282,964 201,067 81,897 40.7 177,972 176,432 1,540 0.9
General and
administrative............ 34,891 23,145 11,746 50.7 N/A N/A N/A N/A
-------- -------- -------- ------ -------- -------- -------- -----
Total expenses.............. $611,391 $440,044 $171,347 38.9% $357,577 $371,409 $(13,832) (3.7)%
======== ======== ======== ====== ======== ======== ======== =====
Income before allocation to
minority interests, income
from investment in
unconsolidated joint
ventures, gain on sales of
real estate and
extraordinary items....... $140,681 $ 68,080 $ 72,601 106.6% $102,447 $ 58,409 $ 44,038 75.4%
Minority interests.......... (1,701) (2,086) 385 18.5 (1,679) (1,986) 307 15.5
Income from unconsolidated
joint ventures............ 5,155 2,093 3,062 146.3 2,432 2,093 339 16.2
Gain on sales of real estate
and extraordinary items... (4,004) 5,338 (9,342) (175.0) (16,311) -- (16,311) --
-------- -------- -------- ------ -------- -------- -------- -----
Net income.................. $140,131 $ 73,425 $ 66,706 90.8% $ 86,889 $ 58,516 $ 28,373 48.5%
======== ======== ======== ====== ======== ======== ======== =====
Property revenues less
property operating
expenses before
depreciation, amortization
and general and
administrative expenses... $450,766 $292,329 $158,437 54.2% $280,996 $251,504 $ 29,492 11.7%
======== ======== ======== ====== ======== ======== ======== =====
</TABLE>

Property Revenues. The increase in rental revenues, tenant reimbursements,
parking income and other income ("Property Revenues") 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 94.8% as of December 31, 1997. This increase represents
approximately 1.4 million square feet of additional occupancy in the Core
Portfolio between January 1, 1996 and December 31, 1997. Included in Property
Revenues for the Core Portfolio are lease termination fees of approximately $3.7
million and $5.6 million for the years ended December 31, 1997 and 1996,
respectively (which are included in the other revenue category on the
consolidated and combined statement of operations). These fees are related to
specific tenants who have paid a fee to terminate their lease obligations before
the end of the contractual term of the lease. Although the Company has
historically experienced similar levels of such termination fees, there is no
way of predicting the timing or amounts of future lease termination fees. The
straight-line rent adjustment which is included in rental revenues for the Core
Portfolio for the years ended December 31, 1997 and 1996, was approximately
$14.6 million and $13.9 million, respectively. The straight-line rent adjustment
which is included in rental revenues for the Total Portfolio for the years ended
December 31, 1997 and 1996 was approximately $27.7 million and $18.4 million,
respectively. Other income for 1996 also includes approximately $8.8 million
relating to the Company's share of a litigation settlement.

Interest Income. Interest income for the Total Portfolio increased by
approximately $3.8 million to $13.4 million for the year ended December 31,
1997, compared to $9.6 million for the year ended December 31, 1996. This
increase in interest income is primarily due to having a greater amount of cash
reserves invested in

35
<PAGE> 41

short term investments pending investment in property acquisitions prior to the
IPO. Prior to the Consolidation, each of the entities involved in the
Consolidation needed to maintain separate cash reserves which in the aggregate
were higher than the cash reserves the Company anticipates maintaining going
forward. Due to the availability of borrowings under the Company's Credit
Facilities, the Company currently maintains lower cash reserves which are
targeted to be between $25 and $50 million (although the cash balance may at
times be more or less in anticipation of pending acquisitions or other
transactions). The lower cash balance will result in lower interest income in
future periods, however, this loss in income should be offset by savings on
interest expense on the Company's Credit Facilities.

Fees from Noncombined Affiliates. Fees from noncombined affiliates
decreased in 1997 from approximately $5.1 million in 1996 to $4.9 million in
1997. These fees are expected to continue to decrease in future periods as the
Managed Properties are sold. Fee income for the years ended December 31, 1997
and 1996, of approximately $0.4 million and $1.3 million, respectively, was
related to properties which have been sold.

Interest Expense. Interest expense increased by approximately $37.6 million
for the Total Portfolio to $157.2 million for the year ended December 31, 1997
compared to $119.6 million for the year ended December 31, 1996. This increase
resulted from having more debt outstanding in 1997. The increase in total debt
and the related increase in interest expense was directly related to Property
acquisitions. While the Company's total debt and total interest expense have
increased due to acquisition activity, the total debt as a percentage of total
assets decreased from 50% of total assets at December 31, 1996 to 36.5% of total
assets at December 31, 1997, and the Company's interest coverage ratio increased
from 2.4 times in 1996 to 2.8 times in 1997. In addition, the weighted average
interest rate on the Company's debt decreased from approximately 7.7% at
December 31, 1996 to approximately 7.2% at December 31, 1997. The decrease in
interest expense in the Core Portfolio of $17.0 million is primarily due to the
replacement of secured debt with unsecured debt.

Depreciation and Amortization. Depreciation and amortization increased for
the Total Portfolio as a result of properties acquired during 1997 and the
recording of substantially all the Company's assets and liabilities at their
fair market value in connection with the Consolidation and the Trust's IPO.

The increase in depreciation in the Core Portfolio resulted from the
recording of substantially all the Company's assets and liabilities at their
fair market value in connection with the Consolidation and the Trust's IPO. The
decrease in amortization in the Core Portfolio resulted from the write-off of
deferred financing and leasing costs at the time of the Consolidation and the
Trust's IPO.

Property Operating Expenses. The increase in real estate taxes and
insurance, repairs and maintenance, and property operating expenses ("Property
Operating Expenses") in the Core Portfolio relates primarily to increases in
real estate taxes due to higher property valuations partially offset by real
estate tax refunds recorded in the year ended December 31, 1997.

General and Administrative Expenses. General and administrative expenses
for the Total Portfolio increased by approximately $11.8 million to $34.9
million for the year ended December 31, 1997, compared to $23.1 million for the
year ended December 31, 1996. General and administrative expenses as a
percentage of total revenues was approximately 4.6% for the years ended December
31, 1997 and 1996. The primary reasons for the increase in general and
administrative expenses are the significant increase in the size of the
Company's portfolio and increased expenses associated with becoming a public
company. While general and administrative expenses will continue to increase as
the size of the Company's portfolio increases, it is anticipated that general
and administrative expenses as a percentage of total revenue will initially
remain stable (or increase slightly), as the full costs of running a public
company are reflected in operations, and then decrease over time as the Company
realizes increased economies of scale.

Parking Operations. Included in the Total and Core Portfolio selected
operating information, for the years ended December 31, 1997 and 1996, are
results of operations from the stand-alone Parking Facilities, the summarized
information for which is presented below. As of December 31, 1997, the Company
owned or had an interest in 17 stand-alone Parking Facilities with approximately
16,749 spaces. Of the Total Portfolio, three Parking Facilities were acquired
prior to January 1, 1996; seven Parking Facilities were acquired in 1996; and
seven Parking Facilities were acquired during the year ended December 31, 1997.
The Core Portfolio for

36
<PAGE> 42

the comparison between the years ended December 31, 1997 and 1996 consist of
three Parking Facilities acquired prior to January 1, 1996.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1997 TO THE YEAR ENDED DECEMBER
31, 1996

<TABLE>
<CAPTION>
TOTAL PARKING PORTFOLIO CORE PARKING PORTFOLIO
--------------------------------------- ---------------------------------------
INCREASE/ % INCREASE/ %
1997 1996 (DECREASE) CHANGE 1997 1996 (DECREASE) CHANGE
---- ---- ---------- ------ ---- ---- ---------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Property revenues.......... $22,577 $10,203 $12,374 121.3% $10,238 $ 9,873 $ 365 3.7%
Interest income............ 249 141 108 76.6 239 141 98 69.5
------- ------- ------- ----- ------- ------- ------ -----
Total revenues............. 22,826 10,344 12,482 120.7 10,477 10,014 463 4.6
------- ------- ------- ----- ------- ------- ------ -----
Interest expense........... 5,427 1,814 3,613 199.2 2,724 1,645 1,079 65.6
Depreciation and
amortization............. 4,031 1,432 2,599 181.5 1,708 1,359 349 25.7
Property operating
expenses................. 5,124 3,152 1,972 62.6 2,619 3,081 (462) (15.0)%
------- ------- ------- ----- ------- ------- ------ -----
Total expenses............. $14,582 $ 6,398 $ 8,184 127.9% $ 7,051 $ 6,085 $ 966 15.9%
======= ======= ======= ===== ======= ======= ====== =====
Income before allocation to
minority interests and
income from investment in
unconsolidated joint
ventures................. 8,244 3,946 4,298 108.9 3,426 3,929 (503) (12.8)
Minority interests......... (323) (252) (71) (28.2) (323) (252) (71) (28.2)
Income from unconsolidated
joint ventures........... 2,461 -- 2,461 -- -- -- -- --
------- ------- ------- ----- ------- ------- ------ -----
Net income................. $10,382 $ 3,694 $ 6,688 181.1% $ 3,103 $ 3,677 $ (574) (15.6)%
======= ======= ======= ===== ======= ======= ====== =====
Property revenues less
property operating
expenses before
depreciation,
amortization and general
and administrative
expenses................. $17,453 $ 7,051 $10,402 147.5% $ 7,619 $ 6,792 $ 827 12.2%
======= ======= ======= ===== ======= ======= ====== =====
</TABLE>

37
<PAGE> 43

YEARS ENDED DECEMBER 31, 1996 AND 1995

The table below presents selected operating information for the Total
Portfolio and for the Core Portfolio. for the years ended December 31, 1996 and
1995

<TABLE>
<CAPTION>
TOTAL PORTFOLIO CORE PORTFOLIO
------------------------------------------ -----------------------------------------
INCREASE/ % INCREASE/ %
1996 1995 (DECREASE) CHANGE 1996 1995 (DECREASE) CHANGE
---- ---- ---------- ------ ---- ---- ---------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Property revenues............. $493,396 $356,959 $136,437 38.2% $349,810 $327,017 $ 22,793 7.0%
Interest income............... 9,608 8,599 1,009 11.7 -- -- -- --
Fees from noncombined
affiliates.................. 5,120 5,899 (779) (13.2) -- -- -- --
-------- -------- -------- ------- -------- -------- -------- ------
Total revenues.............. 508,124 371,457 136,667 36.8 349,810 327,017 22,793 7.0
-------- -------- -------- ------- -------- -------- -------- ------
Interest expense.............. 119,595 100,566 19,029 18.9 85,225 85,371 (146) (0.2)
Depreciation and
amortization................ 96,237 74,156 22,081 29.8 71,969 68,226 3,743 5.5
Property operating expenses... 201,067 151,488 49,579 32.7 143,511 137,103 6,408 4.7
General and administrative.... 23,145 21,987 1,158 5.3 -- -- -- --
Provision for value
impairment.................. -- 20,248 (20,248) (100.0) -- 20,248 (20,248) (100.0)
-------- -------- -------- ------- -------- -------- -------- ------
Total expenses.............. 440,044 368,445 71,599 19.4% 300,705 310,948 (10,243) (3.3)%
Income before allocation to
minority interests, income
from investment in
unconsolidated joint
ventures, gain on sales of
real estate and
extraordinary items......... 68,080 3,012 65,068 2,160.3 49,105 16,069 33,036 205.6
Minority interests, net of
extraordinary gain of
$20,035 in 1995 for the
total and core portfolios... (2,086) (2,129) 43 2.0 (1,733) (2,023) 290 14.3
Income from unconsolidated
joint ventures.............. 2,093 2,305 (212) (9.2) 2,093 2,305 (212) (9.2)
Gain on sales of real estate
and extraordinary items..... 5,338 31,271 (25,933) (82.9) -- 31,271 (31,271) (100.0)
-------- -------- -------- ------- -------- -------- -------- ------
Net income.................... $ 73,425 $ 34,459 $ 38,966 113.1% $ 49,465 $ 47,622 $ 1,843 3.9%
======== ======== ======== ======= ======== ======== ======== ======
Property revenues less
property operating expenses
before depreciation,
amortization and general and
administrative expenses..... $292,329 $205,471 $ 86,858 42.3% $206,299 $189,914 $ 16,385 8.6%
======== ======== ======== ======= ======== ======== ======== ======
</TABLE>

Property Revenues. The increase in Property Revenues 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 87.5% at
January 1, 1995 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. Included in Property
Revenues for the Core Portfolio are lease termination fees of $5.6 million and
$5.0 million for the years ended December 31, 1996 and 1995, respectively (these
amounts are included in the other revenue category on the combined statements of
operations). These fees are related to specific tenants who have paid a fee to
terminate their lease obligations before the end of the contractual term of the
lease. Although the Company has historically experienced similar levels of such
termination fees, there is no way of predicting the timing or amounts of future
lease termination fees. The straight-line rent adjustment which is included in
rental revenues for the Core Portfolio for the years ended December 31, 1996 and
1995, was approximately $6.8 million and $10.5 million, respectively. The
straight-line rent adjustment which is included in rental revenues for the Total
Portfolio for the years ended December 31, 1996 and 1995, was approximately
$18.4 million and $12.7 million, respectively. Other income for 1996 also
includes approximately $8.8 million relating to the Company's share of a
litigation settlement.

Interest Income. Interest income for the Total Portfolio increased by
approximately $1.0 million to $9.6 million for the year ended December 31, 1996
compared to $8.6 million for the year ended December 31,

38
<PAGE> 44

1995. 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.

Fees from Noncombined Affiliates. Fee income from the Managed Properties
for the Total Portfolio decreased as a result of disposition activities in 1995
and 1996 which reduced the number of properties being managed.

Interest Expense. Interest expense increased by approximately $19.0 million
for the Total Portfolio to $119.6 million for the year ended December 31, 1996
compared to $100.6 million for the year ended December 31, 1995. This increase
was primarily the result of increased debt obtained to finance acquisitions.

Depreciation and Amortization. The increase in depreciation and
amortization in the Core Portfolio was related to depreciation of capital and
tenant improvements made at properties in the Core Portfolio in 1995 and 1996
and the amortization of leasing commissions and loan fees paid during that time
period.

Property Operating Expenses. The increase in Property Operating Expenses in
the Core Portfolio resulted from an increase in maintenance expenses in 1996 and
real estate tax refunds received in 1995, with approximately $1.9 million
relating to a single property, which reduced the tax expense in 1995.

General and Administrative. General and administrative expenses increased
by approximately $1.1 million to $23.1 million for the year ended December 31,
1996 compared to $22.0 million for the year ended December 31, 1995. General and
administrative expenses as a percentage of total revenues was approximately 4.6%
and 5.9% for the years ended December 31, 1996 and 1995, respectively. While
general and administrative expenses will continue to increase as the size of the
Company's portfolio increases, it is anticipated that general and administrative
expenses as a percentage of total revenues will initially remain stable (or
increase slightly), as the full costs of running a public company are reflected
in operations, and then decrease over time as the Company realizes increased
economies of scale.

Provision for Value Impairment. During 1995, the Financial Accounting
Standards Board issued Statement No. 121 "Accounting for the Impairment of
Long-Lived Assets to Be Disposed Of" 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. As a result of cash deficits, San
Felipe Plaza was evaluated for impairment and accordingly, during the year ended
December 31, 1995, Equity Office Predecessors recorded a provision for value
impairment of approximately $20.2 million, 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.

Parking Operations. Included in the Total Portfolio numbers above are
results of operations from the stand-alone Parking Facilities, the summarized
information for which is presented below. As of December 31, 1996, the Company
owned or had an interest in 10 stand-alone Parking Facilities with approximately
7,144 spaces. During the year ended December 31, 1995, the Company acquired
three Parking Facilities with approximately 3,128 spaces. Of the Total Parking
Portfolio, there were no Parking Facilities acquired prior to January 1, 1995,
therefore there is not a Core Portfolio for comparison purposes.

39
<PAGE> 45

<TABLE>
<CAPTION>
TOTAL PARKING PORTFOLIO
YEARS ENDED DECEMBER 31,
------------------------
1996 1995
---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Property revenues........................................... $10,203 $5,391
Interest income............................................. 141 17
------- ------
Total revenues............................................ 10,344 5,408
------- ------
Interest expense............................................ 1,814 937
Depreciation and amortization............................... 1,432 722
Property operating expenses................................. 3,152 1,797
------- ------
Total expenses............................................ 6,398 3,456
------- ------
Income before allocation to minority interests.............. 3,946 1,952
Minority interests.......................................... (252) --
------- ------
Net income.................................................. $ 3,694 $1,952
======= ======
Property revenues less property operating expenses before
depreciation, amortization and general and administrative
expenses.................................................. $ 7,051 $3,594
======= ======
</TABLE>

Dispositions of Property. Equity Office Predecessors sold two Office
Properties in 1997: Barton Oaks Plaza II (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. In January 1996, Equity Office Predecessors sold the
condominium portion, comprised of a 210-room hotel, at Three Lakeway, a
mixed-use property. Below is a summary of the operations of these Office
Properties for the years ended December 31, 1997, 1996 and 1995.

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Property revenues........................................... $ 3,246 $9,959 $ 9,445
------- ------ -------
Interest expense............................................ 36 956 4,910
Depreciation and amortization............................... 451 2,286 2,262
Property operating expenses................................. 1,468 4,869 3,068
------- ------ -------
Total expenses............................................ 1,955 8,111 10,240
------- ------ -------
Income before gain on sales of real estate and extraordinary
items..................................................... 1,291 1,848 (795)
Gain on sales of real estate and extraordinary items........ 13,088 5,338 --
------- ------ -------
Net income (loss)........................................... $14,379 $7,186 $ (795)
======= ====== =======
Property revenues less property operating expenses before
depreciation, amortization and general and administrative
expenses.................................................. $ 1,778 $5,090 $ 6,377
======= ====== =======
</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. Prior to the IPO, 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. The
Company intends to make regular quarterly distributions to holders of Series A
Preferred Units, Series B Preferred Units, and Units. The Company established
initial distribution rates as follows: for each Series A Preferred Unit 8.98%
per annum ($2.245 per Unit), for each Series B Preferred Unit 5.25% per annum
($2.625 per Unit), and for each Unit $1.20 per annum per Unit.

40
<PAGE> 46

The Company intends to fund recurring capital costs and non-revenue
enhancing tenant improvements from cash from operations and draws under its
credit facilities. The Company has no contractual obligations for material
capital costs, other than the Probable Acquisitions, a $38 million development
commitment and those obligations in connection with customary tenant
improvements in the ordinary course of business. The Company also expects that
its credit facilities 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.

DEBT FINANCING

The table below summarizes the mortgage debt, unsecured notes and credit
facility indebtedness outstanding at December 31, 1997 and 1996, including a net
premium on mortgage debt (net of accumulated amortization of approximately $2.1
million) of approximately $1.2 million recorded in connection with the Company's
Consolidation and debt assumed in connection with certain of the Company's
acquisitions.

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1997
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
DEBT SUMMARY:
Balance
Fixed rate.......................................... $2,219,496 $1,304,075
Variable rate....................................... 2,064,821 660,817
---------- ----------
Total............................................ $4,284,317 $1,964,892
========== ==========
Percent of total debt:
Fixed rate.......................................... 51.8% 66.4%
Variable rate....................................... 48.2% 33.6%
---------- ----------
Total............................................... 100.0% 100.0%
========== ==========
Weighted average interest
Rate at end of period:
Fixed rate.......................................... 7.5% 7.9%
Variable rate....................................... 6.9% 7.3%
---------- ----------
Weighted average...................................... 7.2% 7.7%
========== ==========
</TABLE>

The variable rate debt shown above bore interest at a 30-day LIBOR-based
floating interest rate. The 30-day LIBOR at December 31, 1997 was 5.7188%
resulting in a weighted average spread over LIBOR at December 31, 1997 of
approximately 1.2%.

MORTGAGE FINANCING

Immediately prior to the IPO, the Company had approximately $1.94 billion
of mortgage financing outstanding of which $1.38 billion was fixed rate
financing and $560 million was variable rate financing. The Company utilized the
net IPO proceeds of $564.5 million and approximately $33.9 million of cash on
hand to repay $253.1 million of fixed rate mortgage financing and $345.3 million
of variable rate mortgage debt. In October 1997, the Company closed on the $1.5
Billion Credit Facility and used approximately $236 million of the proceeds to
repay the majority of the Company's remaining variable rate mortgage debt
outstanding at that time. The Company also assumed approximately $627.5 million
of secured debt (excluding the Company's share of unconsolidated secured debt of
approximately $92.4 million) in connection with the Beacon Merger, $248.3
million of secured debt in connection with the acquisition of the Wright Runstad
Portfolio and $14.7 million of secured debt in connection with other
acquisitions. In addition, in December 1997, the

41
<PAGE> 47

Company obtained an $80 million mortgage loan on the three properties located in
New Orleans. The proceeds from this loan were used to repay a portion of the
$600 Million Credit Facility. As of December 31, 1997, the Company's total
mortgage debt (excluding the Company's share of unconsolidated secured debt of
approximately $92.4 million) consisted of approximately $2.0 billion of fixed
rate debt with a weighted average interest rate of approximately 7.53% and $23.5
million of variable rate debt bearing interest at the 30-day LIBOR plus 1%. The
Company's mortgage debt as of December 31, 1997 will mature as follows:

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
1998........................................................ $ 83,792
1999........................................................ 52,908
2000........................................................ 151,236
2001........................................................ 432,962
2002........................................................ 69,584
Thereafter.................................................. 1,271,378
----------
Subtotal.................................................. 2,061,860
Net premium (net of accumulated amortization of $2.1
million).................................................. 1,157
----------
Total..................................................... $2,063,017
==========
</TABLE>

The instruments encumbering the properties restrict transfer of the
properties, prohibit liens and require payment of taxes on the property,
maintenance of the property in good condition, maintenance of insurance on the
property and lender consent to leases with material tenants.

CREDIT FACILITIES

Lines of Credit. On July 15, 1997, the Company obtained the $600 Million
Credit Facility to be used for acquisitions and other general corporate
purposes. Amounts were drawn on the $600 Million Credit Facility to repay the
balance outstanding on the Equity Office Predecessors credit facility which was
terminated when the $600 Million Credit Facility was obtained. The $600 Million
Credit Facility matures on July 15, 2000. The Company paid a commitment fee of
approximately $1.0 million at the closing of the facility. Prior to the Company
obtaining an investment grade credit rating on its unsecured debt of BBB- or
Baa3 or better from two or more credit rating agencies, the facility initially
bore interest at LIBOR plus 110 basis points, and required payment of a
quarterly unused commitment fee between .15% and .25% of the unused portion of
the facility, depending on the average unfunded balance of the facility during
the quarter. In November 1997, the facility was amended and the interest rate
was reduced to LIBOR plus 100 basis points. In December 1997, the Company
received an investment grade credit rating on its senior unsecured debt from
Moody's (Baa1), Duff & Phelps (BBB+) and Standard & Poor's (BBB). Pursuant to
the terms of the facility, these credit ratings resulted in the interest rate on
the facility being reduced from LIBOR plus 100 basis points to LIBOR plus 60
basis points, and the unused commitment fee was replaced with a facility fee
equal to .20% per annum. In addition, a competitive bid option, whereby the
lenders participating in the facility bid on the interest rate to be charged,
became available for up to $250 million of the facility. As of December 31,
1997, the balance of the $600 Million Credit Facility was approximately $559
million. Subsequent to year end, the Company repaid $509 million of the line
with available cash and the proceeds of the $1.25 Billion Notes Offering, the
$250 Million MOPPRS Offering and the $300 Million PIERS Offering described
below, leaving a balance of $50 million outstanding as of March 3, 1998.

Term Loan Facility. In October 1997, the Company obtained the $1.5 Billion
Credit Facility. The $1.5 Billion Credit Facility is available for the
acquisition of properties and general corporate purposes. The $1.5 Billion
Credit Facility carried an interest rate equal to LIBOR plus 100 basis points
subject to an increase or decrease upon the receipt of an investment grade
unsecured debt rating. As mentioned above, the Company received investment grade
credit ratings in December 1997 resulting in a reduction in the interest rate to
LIBOR plus 80 basis points. The $1.5 Billion Credit Facility matures on July 1,
1998, and may be extended to October 1, 1998. The Company paid an underwriting
fee on the $1.5 Billion Credit Facility at closing of

42
<PAGE> 48

approximately $4.9 million. In addition, an unused commitment fee is payable
quarterly in arrears based upon the unused amount of the $1.5 Billion Credit
Facility as follows: .15% per annum if the unused amount is between 0% to 33%;
.20% per annum if the unused amount is more than 33% but less than 66%; .25% per
annum if the unused amount is greater than 66%. In October 1997, the Company
used approximately $236 million of proceeds from the $1.5 Billion Credit
Facility to repay the majority of the variable rate property mortgage
indebtedness outstanding. The Company repaid $150 million on the $1.5 Billion
Credit Facility with proceeds from the $200 million private placement of Units
in October 1997. Under the terms of the facility agreement, any amounts repaid
cannot be drawn. In addition, amounts were drawn from the $1.5 Billion Credit
Facility for property acquisitions and general corporate purposes. As of
December 31, 1997, the outstanding balance on the $1.5 Billion Credit Facility
was approximately $1.044 billion. Subsequent to December 31, 1997, the entire
$1.044 billion outstanding was repaid with proceeds received from the Series B
Preferred Offering, the $1.25 Billion Notes Offering and the $250 Million MOPPRS
Offering. The amount available to draw under the $1.5 Billion Credit Facility as
of March 31, 1998 was approximately $306 million.

Beacon Lines of Credit. The Company assumed $533 million in unsecured debt
in connection with the Beacon Merger relating to the outstanding balance of the
Beacon lines of credit at the time of the closing of the Beacon Merger. The
Company repaid $95 million of the Beacon lines prior to December 31, 1997 and
repaid the remaining balance of the lines in February 1998 with the proceeds of
the unsecured $1.25 Billion Notes Offering, the $250 Million MOPPRS Offering and
the Series B Preferred Offering described below. The lines were terminated upon
repayment in February 1998.

UNSECURED NOTES

$180 Million Notes Offering. In September 1997, the Company completed the
$180 Million Notes Offering. The $180 Million Notes consist of four tranches
with maturities from seven to 10 years which were priced at an interest rate
spread over the corresponding Treasury rate. The Company used the proceeds of
these notes to repay a portion of the $600 Million Credit Facility. In addition,
the Company terminated $150 million of the $700 million of hedge agreements
described below at a cost of approximately $3.9 million for the $180 Million
Notes Offering. This amount will be amortized to interest expense over the
respective term of each tranche.

$1.25 Billion Notes Offering. In February 1998, the Company completed the
$1.25 Billion Notes Offering. The $1.25 Billion Notes consists of four tranches
with maturities of five to 20 years which were priced at an interest rate spread
over the corresponding Treasury rate.

$250 Million MandatOry Par Put Remarketed Securities Offering. In February
1998, the Company issued $250 million of 6.376% MOPPRS, due February 15, 2012,
which are subject to mandatory tender on February 15, 2002. The MOPPRS are
senior unsecured obligations of the Company.

The table below summarizes the Company's unsecured notes as of March 31,
1998:

<TABLE>
<CAPTION>
STATED EFFECTIVE
TRANCHE AMOUNT RATE RATE(A)
------- ------ ------ ---------
<S> <C> <C> <C>
4-Year MOPPRS due 2002...................................... $ 250,000,000 6.38% 6.42%
5-Year Notes due 2003....................................... 300,000,000 6.38% 6.77%
7-Year Notes due 2004....................................... 30,000,000 7.24% 7.24%
7-Year Notes due 2005....................................... 400,000,000 6.63% 7.06%
8-Year Notes due 2005....................................... 50,000,000 7.36% 7.67%
9-Year Notes due 2006....................................... 50,000,000 7.44% 7.73%
10-Year Notes due 2007...................................... 50,000,000 7.42% 7.69%
10-Year Notes due 2008...................................... 300,000,000 6.75% 7.03%
20-Year Notes due 2018...................................... 250,000,000 7.25% 7.56%
-------------- ----- -----
$1,680,000,000 6.74% 7.04%
============== ===== =====
</TABLE>

- -------------------------
(A) Includes the cost of the terminated interest rate protection agreements and
offering and transaction costs.

43
<PAGE> 49

On March 5, 1998, the Company filed a registration statement (the "Exchange
Offer Registration Statement") relating to an offer to exchange the $180 Million
Notes, the $1.25 Billion Notes and the $250 Million MOPPRS for registered
securities of the Company with terms identical in all material respects to the
terms of the existing Notes.

Interest Rate Protection Agreements. In order to limit the market risk
associated with variable rate debt, the Company entered into several interest
rate protection agreements. These agreements effectively converted floating rate
debt to a fixed rate basis, as well as hedged anticipated financing
transactions. Net amounts paid or received under these agreements are recognized
as an adjustment to interest expense when such amounts were incurred or earned.
Settlement amounts paid or received under these agreements are deferred and
amortized as an adjustment to interest expense over the term of the related
financing transaction on the straight-line method which approximates the
effective yield method. A summary of the various interest rate hedge agreements
is as follows: (1) On June 4, 1997, the Company entered into interest rate
protection agreements with major U.S. financial institutions for $700 million of
indebtedness. As a result of this arrangement, the Company essentially "locked
into" U.S. Treasury rates in effect as of June 4, 1997, for $700 million of
indebtedness. In August 1997, the Company terminated $150 million of the $700
million of hedge agreements at a cost of $3.9 million. The terminated agreements
pertained to the $180 Million Notes Offering. The portion of the $180 Million
Notes Offering protected by these agreements consisted of three tranches with
maturities of eight, nine and ten years, respectively; (2) On October 6, 1997,
the Company entered into an additional $450 million of interest rate protection
agreements with major U.S. financial institutions based on the U.S. Treasury
rates in effect as of that date. In connection with the $1.25 Billion Notes
Offering and the $250 Million MOPPRS Offering, the Company terminated $700
million of hedge agreements at a cost of approximately $32.6 million. The cost
of the terminated hedge agreements will be amortized to interest expense over
the respective terms of each tranche. The Company terminated the remaining $300
million of hedge agreements in 1998 at a cost of approximately $7.4 million
which will be reflected as an extraordinary loss; (3) Equity Office Predecessors
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.

Equity Office Predecessors sold several interest rate protection agreements
(aggregating $173 million of LIBOR-based agreements) in June 1997 at a cost of
approximately $1.1 million.

Restrictions and Covenants. The $600 Million Credit Facility, the $180
Million Notes Offering, the $1.5 Billion Credit Facility, the $1.25 Billion
Notes Offering and the $250 Million MOPPRS Offering contain certain restrictions
and requirements regarding total debt to assets ratios, secured debt to total
assets ratios, debt service coverage ratios, minimum ratio of unencumbered
assets to unsecured debt and other limitations.

EQUITY ISSUANCES

Below is a summary of the equity securities issued in connection with
various transactions occurring from and after the IPO:

- At the time of the Trust's IPO, the Trust issued 151,678,030 Common
Shares and the Company issued 163,555,677 Units.

- The Company issued 5,958,030 Units in connection with various
acquisitions during 1997 (excluding the Wright Runstad Acquisition and
Beacon Merger).

- On December 17, 1997, the Company purchased a portfolio of 10 Properties
from an affiliate of Wright Runstad and Company, and also made a 30%
noncontrolling investment, through a Noncontrolled Subsidiary, in Wright
Runstad Asset Limited Partnership, a development and property management
company. The Trust issued 3,435,688 Common Shares and the Company issued
2,753,127 Units in

44
<PAGE> 50

connection with this transaction. In addition, the Trust issued five-year
warrants to purchase an additional 5,000,000 Restricted Common Shares at
a price of $39.375 per Common Share.

- On December 19, 1997, the Company completed the Beacon Merger. In
connection with the merger, the Trust issued 80,596,117 Common Shares,
and 8,000,000 8.98% Series A Cumulative Redeemable Preferred Shares with
a liquidation preference of $25 per share and the Company issued an
additional 8,570,886 Units and 8,000,000 8.98% Series A Cumulative
Redeemable Preference Units. In addition, the Trust assumed the
obligation to issue 4,732,822 additional Common Shares upon exercise of
Beacon stock options, of which 3,829,739 Common Shares had been issued as
of December 31, 1997.

- During the year, the Trust also issued 298,000 restricted Common Shares
to senior executives, and 5,055 Common Shares to trustees as
compensation, and, as a result, the Company issued a corresponding number
of Units to the Trust.

- In February 1998, the Trust completed the Series B Preferred Offering.
The Series B Preferred Shares are convertible at any time at the option
of the holder to Common Shares at a conversion price of $35.70 per Common
Share (equivalent to a conversion ratio of 1.40056 Common Shares for each
Series B Preferred Shares). The Series B Preferred Shares are
non-callable for five years with a mandatory call in year 10. The annual
distribution of $2.625 per Common Share will be paid in quarterly
distributions of $.65625. Proceeds from the Series B Preferred Offering
were contributed to the Company in exchange for a corresponding number of
Series B Preferred Units and were used to pay down amounts outstanding
under the Company's credit facilities.

- In April 1998, the Trust sold 1,628,009 Restricted Common Shares to
Merrill Lynch, Pierce, Fenner & Smith Incorporated in the UIT Offering.
Merrill Lynch, Pierce, Fenner & Smith Incorporated deposited these Common
Shares with the trustee of the Equity Investor Fund Cohen & Steers Realty
Majors Portfolio (A Unit Investment Trust) the "UIT" in exchange for
units in the UIT. Proceeds from the UIT Offering were contributed to the
Company in exchange for a corresponding number of Units and were used to
pay down amounts outstanding under the Credit Facilities.

CASH FLOWS

YEARS ENDED DECEMBER 31, 1997 AND 1996

For discussion purposes, the cash flows for the year ended December 31,
1997 combine the cash flows of Equity Office Predecessors for the period January
1, 1997 to July 10, 1997 and the cash flows of the Company for the period July
11, 1997 to December 31, 1997. The cash flows for the year ended December 31,
1996 represent solely the cash flows of Equity Office Predecessors.
Consequently, the comparison of the periods provides only limited information
regarding the cash flows of the Company.

Cash and cash equivalents decreased by approximately $181.5 million, to
approximately $228.9 million at December 31, 1997, compared to $410.4 million at
December 31, 1996. This decrease was the result of approximately $2.2 billion
invested in new acquisitions, capital and tenant improvements, and payment of
leasing commissions reduced by approximately $286.7 million of cash generated by
operations and $1.9 billion generated from financing activities (including the
$181.1 million contributed by Equity Office Predecessors). Net cash provided by
operating activities increased by approximately $120.7 million to approximately
$286.7 million from $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 approximately $1.3 billion from $0.9 billion
to $2.2 billion mainly due to an increase in the amount of real estate assets
purchased during the year ended December 31, 1997 compared to the year ended
December 31, 1996. Net cash provided by financing activities increased by
approximately $0.8 billion from $1.1 billion to $1.9 billion due to net proceeds
from the sale of common stock, an increase in proceeds from lines of credit and
unsecured notes, partially offset by a decrease in proceeds from mortgage notes
and an increase in principal payments on mortgage notes and lines of credit.

45
<PAGE> 51

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, $1.1 billion generated from financing activities,
reduced by $924.2 million invested in new acquisitions, capital and tenant
improvements, and payment of leasing commissions. 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 $1.1 billion due to an increase in capital contributions and to 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.

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 made during the first
five years after acquisition of these properties are treated separately from
typical recurring capital expenditures, 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
December 31, 1997, 1996 and 1995 were approximately $78.0 million, $100.3
million and $48.8 million, respectively or $1.19, $3.49 and $2.16 per square
foot, respectively. These amounts include approximately $31.2 million, $47.3
million and $16.8 million for the years ended December 31, 1997, 1996 and 1995,
respectively, for the redevelopment of the 28 State Street Building.

The Company considers capital expenditures to be recurring expenditures
relating to the ongoing maintenance of the Office Properties. The table below
summarizes capital expenditures for the years ended December 31, 1997, 1996 and
1995. The capital expenditures set forth below are not necessarily indicative of
future capital expenditures.

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Number of Office Properties................ 258 81 71
Rentable Square Feet (in millions)......... 65.3 28.7 22.6
Annual Capital Expenditures per square
foot..................................... $.08 $.16 $.14
</TABLE>

TENANT IMPROVEMENTS AND LEASING COMMISSION COSTS

The Company distinguishes its tenant improvements and leasing commissions
between those that are revenue enhancing (i.e., required for space which is
vacant at the time of acquisition or that has been vacant for nine months or
more) and non-revenue enhancing (i.e., 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, 1997, 1996 and 1995. The number of Office
Properties shown below for all periods presented excludes Barton Oaks Plaza II
and 8383 Wilshire which were sold in January 1997 and May 1997, respectively.
The tenant improvement and leasing commission costs set forth below are
presented on an aggregate basis and do not reflect significant regional

46
<PAGE> 52

variations and, in any event, are not necessarily indicative of future tenant
improvement and leasing commission costs:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Number of Office Properties........................... 258 81 71
Rentable square feet (in millions).................... 65.3 28.7 22.6
Revenue enhancing tenant improvements and leasing
commissions:
Amounts (in thousands).............................. $18,272 $31,534 $20,981
Per square foot improved............................ $ 19.74(1) $ 30.26(2) $ 22.89
Per total square foot............................... $ .27(1) $ 1.10(2) $ .93
Non-revenue enhancing tenant improvements and leasing
commissions:
Renewal space
Amounts (in thousands).............................. $ 8,334 $15,486 $10,008
Per square foot improved............................ $ 5.73(1) $ 6.79(2) $ 7.82
Per total square foot............................... $ .12(1) $ .54(2) $ .44
Retenanted space
Amounts (in thousands).............................. $14,806 $31,987 $ 8,446
Per square foot improved............................ $ 15.10(1) $ 20.64(2) $ 19.80
Per square foot total............................... $ .22(1) $ 1.11(2) $ .37
------- ------- -------
Total non-revenue enhancing (in thousands)............ $23,140 $47,473 $18,454
Per square foot improved.............................. $ 9.50(1) $ 12.39 $ 10.81
Per total square foot................................. $ .35(1) $ 1.65 $ .81
</TABLE>

- -------------------------
(1) The per square foot calculations as of December 31, 1997 are calculated
taking the total dollars anticipated to be expended on tenant improvements
for tenants taking occupancy during the year ended December 31, 1997,
divided by the total square footage being improved or total building square
footage. The actual amounts expended as of December 31, 1997 for revenue
enhancing and non-revenue enhancing renewal and released space were $18.4
million, $12.4 million and $33.5 million, respectively.

(2) 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 at 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 retenanted space were approximately $30.6 million, $14 million and $20.8
million, respectively.

YEAR 2000

The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities.

The Company does not believe that the impact of the recognition of the year
2000 by its information and operating technology systems will have a material
adverse effect on the Company's financial condition and results of operations.
The majority of any necessary system changes will be upgraded in the normal
course of business. The Company has initiated formal communications with all of
its significant suppliers to determine the extent to which the Company's
interface systems are vulnerable to those third parties' failure to remediate
their own year 2000 issues. There can be no guarantee that the systems of other
companies on which the Company's systems rely will be timely converted and would
not have an adverse effect on the Company's systems.

47
<PAGE> 53

INFLATION

Substantially all of the office leases require the tenant to pay, as
additional rent, a portion of any increases in real estate taxes (except, in the
case of certain California leases, which limit the ability of the landlord to
pass through to the tenants the effect of increased real estate taxes
attributable to a sale of real property interests) and operating expenses over a
base amount. In addition, many of the office leases provide for fixed increases
in base rent or indexed calculations (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 generally accepted accounting principles ("GAAP"), and
it should not be considered as an alternative to these indicators in evaluating
liquidity or operating performance of the Company.

The following table reflects the calculation of the Company's and Equity
Office Predecessor's combined Funds from Operations for the years ended December
31, 1997, 1996 and 1995 on an historical basis.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Income before income from investment in unconsolidated
joint ventures, gain on sales of real estate,
extraordinary items and minority interests............ $ 140,681 $ 68,080 $ 3,012
Add back (deduct):
(Income) allocated to minority interests.............. (1,701) (2,086) (2,129)
Income from investment in unconsolidated joint
ventures........................................... 5,155 2,093 2,305
Provision for value impairment........................ -- -- 20,248
Depreciation and amortization (real estate related)... 130,465 92,373 72,668
Net amortization of loan premiums and discounts....... 2,324 -- --
Preferred dividends................................... (649) -- --
----------- ----------- ---------
Funds from Operations before effect of adjusting
straight-line rental revenue and expenses included in
Funds from Operations to a cash basis(1).............. 276,275 160,460 96,104
----------- ----------- ---------
Deferred rental revenue............................... (27,740) (18,427) (12,663)
Deferred rental expense............................... 2,206 788 --
----------- ----------- ---------
Funds from Operations excluding straight-line rental
revenue and expense adjustments....................... $ 250,741 $ 142,821 $ 83,441
=========== =========== =========
Cash Flow Provided by (used for):
Operating Activities.................................. $ 286,714 $ 165,975 $ 93,878
Investing Activities.................................. $(2,163,340) $ (924,227) $(380,615)
Financing Activities(2)............................... $ 1,876,197 $ 1,057,551 $ 276,513
Ratio of Earnings to Combined Fixed Charges............. 1.81 1.49 1.21
</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

48
<PAGE> 54

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 nor does it represent cash
available for distributions 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.

(2) For the year ended December 31, 1997, cash flow provided by financing
activities includes approximately $181.1 million in cash contributed from
Equity Office Predecessors in connection with the Consolidation.

49
<PAGE> 55

THE PROPERTIES

GENERAL

The Company's portfolio (based on revenue and square footage as of December
31, 1997) is the largest portfolio of office properties of any publicly traded,
full-service office company in the United States. As of March 31, 1998, the
Company owned or had an interest in 260 Office Properties containing
approximately 66.6 million rentable square feet of office space and owned or had
an interest in 17 Parking Facilities containing approximately 16,749 parking
spaces. The Office Properties are located in 78 submarkets in 39 markets in 24
states and the District of Columbia. The Office Properties, by rentable square
feet, are located approximately 51% in CBDs and approximately 49% in suburban
markets. As of March 31, 1998, the Office Properties were, on a weighted average
basis, 94% occupied by a total of 5,705 tenants, with no single tenant
accounting for more than 1.5% of annualized rent (except for the U.S. General
Services Administration, which accounted for 3.5% of annualized rent). An
additional 537,900 square feet (approximately 0.8% of the rentable square
footage of the Office Properties) was leased, with occupancy to commence in
whole or in part during 1998.

All Property data is as of March 31, 1998.

OFFICE PROPERTIES BY REGION

<TABLE>
<CAPTION>
PERCENTAGE ANNUALIZED
OF TOTAL NET
OFFICE PERCENTAGE 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 ($000S)(1) RENT LEASES FOOT(2)
------ ---------- -------- ---------- ---------- ---------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Northeast............ 85 18,968,825 28.5% 95.0% $ 473,240 33.8% 1,445 $14.75
Central.............. 31 13,339,779 20.0 93.1 287,506 20.6 1,171 11.32
Pacific.............. 43 9,697,938 14.6 93.8 212,435 15.2 664 13.57
West................. 32 8,798,482 13.2 95.2 158,251 11.3 1,051 10.85
Southeast............ 51 8,685,134 13.0 96.7 157,259 11.2 698 11.10
Southwest............ 18 7,120,292 10.7 92.6 109,901 7.9 676 8.79
--- ---------- ----- ---- ---------- ----- ----- ------
Total/Weighted
Average.......... 260 66,610,450 100.0% 94.4% $1,398,591 100.0% 5,705 12.26
=== ========== ===== ========== ===== =====

ANNUALIZED
RENT PER
OCCUPIED
SQUARE
REGION FOOT(1)
------ ----------
<S> <C>
Northeast............ $26.26
Central.............. 23.15
Pacific.............. 23.35
West................. 18.90
Southeast............ 18.72
Southwest............ 16.66
------
Total/Weighted
Average.......... $22.23
</TABLE>

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

(1) Annualized Rent is the monthly contractual rent under existing leases as of
March 31, 1998 multiplied by 12. This amount reflects total rent before any
rent abatements and includes expense reimbursements, which may be estimates.
Total rent abatements for leases in effect as of March 31, 1998 for the 12
months ending March 31, 1999 are approximately 9.3 million.

(2) Annualized Net Effective Rent is calculated for leases in effect as of March
31, 1998 as follows: Annualized Rent, calculated as described above, was
reduced by the estimated operating expenses per square foot, based on 1997
actual operating expense for Properties owned as of January 1, 1997 and
based on the Company's estimate of annual operating expense for Properties
acquired subsequent to January 1, 1997.

50
<PAGE> 56

The following table sets forth certain information relating to each Office
Property as of March 31, 1998.

<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
OFFICE PERCENTAGE
PORTFOLIO OF
NUMBER RENTABLE RENTABLE ANNUALIZED PORTFOLIO
OF YEAR/BUILT SQUARE SQUARE PERCENTAGE RENT ANNUALIZED
PROPERTY PROPERTIES RENOVATED FEET FEET OCCUPIED ($000S)(1) RENT
-------- ---------- ---------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
NORTHEAST REGION
Stamford, CT
Shelton
Shelton Point...................... 1 1985/93 159,848 0.2% 96.2% $ 2,307 0.2%
Stamford
One Stamford Plaza............... 1 1986/94 212,244 0.3 100.0 5,255 0.4
Two Stamford Plaza............... 1 1986/94 253,020 0.4 97.4 6,794 0.5
Three Stamford Plaza............. 1 1980/94 241,575 0.4 100.0 5,592 0.4
Four Stamford Plaza.............. 1 1979/94 260,581 0.4 100.0 5,177 0.4
177 Broad Street................. 1 1989 187,573 0.3 99.4 4,564 0.3
300 Atlantic Street.............. 1 1987/96 272,458 0.4 100.0 7,332 0.5
Canterbury Green(3).............. 1 1987 224,405 0.3 98.0 6,796 0.5
--- ---------- ----- ---------- -----
Stamford Total/Weighted Average.. 8 1,811,704 2.7 99.0 43,817 3.1
Washington, D.C.
Central Business District
1111 19th Street................. 1 1979/93 252,014 0.4 97.0 7,154 0.5
1620 L Street.................... 1 1989 156,272 0.2 98.0 4,361 0.3
One Lafayette Centre............. 1 1980/93 314,634 0.5 99.5 9,814 0.7
East End
1333 H Street.................... 1 1982 244,585 0.4 90.9 6,289 0.4
Alexandria/Old Town
1600 Duke Street................. 1 1985 68,770 0.1 100.0 1,626 0.1
Crystal City
Polk and Taylor
Buildings(4)(5)................ 2 1970 902,371 1.4 99.9 24,519 1.8
Fairfax Center
Centerpointe I & II.............. 2 1988-90 407,723 0.6 99.8 7,150 0.5
Fair Oaks Plaza.................. 1 1986 177,917 0.3 95.3 2,742 0.2
Herndon/Dulles
Northridge I..................... 1 1988 124,319 0.2 100.0 3,312 0.2
Reston
Reston Town Center............... 3 1990 726,045 1.1 100.0 20,211 1.4
Rosslyn/Ballston
1300 North 17th Street........... 1 1980 380,199 0.6 99.7 10,196 0.7
1616 N. Fort Myer Drive.......... 1 1974 292,826 0.4 100.0 7,296 0.5
Tyson's Corner
E. J. Randolph................... 1 1983 164,906 0.2 100.0 3,743 0.3
John Marshall I.................. 1 1981 255,558 0.4 100.0 5,154 0.4
--- ---------- ----- ---------- -----
Washington D.C. Total/Weighted
Average 18 4,468,139 6.7 99.0 113,568 8.1
Boston
Downtown -- Financial District
100 Summer Street................ 1 1974/90 1,037,801 1.6 100.0 31,128 2.2
150 Federal Street............... 1 1988 529,730 0.8 99.0 18,019 1.3
175 Federal Street............... 1 1977 207,366 0.3 92.4 4,693 0.3
2 Oliver Street-147 Milk
Street......................... 1 1988 270,302 0.4 92.8 4,685 0.3
225 Franklin Street.............. 1 1966/96 916,722 1.4 99.0 34,316 2.5
28 State Street(6)............... 1 1968/97 570,040 0.9 59.8 11,531 0.8
75-101 Federal Street(4)(7)...... 2 1988 811,054 1.2 93.8 25,922 1.9
One Post Office Square(4)(8)..... 1 1981 765,780 1.1 99.2 22,642 1.6
Rowes Wharf(4)(8)................ 3 1987 344,698 0.5 98.4 12,068 0.9
Russia Wharf..................... 1 1978-82 312,833 0.5 94.6 4,933 0.4
South Station(3)................. 1 1988 178,959 0.3 99.5 6,319 0.5
Downtown -- Government Center
Center Plaza..................... 1 1969 637,069 1.0 94.5 15,536 1.1
East Cambridge
One Canal Park................... 1 1987 98,154 0.1 67.9 1,869 0.1
Riverview I & II................. 2 1985-86 263,892 0.4 100.0 7,257 0.5
Ten Canal Park................... 1 1987 110,843 0.2 100.0 2,179 0.2
Northwest
Crosby Corporate Center.......... 6 1996 337,285 0.5 97.8 4,839 0.3
New England Executive Park....... 9 1970/85 817,008 1.2 89.6 16,467 1.2
The Tower at New England
Executive Park(12)............. 1 1971/98 195,228 0.3 36.5 1,632 0.1
South
Westwood Business Center......... 1 1985 164,985 0.2 90.3 3,014 0.2

<CAPTION>
ANNUALIZED
NET
EFFECTIVE ANNUALIZED
RENT PER RENT PER
NUMBER OCCUPIED OCCUPIED
OF SQUARE SQUARE
PROPERTY LEASES FOOT(2) FOOT(1)
-------- ------ ---------- ----------
<S> <C> <C> <C>
NORTHEAST REGION
Stamford, CT
Shelton
Shelton Point...................... 13 $ 8.96 $14.99
Stamford
One Stamford Plaza............... 11 14.07 24.76
Two Stamford Plaza............... 20 16.47 27.56
Three Stamford Plaza............. 15 13.26 23.15
Four Stamford Plaza.............. 9 10.74 19.87
177 Broad Street................. 17 14.23 24.47
300 Atlantic Street.............. 26 15.65 26.91
Canterbury Green(3).............. 18 20.97 30.89
-----
Stamford Total/Weighted Average.. 129 14.33 24.43
Washington, D.C.
Central Business District
1111 19th Street................. 28 18.13 29.25
1620 L Street.................... 16 18.27 28.47
One Lafayette Centre............. 21 19.18 31.36
East End
1333 H Street.................... 22 16.09 28.30
Alexandria/Old Town
1600 Duke Street................. 10 15.25 23.65
Crystal City
Polk and Taylor
Buildings(4)(5)................ 9 19.86 27.21
Fairfax Center
Centerpointe I & II.............. 17 9.81 17.57
Fair Oaks Plaza.................. 34 9.23 16.17
Herndon/Dulles
Northridge I..................... 1 19.94 26.64
Reston
Reston Town Center............... 83 18.03 27.84
Rosslyn/Ballston
1300 North 17th Street........... 32 18.34 26.89
1616 N. Fort Myer Drive.......... 14 15.54 24.92
Tyson's Corner
E. J. Randolph................... 16 14.76 22.70
John Marshall I.................. 2 13.31 20.17
-----
Washington D.C. Total/Weighted
Average 305 16.61 25.68
Boston
Downtown -- Financial District
100 Summer Street................ 25 14.44 29.99
150 Federal Street............... 22 21.57 34.37
175 Federal Street............... 31 12.92 24.50
2 Oliver Street-147 Milk
Street......................... 48 12.13 18.67
225 Franklin Street.............. 20 22.27 37.83
28 State Street(6)............... 15 23.90 33.82
75-101 Federal Street(4)(7)...... 70 20.19 34.09
One Post Office Square(4)(8)..... 67 17.42 29.81
Rowes Wharf(4)(8)................ 44 16.55 35.59
Russia Wharf..................... 46 8.23 16.68
South Station(3)................. 29 14.06 35.47
Downtown -- Government Center
Center Plaza..................... 83 12.64 25.80
East Cambridge
One Canal Park................... 4 15.49 28.03
Riverview I & II................. 4 15.60 27.50
Ten Canal Park................... 1 11.13 19.66
Northwest
Crosby Corporate Center.......... 6 10.86 14.67
New England Executive Park....... 83 12.17 22.48
The Tower at New England
Executive Park(12)............. 3 13.29 22.90
South
Westwood Business Center......... 17 9.59 20.23
</TABLE>

51
<PAGE> 57

<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
OFFICE PERCENTAGE
PORTFOLIO OF
NUMBER RENTABLE RENTABLE ANNUALIZED PORTFOLIO
OF YEAR/BUILT SQUARE SQUARE PERCENTAGE RENT ANNUALIZED
PROPERTY PROPERTIES RENOVATED FEET FEET OCCUPIED ($000S)(1) RENT
-------- ---------- ---------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
West
Wellesley Office Park............ 8 1963-84 641,793 1.0% 99.0% $ 16,299 1.2%
--- ---------- ----- ---------- -----
Boston Total/Weighted Average.... 44 9,211,542 13.8 92.8 245,348 17.5
New York City
Third Avenue
850 Third Avenue................. 1 1960/96 562,567 0.8 99.2 16,804 1.2
Philadelphia
Conshohocken
Four Falls Corporate Center(4)... 1 1988 254,355 0.4 99.8 6,239 0.4
Center City
1601 Market Street............... 1 1970 681,289 1.0 94.8 13,326 1.0
1700 Market Street............... 1 1969 825,547 1.2 85.8 14,414 1.0
King of Prussia/Valley Forge
Oak Hill Plaza(4)................ 1 1982 164,360 0.2 100.0 3,007 0.2
Walnut Hill Plaza(4)............. 1 1985 149,716 0.2 94.7 2,779 0.2
Main Line
One Devon Square(4).............. 1 1984 73,267 0.1 64.4 877 0.1
Two Devon Square(4).............. 1 1985 63,226 0.1 100 1,012 0.1
Three Devon Square(4)............ 1 6,000 0.0 100.0 218 0.0
Plymouth Meeting/Blue Bell
One Valley Square(4)............. 1 1982 70,289 0.1 100.0 1,229 0.1
Two Valley Square(4)............. 1 1990 70,622 0.1 92.1 1,246 0.1
Three Valley Square(4)........... 1 1984 84,605 0.1 97.7 1,579 0.1
Four and Five Valley Square(4)... 2 1988 68,321 0.1 100.0 1,340 0.1
--- ---------- ----- ---------- -----
Philadelphia Total/Weighted
Average........................ 13 2,511,597 3.8 92.3 47,265 3.4
Norfolk
Norfolk
Dominion Tower(4)................ 1 1987 403,276 0.6 95.7 6,438 0.5
--- ---------- ----- ---------- -----
NORTHEAST REGION
TOTAL/WEIGHTED AVERAGE........... 85 18,968,825 28.5% 95.0% $ 473,240 33.8%
CENTRAL REGION
Chicago
Downtown-Central Loop
161 N. Clark..................... 1 1992 1,010,520 1.5% 80.4% $ 19,379 1.4%
200 West Adams................... 1 1985/96 677,222 1.0 91.2 12,930 0.9
30 N. LaSalle Street(3).......... 1 1974/90 925,950 1.4 95.1 19,448 1.4
One North Franklin............... 1 1991 617,592 0.9 99.3 14,109 1.0
Downtown-West Loop
10 & 30 S. Wacker................ 2 1983-87 2,003,288 3.0 95.7 62,668 4.5
101 N. Wacker.................... 1 1980/1990 575,294 0.9 87.3 11,089 0.8
Civic Opera House................ 1 1929/1996 841,778 1.3 96.7 13,164 0.9
O'Hare
Presidents Plaza................. 4 1980-82 815,604 1.2 96.4 16,589 1.2
1700 Higgins..................... 1 1986 133,876 0.2 100.0 2,491 0.2
Oak Brook
AT&T Plaza....................... 1 1984 224,847 0.3 97.9 5,041 0.4
Oakbrook Terrace Tower........... 1 1988 772,928 1.2 87.9 17,580 1.3
Westbrook Corporate Center....... 5 1985-96 1,107,372 1.7 92.9 27,553 2.0
Lake County
Tri-State International.......... 5 1986 546,263 0.8 88.9 10,913 0.8
--- ---------- ----- ---------- -----
Chicago Total/Weighted Average... 25 10,252,534 15.4 92.6 232,954 16.7
Indianapolis
Downtown
Bank One Center/Tower............ 2 1990 1,057,877 1.6 94.0 19,727 1.4
Cleveland
Downtown
BP Tower......................... 1 1985 1,242,144 1.9 94.8 18,871 1.3
Columbus
Downtown
One Columbus Building............ 1 1987 407,472 0.6 92.5 8,933 0.6
Suburban
Community Corporate Center....... 1 1987 250,169 0.4 100.0 4,867 0.3
One Crosswoods Center............ 1 1984 129,583 0.2 97.2 2,155 0.2
--- ---------- ----- ---------- -----
Columbus Total/Weighted Average.. 3 787,224 1.2 95.7 15,955 1.1
CENTRAL REGION TOTAL/WEIGHTED
AVERAGE........................ 31 13,339,779 20.0% 93.1% $ 287,506 20.6%

<CAPTION>
ANNUALIZED
NET
EFFECTIVE ANNUALIZED
RENT PER RENT PER
NUMBER OCCUPIED OCCUPIED
OF SQUARE SQUARE
PROPERTY LEASES FOOT(2) FOOT(1)
-------- ------ ---------- ----------
<S> <C> <C> <C>
West
Wellesley Office Park............ 89 $16.60 $25.66
-----
Boston Total/Weighted Average.... 707 15.06 28.71
New York City
Third Avenue
850 Third Avenue................. 27 16.94 30.10
Philadelphia
Conshohocken
Four Falls Corporate Center(4)... 44 16.49 24.59
Center City
1601 Market Street............... 69 11.82 20.63
1700 Market Street............... 47 10.49 20.35
King of Prussia/Valley Forge
Oak Hill Plaza(4)................ 4 10.81 18.30
Walnut Hill Plaza(4)............. 19 13.12 19.60
Main Line
One Devon Square(4).............. 9 13.10 18.57
Two Devon Square(4).............. 6 10.53 16.00
Three Devon Square(4)............ 1 30.90 36.37
Plymouth Meeting/Blue Bell
One Valley Square(4)............. 7 11.57 17.49
Two Valley Square(4)............. 6 12.17 19.17
Three Valley Square(4)........... 6 12.76 19.10
Four and Five Valley Square(4)... 5 13.07 19.62
-----
Philadelphia Total/Weighted
Average........................ 223 11.11 20.40
Norfolk
Norfolk
Dominion Tower(4)................ 54 9.15 16.68
-----
NORTHEAST REGION
TOTAL/WEIGHTED AVERAGE........... 1,445 $14.75 $26.26
CENTRAL REGION
Chicago
Downtown-Central Loop
161 N. Clark..................... 56 $10.75 $23.85
200 West Adams................... 61 9.43 20.94
30 N. LaSalle Street(3).......... 113 8.35 22.09
One North Franklin............... 55 9.66 23.00
Downtown-West Loop
10 & 30 S. Wacker................ 124 17.35 32.68
101 N. Wacker.................... 37 9.37 22.07
Civic Opera House................ 206 5.70 16.17
O'Hare
Presidents Plaza................. 66 9.05 21.09
1700 Higgins..................... 16 10.65 18.61
Oak Brook
AT&T Plaza....................... 27 15.35 22.90
Oakbrook Terrace Tower........... 55 17.12 25.87
Westbrook Corporate Center....... 101 18.28 26.79
Lake County
Tri-State International.......... 42 14.82 22.47
-----
Chicago Total/Weighted Average... 959 11.70 24.54
Indianapolis
Downtown
Bank One Center/Tower............ 80 11.41 19.83
Cleveland
Downtown
BP Tower......................... 38 7.74 16.02
Columbus
Downtown
One Columbus Building............ 30 16.42 23.70
Suburban
Community Corporate Center....... 43 12.24 19.46
One Crosswoods Center............ 21 10.22 17.11
-----
Columbus Total/Weighted Average.. 94 13.38 21.19
CENTRAL REGION TOTAL/WEIGHTED
AVERAGE........................ 1,171 $11.32 $23.15
</TABLE>

52
<PAGE> 58

<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
OFFICE PERCENTAGE
PORTFOLIO OF
NUMBER RENTABLE RENTABLE ANNUALIZED PORTFOLIO
OF YEAR/BUILT SQUARE SQUARE PERCENTAGE RENT ANNUALIZED
PROPERTY PROPERTIES RENOVATED FEET FEET OCCUPIED ($000S)(1) RENT
-------- ---------- ---------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
PACIFIC REGION
Los Angeles
Downtown
550 S. Hope...................... 1 1991 566,434 0.9% 80.7% $ 9,732 0.7%
Two California Plaza(3).......... 1 1992 1,329,809 2.0 88.2 26,224 1.9
Pasadena
Pasadena Towers.................. 2 1990-91 439,367 0.7 92.3 10,966 0.8
Westwood
10880 Wilshire Boulevard(3)...... 1 1970/92 534,047 0.8 90.1 13,547 1.0
10960 Wilshire Boulevard......... 1 1971/92 543,804 0.8 94.8 15,083 1.1
--- ---------- ----- ---------- -----
Los Angeles Total/Weighted
Average........................ 6 3,413,461 5.1 88.8 75,551 5.4
Orange County
Anaheim Stadium Area
500 Orange Tower(9).............. 1 1988 290,765 0.4 94.1 5,081 0.4
Town & Country
1100 Executive Tower............. 1 1987 366,747 0.6 100.0 6,590 0.5
Airport Office Area
1920 Main Plaza.................. 1 1988 305,662 0.5 90.3 5,842 0.4
2010 Main Plaza.................. 1 1988 280,882 0.4 89.9 6,111 0.4
--- ---------- ----- ---------- -----
Orange County Total/Weighted
Average........................ 4 1,244,056 1.9 94.0 23,624 1.7
San Diego
University Town Center
The Plaza at La Jolla
Village(4)..................... 5 1987-90 635,419 1.0 100.0 15,169 1.1
Smith Barney Tower............... 1 1987 187,999 0.3 85.0 3,528 0.3
--- ---------- ----- ---------- -----
San Diego Total/Weighted
Average........................ 6 823,418 1.2 96.6 18,697 1.3
San Francisco
Downtown -- Financial District
201 Mission Street............... 1 1981 483,289 0.7 99.6 9,655 0.7
580 California................... 1 1984 313,012 0.5 99.2 8,219 0.6
60 Spear Street Building......... 1 1967/87 133,782 0.2 100.0 3,302 0.2
One Maritime Plaza............... 1 1967/90 523,929 0.8 86.9 13,605 1.0
One Market....................... 1 1976/95 1,460,081 2.2 97.0 38,695 2.8
--- ---------- ----- ---------- -----
San Francisco Total/Weighted
Average........................ 5 2,914,093 4.4 96.0 73,476 5.3
San Jose
Mountain View
Shoreline Technology Park........ 12 1985-91 726,508 1.1 100.0 13,450 1.0
Santa Clara
Lake Marriott Business Park...... 7 1981 401,402 0.6 100.0 4,418 0.3
Sunnyvale
Sunnyvale Business Center........ 3 1990 175,000 0.3 100.0 3,219 0.2
--- ---------- ----- ---------- -----
San Jose Total/Weighted
Average........................ 22 1,302,910 2.0 100.0 21,087 1.5
PACIFIC REGION TOTAL/WEIGHTED
AVERAGE........................ 43 9,697,938 14.6% 93.8% $ 212,435 15.2%
WEST REGION
Anchorage
Midtown
Calais Office Center(3).......... 2 1975 190,599 0.3% 99.8% $ 3,542 0.3%
Phoenix
Central Corridor
49 East Thomas Road(10).......... 1 1974/93 18,892 0.0 71.1 114 0.0
One Phoenix Plaza(11)............ 1 1989 586,403 0.9 100.0 7,316 0.5
--- ---------- ----- ---------- -----
Phoenix Total/Weighted Average... 2 605,295 0.9 99.1 7,430 0.5
Minneapolis
Minneapolis -- Central Business
District LaSalle Plaza........... 1 1991 588,908 0.9 98.1 15,347 1.1
Denver
Southeast
Denver Corporate Center II &
III............................ 2 1981/93-97 358,357 0.5 100.0 6,341 0.5
The Quadrant..................... 1 1985 313,302 0.5 87.1 5,290 0.4
--- ---------- ----- ---------- -----
Denver Total/Weighted Average.... 3 671,659 1.0 94.0 11,631 0.8
St. Louis
Mid County
Interco Corporate Tower.......... 1 1986 339,163 0.5 100.0 7,209 0.5

<CAPTION>
ANNUALIZED
NET
EFFECTIVE ANNUALIZED
RENT PER RENT PER
NUMBER OCCUPIED OCCUPIED
OF SQUARE SQUARE
PROPERTY LEASES FOOT(2) FOOT(1)
-------- ------ ---------- ----------
<S> <C> <C> <C>
PACIFIC REGION
Los Angeles
Downtown
550 S. Hope...................... 36 $10.72 $21.30
Two California Plaza(3).......... 31 13.24 22.37
Pasadena
Pasadena Towers.................. 34 17.40 27.04
Westwood
10880 Wilshire Boulevard(3)...... 45 16.90 28.16
10960 Wilshire Boulevard......... 33 17.40 29.27
-----
Los Angeles Total/Weighted
Average........................ 179 13.06 24.92
Orange County
Anaheim Stadium Area
500 Orange Tower(9).............. 49 11.66 18.57
Town & Country
1100 Executive Tower............. 25 10.52 17.97
Airport Office Area
1920 Main Plaza.................. 37 12.25 21.16
2010 Main Plaza.................. 30 15.98 24.19
-----
Orange County Total/Weighted
Average........................ 141 11.63 20.21
San Diego
University Town Center
The Plaza at La Jolla
Village(4)..................... 89 16.46 23.87
Smith Barney Tower............... 18 13.61 22.09
-----
San Diego Total/Weighted
Average........................ 107 15.34 23.51
San Francisco
Downtown -- Financial District
201 Mission Street............... 18 9.44 20.05
580 California................... 27 16.16 26.46
60 Spear Street Building......... 9 13.35 24.69
One Maritime Plaza............... 38 19.25 29.87
One Market....................... 114 16.17 27.31
-----
San Francisco Total/Weighted
Average........................ 206 14.77 26.26
San Jose
Mountain View
Shoreline Technology Park........ 12 15.44 18.51
Santa Clara
Lake Marriott Business Park...... 16 7.05 11.01
Sunnyvale
Sunnyvale Business Center........ 3 16.24 18.40
-----
San Jose Total/Weighted
Average........................ 31 12.96 16.18
PACIFIC REGION TOTAL/WEIGHTED
AVERAGE........................ 664 $13.57 $23.35
WEST REGION
Anchorage
Midtown
Calais Office Center(3).......... 36 $ 9.96 $18.62
Phoenix
Central Corridor
49 East Thomas Road(10).......... 14 1.33 8.50
One Phoenix Plaza(11)............ 1 11.92 12.48
-----
Phoenix Total/Weighted Average... 15 11.57 12.39
Minneapolis
Minneapolis -- Central Business
District LaSalle Plaza........... 30 10.44 26.55
Denver
Southeast
Denver Corporate Center II &
III............................ 15 10.14 17.69
The Quadrant..................... 38 11.14 19.40
-----
Denver Total/Weighted Average.... 53 9.93 18.43
St. Louis
Mid County
Interco Corporate Tower.......... 33 11.60 21.26
</TABLE>

53
<PAGE> 59

<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
OFFICE PERCENTAGE
PORTFOLIO OF
NUMBER RENTABLE RENTABLE ANNUALIZED PORTFOLIO
OF YEAR/BUILT SQUARE SQUARE PERCENTAGE RENT ANNUALIZED
PROPERTY PROPERTIES RENOVATED FEET FEET OCCUPIED ($000S)(1) RENT
-------- ---------- ---------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Albuquerque
Downtown
500 Marquette Building........... 1 1985 230,022 0.3% 93.6% $ 3,412 0.2%
Oklahoma City
Northwest
Atrium Towers.................... 2 1980/95 155,865 0.2 88.5 1,228 0.1
5100 Brookline(4)................ 1 1974 105,459 0.2 83.3 842 0.1
--- ---------- ----- ---------- -----
Oklahoma City Total/Weighted
Average........................ 3 261,324 0.4 86.4 2,070 0.1
Portland
Downtown
1001 Fifth Avenue................ 1 1980 368,138 0.6 95.6 6,298 0.5
Dallas
LBJ/Quorum
Four Forest(4)................... 1 1985 394,324 0.6 93.4 5,894 0.4
Lakeside Square.................. 1 1987 397,328 0.6 98.3 7,913 0.6
North Central Plaza Three........ 1 1986/94 346,575 0.5 80.4 4,665 0.3
Central
8080 NCX......................... 1 1984/95 283,707 0.4 86.7 4,192 0.3
North Central Expressway
9400 NCX......................... 1 1981/95 379,556 0.6 89.2 4,811 0.3
Preston Center
Preston Commons.................. 3 1986 418,604 0.6 90.6 8,460 0.6
Sterling Plaza................... 1 1984/94 302,747 0.5 88.8 5,122 0.4
--- ---------- ----- ---------- -----
Dallas Total/Weighted Average.... 9 2,522,841 3.8 90.0 41,058 2.9
Ft. Worth
W/SW Fort Worth
Summitt Office Park.............. 2 1974/93 239,095 0.4 96.2 2,805 0.2
Seattle
Bellevue -- Central Business
District
One Bellevue Center(3)........... 1 1983 344,715 0.5 98.9 7,146 0.5
Rainer Plaza(3).................. 1 1986 410,855 0.6 98.3 8,763 0.6
Seattle -- Central Business
District
1111 Third Avenue................ 1 1980 528,282 0.8 97.9 9.309 0.7
First Interstate Center.......... 1 1983 915,883 1.4 98.4 19,583 1.4
Second and Seneca Buildings...... 2 1991/1996 480,272 0.7 99.6 10,036 0.7
Nordstrom Medical Tower.......... 1 1986 101,431 0.2 97.8 2,611 0.2
--- ---------- ----- ---------- -----
Seattle Total/Weighted Average... 7 2,781,438 4.2 98.5 57,447 4.1
WEST REGION TOTAL/WEIGHTED
AVERAGE........................ 32 8,798,482 13.2% 95.2% $ 158,251 11.3%
SOUTHEAST REGION
Ft. Lauderdale
Downtown
First Union Center............... 1 1991 225,500 0.3% 99.0% $ 6,129 0.4%
Orlando
Central Business District
SunTrust Center.................. 1 1988 640,385 1.0 94.5 14,945 1.1
Palm Beach County, FL
West Palm Beach
One Clearlake Centre............. 1 1987 215,104 0.3 92.8 3,876 0.3
Sarasota
Downtown
Sarasota City Center............. 1 1989 247,891 0.4 88.6 4,135 0.3
Tampa
Westshore/Airport
Tampa Commons.................... 1 1985 254,808 0.4 99.5 4,824 0.3
Westshore Center................. 1 1984 215,523 0.3 99.4 3,577 0.3
--- ---------- ----- ---------- -----
Tampa Total/Weighted Average..... 2 470,331 0.7 99.5 8,402 0.6
Atlanta
Central Perimeter
One Perimeter Center............. 4 1972-86 1,264,027 1.9 94.0 21,910 1.6
Two Perimeter Center............. 11 1971-1985 980,708 1.5 98.9 15,588 1.1
Three Perimeter Center........... 14 1970-89 557,435 0.8 98.4 10,119 0.7
Four Perimeter Center............ 3 1978-81 483,796 0.7 99.7 8,883 0.6
Central Park..................... 2 1986 612,733 0.9 92.4 11,435 0.8
Lakeside Office Park............. 5 1972-78 390,721 0.6 97.1 6,084 0.4
Midtown
Promenade II..................... 1 1990 770,840 1.2 97.1 16,783 1.2

<CAPTION>
ANNUALIZED
NET
EFFECTIVE ANNUALIZED
RENT PER RENT PER
NUMBER OCCUPIED OCCUPIED
OF SQUARE SQUARE
PROPERTY LEASES FOOT(2) FOOT(1)
-------- ------ ---------- ----------
<S> <C> <C> <C>
Albuquerque
Downtown
500 Marquette Building........... 31 $ 8.10 $15.84
Oklahoma City
Northwest
Atrium Towers.................... 38 4.81 8.90
5100 Brookline(4)................ 61 4.26 9.59
-----
Oklahoma City Total/Weighted
Average........................ 99 3.97 9.17
Portland
Downtown
1001 Fifth Avenue................ 53 11.01 17.89
Dallas
LBJ/Quorum
Four Forest(4)................... 55 9.09 16.01
Lakeside Square.................. 22 11.67 20.27
North Central Plaza Three........ 36 8.99 16.75
Central
8080 NCX......................... 35 9.33 17.03
North Central Expressway
9400 NCX......................... 67 6.86 14.21
Preston Center
Preston Commons.................. 68 16.65 22.32
Sterling Plaza................... 71 10.69 19.05
-----
Dallas Total/Weighted Average.... 354 9.60 18.09
Ft. Worth
W/SW Fort Worth
Summitt Office Park.............. 62 6.27 12.20
Seattle
Bellevue -- Central Business
District
One Bellevue Center(3)........... 38 13.30 20.97
Rainer Plaza(3).................. 59 14.01 21.70
Seattle -- Central Business
District
1111 Third Avenue................ 55 11.45 18.00
First Interstate Center.......... 74 14.63 21.73
Second and Seneca Buildings...... 34 13.56 20.97
Nordstrom Medical Tower.......... 25 18.42 26.32
-----
Seattle Total/Weighted Average... 285 13.52 20.96
WEST REGION TOTAL/WEIGHTED
AVERAGE........................ 1,051 $10.85 $18.90
SOUTHEAST REGION
Ft. Lauderdale
Downtown
First Union Center............... 21 $17.89 $27.44
Orlando
Central Business District
SunTrust Center.................. 46 14.57 24.68
Palm Beach County, FL
West Palm Beach
One Clearlake Centre............. 33 10.14 19.41
Sarasota
Downtown
Sarasota City Center............. 32 11.33 18.84
Tampa
Westshore/Airport
Tampa Commons.................... 22 11.55 19.03
Westshore Center................. 37 8.90 16.70
-----
Tampa Total/Weighted Average..... 59 10.28 17.96
Atlanta
Central Perimeter
One Perimeter Center............. 127 11.72 18.45
Two Perimeter Center............. 75 9.34 16.07
Three Perimeter Center........... 56 11.72 18.45
Four Perimeter Center............ 7 11.68 18.41
Central Park..................... 69 13.01 20.20
Lakeside Office Park............. 39 8.42 16.04
Midtown
Promenade II..................... 24 15.08 22.43
</TABLE>

54
<PAGE> 60

<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
OFFICE PERCENTAGE
PORTFOLIO OF
NUMBER RENTABLE RENTABLE ANNUALIZED PORTFOLIO
OF YEAR/BUILT SQUARE SQUARE PERCENTAGE RENT ANNUALIZED
PROPERTY PROPERTIES RENOVATED FEET FEET OCCUPIED ($000S)(1) RENT
-------- ---------- ---------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Northwest
Paces West....................... 2 1988 641,263 1.0% 99.3% $ 13,127 0.9%
--- ---------- ----- ---------- -----
Atlanta Total/Weighted Average... 42 5,701,523 8.6 96.8 103,930 7.4
Charlotte
Uptown
Wachovia Center.................. 1 1972/94 581,666 0.9 100.0 6,909 0.5
Raleigh/Durham
South Durham
University Tower................. 1 1987/92 181,221 0.3 94.3 3,209 0.2
Nashville
Downtown
Nations Bank Plaza............... 1 1977/95 421,513 0.6 97.9 5,723 0.4
--- ---------- ----- ---------- -----
SOUTHEAST REGION TOTAL/WEIGHTED
AVERAGE........................ 51 8,685,134 13.0% 96.7% $ 157,259 11.2%
SOUTHWEST REGION
New Orleans
Central Business District
LL&E Tower....................... 1 1987 545,157 0.8% 84.4% $ 7,255 0.5%
Texaco Center.................... 1 1984 619,714 0.9 89.7 9,161 0.7
Metairie/E. Jefferson
One Lakeway Center............... 1 1981/96 289,112 0.4 94.7 4,095 0.3
Two Lakeway Center............... 1 1984/96 440,826 0.7 95.8 6,549 0.5
Three Lakeway Center............. 1 1987/96 462,890 0.7 95.0 7,027 0.5
--- ---------- ----- ---------- -----
New Orleans Total/Weighted
Average........................ 5 2,357,699 3.5 91.3 34,087 2.4
Austin
Central Business District
Franklin Plaza................... 1 1987 517,849 0.8 88.3 9,367 0.7
One American Center(3)........... 1 1984 505,770 0.8 93.1 9,228 0.7
San Jacinto Center............... 1 1987 400,329 0.6 96.2 7,304 0.5
--- ---------- ----- ---------- -----
Austin Total/Weighted Average.... 3 1,423,948 2.1 25,900 1.9
Houston
Galleria/West Loop
San Felipe Plaza(4).............. 1 1984 959,466 1.4 92.4 14,849 1.1
North/North Belt
Intercontinental Center.......... 1 1983/91 194,801 0.3 99.4 2,715 0.2
Northborough Tower(4)............ 1 1983/90 207,908 0.3 95.4 2,744 0.2
North Loop/Northwest
Brookhollow Central.............. 3 1972-1981 797,971 1.2 88.7 10,719 0.8
West
Destec Tower..................... 1 1982 574,216 0.9 98.7 10,644 0.8
--- ---------- ----- ---------- -----
Houston Total/Weighted Average... 7 2,734,362 4.1 93.4 41,672 3.0
San Antonio
Northwest
Union Square..................... 1 1986 194,398 0.3 97.6 2,690 0.2
Colonade I....................... 1 1983 168,637 0.3 93.6 2,399 0.2
Northwest Center................. 1 1984/94 241,248 0.4 94.7 3,153 0.2
--- ---------- ----- ---------- -----
San Antonio Total/Weighted
Average........................ 3 604,283 0.9 95.3 8,242 0.6
--- ---------- ----- ---------- -----
SOUTHWEST REGION TOTAL/WEIGHTED
AVERAGE........................ 18 7,120,292 10.7% 92.6% $ 109,901 7.9%
--- ---------- ----- ---------- -----
PORTFOLIO TOTAL/WEIGHTED AVERAGE.... 260 66,610,450 100.0% 94.4% $1,398,591 100.0%
=== ========== ===== ========== =====

<CAPTION>
ANNUALIZED
NET
EFFECTIVE ANNUALIZED
RENT PER RENT PER
NUMBER OCCUPIED OCCUPIED
OF SQUARE SQUARE
PROPERTY LEASES FOOT(2) FOOT(1)
-------- ------ ---------- ----------
<S> <C> <C> <C>
Northwest
Paces West....................... 44 $13.84 $20.62
-----
Atlanta Total/Weighted Average... 441 11.52 18.83
Charlotte
Uptown
Wachovia Center.................. 9 6.52 11.88
Raleigh/Durham
South Durham
University Tower................. 36 11.63 18.78
Nashville
Downtown
Nations Bank Plaza............... 21 6.78 13.87
-----
SOUTHEAST REGION TOTAL/WEIGHTED
AVERAGE........................ 698 $11.10 $18.72
SOUTHWEST REGION
New Orleans
Central Business District
LL&E Tower....................... 33 $ 9.26 $15.76
Texaco Center.................... 28 10.32 16.48
Metairie/E. Jefferson
One Lakeway Center............... 52 8.57 14.95
Two Lakeway Center............... 84 10.01 15.50
Three Lakeway Center............. 52 10.26 15.98
-----
New Orleans Total/Weighted
Average........................ 249 8.95 15.84
Austin
Central Business District
Franklin Plaza................... 37 11.48 20.50
One American Center(3)........... 34 9.99 19.59
San Jacinto Center............... 43 9.00 18.96
-----
Austin Total/Weighted Average.... 114 9.42 19.72
Houston
Galleria/West Loop
San Felipe Plaza(4).............. 125 9.47 16.74
North/North Belt
Intercontinental Center.......... 12 6.84 14.02
Northborough Tower(4)............ 15 7.28 13.83
North Loop/Northwest
Brookhollow Central.............. 53 8.38 15.14
West
Destec Tower..................... 24 11.83 18.78
-----
Houston Total/Weighted Average... 229 8.71 16.32
San Antonio
Northwest
Union Square..................... 22 7.05 14.18
Colonade I....................... 27 7.85 15.20
Northwest Center................. 35 7.37 13.79
-----
San Antonio Total/Weighted
Average........................ 84 7.05 14.31
-----
SOUTHWEST REGION TOTAL/WEIGHTED
AVERAGE........................ 676 $ 8.79 $16.66
-----
PORTFOLIO TOTAL/WEIGHTED AVERAGE.... 5,705 $12.26 $22.23
=====
</TABLE>

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

(1) Annualized Rent is the monthly contractual rent under existing leases as of
March 31, 1998, multiplied by 12. This amount reflects total base rent
before any rent abatements, but includes expense reimbursements, which may
be estimates. Total rent abatements for leases in effect as of March 31,
1998, for the 12 months ending March 31, 1999, are approximately $9.3
million.

(2) Annualized Net Effective Rent is calculated for leases in effect as of
March 31, 1998, as follows: Annualized Rent, calculated as described above,
was reduced by the estimated operating expenses per square foot, based on
1997 actual operating expenses for Properties owned as of January 1, 1997,
and based on the Company's estimate of annual operating expenses for
Properties acquired subsequent to January 1, 1997.

55
<PAGE> 61

(3) This Office Property is held subject to a ground lease.

(4) This Office Property is held in a partnership with an unaffiliated third
party and, in the case of San Felipe Plaza, an affiliated party.

(5) The Company owns a 10% interest in this Office Property. The Company's
joint venture partner has advised the Company of its exercise of its
buy-sell right under the joint venture documents. In response to this
advice, the Company has determined that it will acquire the joint venture
partner's interest in the Office Property, based on an assumed value for
the Property of $175.5 million.

(6) This Office Property recently underwent major redevelopment and tenants
commenced occupancy in May 1997.

(7) This Office Property is held in a private real estate investment trust in
which the Company and the Trust own 51.6% of the outstanding shares.

(8) As of the date hereof, the Company is involved in continuing discussions
with its joint venture partner in One Post Office Square and Rowes Wharf
with respect to the Company's control over property management of such
Properties. Such joint venture partner did not consent to the transfer to
the Company of Beacon's joint venture interest in these Properties which
occurred as a result of the Beacon Merger. Although the Company believes
that such consent was not required, unless the Company is able to reach an
agreement with respect to day-to-day management of such Properties, it is
possible that the joint venture partner could challenge the transfer of
such Properties in the Beacon Merger, or seek to trigger the buy-sell
remedy contained in the joint venture documents.

(9) 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.

(10) This Office Property was purchased in conjunction with the purchase of One
Phoenix Plaza for the sole purpose of providing additional parking for the
tenants of One Phoenix Plaza.

(11) 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.

(12) This Office Property is currently undergoing a major renovation which is
scheduled to be completed by the end of 1998.

56
<PAGE> 62

PARKING FACILITIES

Information concerning the Parking Facilities as of March 31, 1998 is set
forth below.

<TABLE>
<CAPTION>
APPROXIMATE MANAGEMENT NUMBER 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
Adams Wabash Garage..................... 670 Chicago Standard Parking 1
Stanwix Parking Garage.................. 712 Pittsburgh Standard Parking 1
Milwaukee Center(2)..................... 876 Milwaukee Standard Parking 1
Capitol Commons Garage(2)(3)............ 950 Indianapolis Central Parking 1
601 Tchoupitoulas Garage................ 759 New Orleans Central Parking 1
North Loop Transportation Center(3)..... 1,172 Chicago Standard Parking 1
Theater District Garage(3).............. 1,006 Chicago Standard Parking 1
Civic Parking(4)........................ 7,464 St. Louis Central Parking 4
------ --
Total................................. 16,749 17
====== ==
</TABLE>

- -------------------------
(1) With the exception of Capitol 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 Capitol 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
nonqualifying gross income for REIT qualification purposes relative to the
total gross income of the Company.

(2) This Parking Facility is held subject to a ground lease.

(3) Each of these Parking Facilities is held in a partnership with an
unaffiliated third party. The Company or a Subsidiary is the managing
general partner of each such partnership.

(4) The Company has a 50% membership interest in a portfolio of four Parking
Facilities serving the St. Louis, Missouri area.

TENANTS

As of March 31, 1998, the Office Properties were leased to 5,705 tenants;
no single tenant accounted for more than 1.5% of the Company's aggregate
annualized rent or 1.2% of aggregate occupied square feet (except for the U.S.
General Services Administration, acting on behalf of various agencies or
departments of the U.S. government, which accounted for 3.5% of annualized rent
and 3.1% of occupied square feet).

57
<PAGE> 63

LEASE EXPIRATION BY REGION AS OF MARCH 31, 1998

1998 1999 2000 2001 2002
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CENTRAL Square Feet(1).......... 831,839 976,069 1,386,731 903,221 1,129,223
REGION % Square Feet(2)........ 6.2% 7.3% 10.4% 6.8% 8.5%
TOTALS Annualized Rent(3)...... 19,662,316 25,720,926 35,382,249 20,010,855 27,275,611
Number of Leases........ 167 179 176 159 149
Rent Per Square Foot.... $ 23.64 $ 26.35 $ 25.51 $ 22.15 $ 24.15
NORTHEAST Square Feet(1).......... 1,071,304 1,405,471 1,805,589 3,062,085 3,093,647
REGION % Square Feet(2)........ 5.6% 7.4% 9.5% 16.1% 16.3%
TOTALS Annualized Rent(3)...... 26,863,536 36,237,880 46,758,958 85,479,255 82,281,601
Number of Leases........ 212 199 237 219 220
Rent Per Square Foot.... $ 25.08 $ 25.78 $ 25.90 $ 27.92 $ 26.60
SOUTHEAST Square Feet(1).......... 603,026 1,360,034 1,249,925 1,458,653 883,608
REGION % Square Feet(2)........ 6.9% 15.7% 14.4% 16.8% 10.2%
TOTALS Annualized Rent(3)...... 10,940,629 22,439,810 25,271,118 27,194,739 17,128,932
Number of Leases........ 115 147 137 117 111
Rent Per Square Foot.... $ 18.14 $ 16.50 $ 20.22 $ 18.64 $ 19.39
SOUTHWEST Square Feet(1).......... 614,321 609,935 1,385,634 996,849 930,791
REGION % Square Feet(2)........ 8.6% 8.6% 19.5% 14.0% 13.1%
TOTALS Annualized Rent(3)...... 9,299,326 9,575,435 24,520,688 17,002,173 16,421,391
Number of Leases........ 158 114 130 95 97
Rent Per Square Foot.... $ 15.14 $ 15.70 $ 17.70 $ 17.06 $ 17.64
WEST Square Feet(1).......... 755,284 917,926 1,223,990 1,295,815 1,028,883
REGION % Square Feet(2)........ 8.6% 10.4% 13.9% 14.7% 11.7%
TOTALS Annualized Rent(3)...... 13,773,994 16,511,547 22,394,176 25,626,770 19,980,697
Number of Leases........ 264 196 192 159 111
Rent Per Square Foot.... $ 18.24 $ 17.99 $ 18.30 $ 19.78 $ 19.42
PACIFIC Square Feet(1).......... 340,157 1,131,697 1,329,824 1,712,605 770,985
REGION % Square Feet(2)........ 3.5% 11.7% 13.7% 17.7% 7.9%
TOTALS Annualized Rent(3)...... 8,464,674 26,062,219 28,619,822 36,730,190 20,696,178
Number of Leases........ 90 115 112 115 74
Rent Per Square Foot.... $ 24.88 $ 23.03 $ 21.52 $ 21.45 $ 26.84
PORTFOLIO Square Feet(1).......... 4,215,931 6,401,132 8,381,693 9,429,228 7,837,137
TOTALS % Square Feet(2)........ 6.3% 9.6% 12.6% 14.2% 11.8%
Annualized Rent(3)...... 89,004,474 136,547,816 182,947,012 212,043,981 183,784,411
Number of Leases........ 1,006 950 984 864 762
Rent Per Square Foot.... $ 21.11 $ 21.33 $ 21.83 $ 22.49 $ 23.45

<CAPTION>
2008 AND
2003 2004 2005 2006 2007 BEYOND TOTALS
------------ ----------- ----------- ----------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
CENTRAL 1,285,439 950,883 1,091,564 677,528 490,779 2,695,479 12,418,755
REGION 9.6% 7.1% 8.2% 5.1% 3.7% 20.2% 93.1%
TOTALS 37,223,556 23,437,564 22,324,091 14,397,329 9,860,531 52,211,156 287,506,184
81 83 52 45 34 46 1,171
$ 28.96 $ 24.65 $ 20.45 $ 21.25 $ 20.09 $ 19.37 $ 23.15
NORTHEAST 1,415,681 1,181,330 1,031,602 1,060,091 944,046 1,953,642 18,024,488
REGION 7.5% 6.2% 5.4% 5.6% 5.0% 10.3% 95.0%
TOTALS 36,139,150 29,180,471 27,066,306 23,081,229 22,942,420 57,208,736 473,239,542
116 66 52 48 32 44 1,445
$ 25.53 $ 24.70 $ 26.24 $ 21.77 $ 24.30 $ 29.28 $ 26.26
SOUTHEAST 330,276 354,743 440,007 594,621 33,750 1,091,326 8,399,969
REGION 3.8% 4.1% 5.1% 6.8% 0.4% 12.6% 96.7%
TOTALS 7,352,130 5,389,996 6,368,597 13,663,341 545,976 20,963,612 157,258,880
21 18 9 8 5 10 698
$ 22.26 $ 15.19 $ 14.47 $ 22.98 $ 16.18 $ 19.21 $ 18.72
SOUTHWEST 565,885 539,351 74,924 522,951 171,843 183,159 6,595,643
REGION 7.9% 7.6% 1.1% 7.3% 2.4% 2.6% 92.6%
TOTALS 9,713,299 9,497,736 1,367,499 8,598,631 3,017,761 887,062 109,901,001
44 19 5 9 2 3 676
$ 17.16 $ 17.61 $ 18.25 $ 16.44 $ 17.56 $ 4.84 $ 16.66
WEST 1,095,685 1,007,586 282,593 352,302 216,330 195,508 8,371,902
REGION 12.5% 11.5% 3.2% 4.0% 2.5% 2.2% 95.2%
TOTALS 23,268,345 14,899,123 5,669,678 7,464,701 6,193,196 2,468,508 158,250,735
72 24 12 10 7 4 1,051
$ 21.24 $ 14.79 $ 20.06 $ 21.19 $ 28.63 $ 12.63 $ 18.90
PACIFIC 538,589 376,523 814,607 513,045 794,965 773,305 9,096,302
REGION 5.6% 3.9% 8.4% 5.3% 8.2% 8.0% 93.8%
TOTALS 13,762,478 9,581,781 17,094,691 14,236,129 24,405,886 12,780,746 212,434,793
49 23 29 20 16 21 664
$ 25.55 $ 25.45 $ 20.99 $ 27.75 $ 30.70 $ 16.53 $ 23.35
PORTFOLIO 5,231,555 4,410,416 3,735,297 3,720,538 2,651,713 6,892,419 62,907,059
TOTALS 7.9% 6.6% 5.6% 5.6% 4.0% 10.3% 94.4%
127,458,959 91,986,671 79,890,861 81,441,360 66,965,770 146,519,819 1,398,591,135
383 233 159 140 96 128 5,705
$ 24.36 $ 20.86 $ 21.39 $ 21.89 $ 25.25 $ 21.26 $ 22.23
</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
March 31, 1998 multiplied by 12. This amount reflects total base rent before
any rent abatements, but includes expense reimbursements. Total rent
abatements for leases in effect as of March 31, 1998 for the 12 months
ending March 31, 1998 are approximately $9.3 million.

58
<PAGE> 64

LEASE EXPIRATIONS -- TOTAL PORTFOLIO

The following table sets forth a summary schedule of the lease expirations
for the Office Properties for leases in place as of March 31, 1998, assuming
that none of the tenants exercise renewal options or termination rights, if any,
at or prior to the scheduled expirations:

<TABLE>
<CAPTION>
ANNUALIZED PERCENTAGE OF
SQUARE PERCENTAGE RENT OF ANNUALIZED
NUMBER OF FOOTAGE OF OF TOTAL ANNUALIZED RENT EXPIRING RENT OF
YEAR OF LEASE LEASES EXPIRING OCCUPIED OF EXPIRING LEASES PER EXPIRING
EXPIRATION EXPIRING LEASES SQUARE FEET LEASES SQUARE FOOT LEASES(1)
------------- --------- ---------- ----------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
1998(2)................. 1,006 4,215,931 6.8% $ 89,004,475 $21.11 6.4%
1999.................... 950 6,401,132 10.3 136,547,816 21.33 9.8
2000.................... 984 8,381,693 13.5 182,947,012 21.83 13.1
2001.................... 864 9,429,228 15.1 212,043,981 22.49 15.1
2002.................... 762 7,837,137 12.6 183,784,411 23.45 13.1
2003.................... 383 5,231,555 8.4 127,458,959 24.36 9.1
2004.................... 233 4,410,416 7.1 91,986,671 20.86 6.6
2005.................... 159 3,735,297 6.0 79,890,861 21.39 5.7
2006.................... 140 3,720,538 6.0 81,441,360 21.89 5.8
2007.................... 96 2,651,713 4.3 66,965,770 25.25 4.8
2008.................... 58 2,252,516 3.6 55,453,467 24.62 4.0
2009.................... 24 790,533 1.3 19,744,576 24.98 1.4
2010 and beyond......... 46 3,131,059 5.0 71,321,776 22.78 5.1
----- ---------- ----- -------------- -----
Total/Weighted
Average............... 5,705 62,188,748 100.0%(3) $1,398,591,135 $22.23 100.0%
===== ========== ===== ============== =====
</TABLE>

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

(1) Based on currently payable rent.

(2) Represents lease expirations from April 1, 1998 to December 31, 1998 and
month-to-month leases.

(3) Reconciliation of total net rentable square footage is as follows:

<TABLE>
<CAPTION>
SQUARE PERCENTAGE
FOOTAGE OF TOTAL
------- ----------
<S> <C> <C>
Square footage occupied by tenants...................... 62,188,748 93.36%
Square footage used for management offices and building
use, and remeasurement adjustments.................... 718,311 1.08%
---------- -----
Total occupied square footage........................... 62,907,059 94.44%
Square footage vacant................................... 3,703,391 5.56%
---------- -----
Total net rentable square footage....................... 66,610,450 100.0%
========== =====
</TABLE>

59
<PAGE> 65

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
March 31, 1998:

<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF AGGREGATE ANNUALIZED OF AGGREGATE
NUMBER PERCENT TOTAL PORTFOLIO RENT PER PORTFOLIO
SQUARE FEET OF OF ALL OCCUPIED OCCUPIED ANNUALIZED SQUARE ANNUALIZED
UNDER LEASE LEASES LEASES SQUARE FEET SQUARE FEET RENT FOOT RENT
----------- ------ ------- ----------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
2,500 or Less............ 2,101 36.8% 2,608,527 4.2% $ 53,033,799 $20.33 3.8%
2,501-5,000.............. 1,231 21.6 4,408,417 7.1 93,233,621 21.15 6.7
5,001-7,500.............. 662 11.6 4,051,615 6.5 85,902,110 21.20 6.1
7,501-10,000............. 341 6.0 2,949,556 4.8 63,822,566 21.64 4.6
10,001-20,000............ 693 12.1 9,756,440 15.7 211,689,949 21.70 15.1
20,001-40,000............ 374 6.6 10,217,776 16.4 232,610,246 22.77 16.6
40,001-60,000............ 132 2.3 6,411,864 10.3 144,903,115 22.60 10.4
60,001-100,000........... 94 1.6 7,039,652 11.3 174,382,138 24.77 12.5
100,001 or Greater....... 77 1.4 14,744,901 23.7 339,013,591 22.99 24.2
----- ----- ---------- ----- -------------- -----
Total/Weighted Average... 5,705 100.0% 62,188,748 100.0% $1,398,591,135 $22.23 100.0%
===== ===== ========== ===== ============== =====
</TABLE>

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>
PERCENTAGE OF
AGGREGATE RENTABLE
RENTABLE SQUARE FEET
DATE 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
December 31, 1997..................................... 65,291,790 94
March 31, 1998........................................ 66,610,450 94
</TABLE>

LEGAL PROCEEDINGS

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 actions
which the Company does not believe to be material or 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, business, results of operations or
financial condition of the Company.

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<PAGE> 66
MANAGEMENT

TRUSTEES AND EXECUTIVE AND SENIOR OFFICERS OF THE TRUST

The Company does not have any trustees or executive officers.

The Board of Trustees of the Trust, the managing general partner of the
Company, currently consists of eleven trustees, eight of whom are not employees
or affiliates of the Trust, the Company or the Equity Group. 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 Trust 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.

Information concerning the trustees and executive and senior officers of
the Trust is set forth below.

<TABLE>
<CAPTION>
NAME AGE OFFICE HELD
---- --- -----------
<S> <C> <C>
Samuel Zell.................... 56 Chairman of the Board, Trustee (term expires in 1998)
Timothy H. Callahan............ 47 President, Chief Executive Officer, Trustee (term expires in
1999)
Michael A. Steele.............. 51 Chief Operating Officer and Executive Vice President -- Real
Estate Operations
Richard D. Kincaid............. 36 Executive Vice President, Chief Financial Officer
Stanley M. Stevens............. 49 Executive Vice President, Chief Legal Counsel and Secretary
Gary A. Beller................. 51 Executive Vice President -- Parking Facilities
Jeffrey L. Johnson............. 38 Chief Investment Officer and Senior Vice President --
Investments
David H. Crawford.............. 41 Senior Vice President -- Administration and General Counsel
for Property Operations
Sybil J. Ellis................. 44 Senior Vice President -- Acquisitions
Frank Frankini................. 43 Senior Vice President -- Design & Construction
Frances P. Lewis............... 44 Senior Vice President -- Corporate Communications
Diane M. Morefield............. 39 Senior Vice President -- Finance/Capital Markets
David H. Naus.................. 43 Senior Vice President -- Acquisitions
Michael E. Sheinkop............ 35 Senior Vice President -- Portfolio Management
Peter D. Johnston.............. 40 Senior Vice President -- Southwest Region
Peter H. Adams................. 51 Senior Vice President -- Pacific Region
Kim J. Koehn................... 42 Senior Vice President -- West Region
Christopher P. Mundy........... 36 Senior Vice President -- Northwest Region
Arvid J. Povilaitis............ 38 Senior Vice President -- Central Region
Mark E. Scully................. 40 Senior Vice President -- Southeast Region
Sheli Z. Rosenberg............. 56 Trustee (term expires in 2000)
Thomas E. Dobrowski............ 54 Trustee (term expires in 1998)
James D. Harper, Jr............ 64 Trustee (term expires in 1999)
Peter Linneman................. 47 Trustee (term expires in 2000)
Jerry M. Reinsdorf............. 62 Trustee (term expires in 1998)
William M. Goodyear............ 50 Trustee (term expires in 1999)
David K. McKown................ 60 Trustee (term expires in 2000)
H. Jon Runstad................. 56 Trustee (term expires in 1998)
Edwin N. Sidman................ 55 Trustee (term expires in 1998)
</TABLE>

The following is a biographical summary of the experience of the trustees,
executive officers and senior officers of the Trust. Officers serve at the
pleasure of the Board.

Samuel Zell has been a trustee and Chairman of the Board of the Trust since
October 1996. For more than five years, Mr. Zell has served as Chairman of the
Board of Directors of Equity Group Investments, Inc., an owner, manager and
financier of real estate and corporations ("EGI"). For more than five years, Mr.
Zell

61
<PAGE> 67

has served as Chairman of the Boards 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"), and
Manufactured Home Communities, Inc., a REIT specializing in the ownership and
management of manufactured home communities ("MHC"). Since March 1993, Mr. Zell
has served as Chairman of the Board of Trustees of Equity Residential Properties
Trust, a REIT that owns and operates multifamily residential properties ("EQR").
Since January 1995, Mr. Zell has served as a director of TeleTech Holdings,
Inc., a provider of telephone and computer based customer care solutions. 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"). Since March 1998, Mr. Zell has served as a director of Fred Meyer,
Inc., a large domestic food retailer and operator of multi-department stores.

Timothy H. Callahan has been a trustee and Chief Executive Officer and
President of the Trust since October 1996. Mr. Callahan served on the Board of
Managers and was the Chief Executive Officer of Equity Office Holdings, L.L.C
("EOH"), and Equity Office Properties, L.L.C., a property manager of office
buildings ("EOP LLC"), from August 1996 until October 1997. 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 was a Director of MHC from May 1996 until October
1997. 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, New York, from July 1973 until
March 1987.

Michael A. Steele has been Chief Operating Officer and Executive Vice
President -- Real Estate Operations for the Trust since February 1998 and was
Executive Vice President -- Real Estate Operations of the Trust from October
1996 until February 1998. Mr. Steele was President and Chief Operating Officer
of EOP LLC from July 1995 until October 1997. Mr. Steele was Executive Vice
President of EOH from July 1995 until October 1997. 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.

Richard D. Kincaid has been Executive Vice President and Chief Financial
Officer of the Trust since March 1997 and was Senior Vice President and Chief
Financial Officer of the Trust from October 1996 until March 1997. Mr. Kincaid
was Senior Vice President and Chief Financial Officer of EOH from July 1995
until October 1997. 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.

Stanley M. Stevens has been Executive Vice President, Chief Legal Counsel
and Secretary of the Trust since October 1996. Mr. Stevens was Executive Vice
President and General Counsel of EOH from September 1996 until October 1997. 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.

Gary A. Beller has been Executive Vice President of the Trust since March
1997. Mr. Beller has been President of Equity Capital Holdings L.L.C., the
general partner of Equity Capital Holdings, L.P., an asset

62
<PAGE> 68

manager of parking facilities, since August 1997. 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.

Jeffrey L. Johnson has been Chief Investment Officer and Senior Vice
President -- Investments for the Trust since February 1998 and was Senior Vice
President -- Investments for the Trust from October 1996 until February 1998.
Mr. Johnson was Senior Vice President -- Asset Management for EOH from July 1996
until October 1997. 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.

David H. Crawford has been Senior Vice President -- Administration and
General Counsel for Property Operations of the Trust since March 1997. Mr.
Crawford was Senior Vice President and Associate General Counsel of EOH from
September 1996 until October 1997. Mr. Crawford was Senior Vice President and
General Counsel of EOH from July 1995 until September 1996 and of EOP LLC from
September 1996 until July 1997. 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 Trust
since March 1997. Ms. Ellis was Senior Vice President -- Acquisitions of EOH
from July 1995 until October 1997. 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 Trust since March 1997. Mr. Frankini was Senior Vice President -- Design and
Construction of EOP LLC from July 1995 until October 1997. 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.

Frances P. Lewis has been Senior Vice President -- Corporate Communications
of the Trust since April 1997. Ms. Lewis was Vice President -- Corporate
Communications of EGI from November 1994 until April 1997. Ms. Lewis was Vice
President -- Publications of EGI from September 1988 until October 1994.

Diane M. Morefield has been Senior Vice President -- Finance/Capital
Markets of the Trust since July 1997. Ms. Morefield was Senior Manager in the
Corporate Finance practice of Deloitte & Touche, a public accounting and
consulting firm, from November 1994 until July 1997. Ms. Morefield was Executive
Vice President of the Fordham Company, a real estate development company located
in Chicago, Illinois, from November 1993 until November 1994. Ms. Morefield was
Team Leader for the Real Estate Group division, in the Midwest, of Barclays Bank
PLC from August 1983 until November 1993.

David H. Naus has been Senior Vice President -- Acquisitions of the Trust
since March 1997. Mr. Naus was Senior Vice President -- Acquisitions for EOH
from December 1995 until October 1997. 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

63
<PAGE> 69

of EAM from November 1992 until November 1993. Mr. Naus was Vice President of
EAM from October 1988 until November 1992.

Michael E. Sheinkop has been Senior Vice President -- Portfolio Management
of the Trust since November 1997. Mr. Sheinkop was Senior Vice President --
Divisional Manager of EOH from March 1997 until October 1997 and for the Trust
from March 1997 through December 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 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.

Peter H. Adams has been Senior Vice President -- Pacific Region of the
Trust since March 1998 and was Regional Vice President -- Pacific Region of the
Trust from March 1997 until February 1998. Mr. Adams was Vice President -- Group
Manager of EOH from July 1994 until March 1997. Mr. Adams was President of Adams
Equities, a private real estate consulting firm, from 1990 to 1994.

Peter D. Johnston has been Senior Vice President -- Southwest Region of the
Trust since March 1998 and was Regional Vice President -- Southwest Region from
January 1998 until February 1998. Mr. Johnston was Senior Vice President --
National Accounts from April 1993 until February 1998.

Kim J. Koehn has been Senior Vice President -- West Region of the Trust
since March 1998 and was Regional Vice President -- West Region from March 1997
until February 1998 and was also Regional Vice President -- Southwest Region
from March 1997 until December 1997. Mr. Koehn was Senior Vice President --
Asset Management of EOH from December 1995 to February 1997. Mr. Koehn was a
Vice President of EOH from June 1993 until December 1995.

Christopher P. Mundy has been Senior Vice President -- Northeast Region of
the Trust since March 1998, and was Regional Vice President -- Northeast Region
from July 1997 until February 1998. Mr. Mundy was Regional Director -- Leasing
of EOH from November 1991 until July 1997.

Arvid A. Povilaitis has been Senior Vice President -- Central Region of the
Trust since March 1998 and was Regional Vice President -- Central Region from
March 1997 until February 1998. Mr. Povilaitis was Vice President -- Asset
Management of EOH from August 1994 until February 1997. Mr. Povilaitis was Vice
President -- Investment Properties of Strategic Realty Advisors, Inc., a real
estate and advisory company, from January 1994 until August 1994. Mr. Povilaitis
was employed at VMS Realty Partners, a sponsor of public and private real estate
limited partnerships, from January 1983 until January 1994, most recently
serving as Second Vice President.

Mark E. Scully has been Senior Vice President -- Southeast Region of the
Trust since March 1998 and was Regional Vice President for the Southeast Region
from March 1997 until February 1998. Mr. Scully was Vice President -- Regional
Leasing Director of EOH from January 1995 until February 1997. Mr. Scully was
Regional Leasing Director or EOH from September 1991 until December 1994.

Sheli Z. Rosenberg has been a trustee of the Trust since March 1997. Since
November 1994, Ms. Rosenberg has been Chief Executive Officer and President of
EGI. From 1980 until September 1997, Ms. Rosenberg was 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, and Anixter. 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., a wholly
owned indirect subsidiary of Great American Management and Investment, Inc.,
("FCBA") 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 August 1996, Ms. Rosenberg has been a 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.
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<PAGE> 70

Thomas E. Dobrowski has been a trustee of the Trust since July 1997. Since
December 1994, Mr. Dobrowski has been the managing director of real estate and
alternative investments of General Motors Investment Management Corporation
("GMIMCO"), 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 Roof 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. has been a trustee of the Trust since July 1997. 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 has been a trustee of the Trust since July 1997. 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. From 1993 until 1997,
Dr. Linneman was 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.

Jerry M. Reinsdorf has been a trustee of the Trust since July 1997. 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. Mr. Reinsdorf is a stockholder, officer and
director of Jerbo Holdings I, Inc. ("Jerbo") which is the corporate general
partner of a limited partnership which is the general partner of Bojer Realty
Limited Partnership-I ("Bojer Realty"). Bojer Realty was a limited partner of
Smith Dairy Partnership, Ltd. ("Smith Dairy") and a stockholder of the corporate
general partner of Smith Dairy which filed a voluntary petition for relief under
Chapter 11 Bankruptcy on January 24, 1994. On February 14, 1995, an order
dismissing the Smith Dairy bankruptcy case was entered by the Bankruptcy Court
for the Southern District of Florida.

William M. Goodyear has been a trustee of the Trust since July 1997. Since
July 1997, Mr. Goodyear has been Chairman of Bank of America, Illinois, the
Midwest business development unit of BankAmerica Corporation, a commercial bank.
Mr. Goodyear was Chairman and Chief Executive Officer of Bank of America
Illinois, a subsidiary of BankAmerica Corporation, from September 1994 until
June 1997, at which time it merged with Bank of America NT & SA, a subsidiary of
BankAmerica Corporation. For more than two years prior to September 1994, Mr.
Goodyear was a Vice Chairman and a member of the Board of Directors of
Continental Bank Corporation, the parent company of Continental Bank, N.A., a
commercial bank which merged into Bank of America Illinois in September 1994.
Since June 1992, Mr. Goodyear has been a member of the Board of Trustees of the
Museum of Science and Industry in Chicago, Illinois. Mr. Goodyear has been a
member of the Board of Trustees of the University of Notre Dame since May 1996
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<PAGE> 71

and of Rush-Presbyterian St. Lukes Medical Center in Chicago, Illinois, since
June 1996. Mr. Goodyear has been a member of the Advisory Council for the
University of Chicago Graduate School of Business since September 1995.

David K. McKown has been a trustee of the Trust since July 1997. Since
1993, Mr. McKown has been Group Executive of the Diversified Finance and Real
Estate Lending Unit of BankBoston, N.A., a commercial bank. Mr. McKown was
director of Loan Review for BankBoston, N.A. from 1990 until 1993. Mr. McKown
serves as a Director of Electrolux Corporation.

H. Jon Runstad was appointed a trustee of the Trust effective January 1,
1998, pursuant to a Right to Purchase Agreement dated as of December 16, 1997,
executed in connection with the Wright Runstad Acquisition. Since 1971, Mr.
Runstad has been President and Chief Executive Officer of Wright Runstad &
Company, a Seattle, Washington based owner, manager and developer of office
buildings in the western United States, primarily in the Pacific Northwest.
Since 1987, Mr. Runstad has served as a member of the Board of Regents for the
University of Washington. Since July 1975, Mr. Runstad has served as a trustee
for the Downtown Seattle Association.

Edwin N. Sidman was appointed a trustee of the Trust effective March 1,
1998, pursuant to the Merger Agreement. Mr. Sidman served as Chairman of the
Board and a director of Beacon from 1994 until the consummation of the Beacon
Merger in December 1997. He is currently the managing partner of The Beacon
Companies, a private company involved in real estate investment, development and
management. Prior to joining Beacon in 1971, Mr. Sidman practiced law with the
predecessor to the firm of Rubin and Rudman in Boston. Mr. Sidman's professional
affiliations include service as Senior Vice Chairman of the National Realty
Committee. Mr. Sidman is a member of the Board of Trustees of Duke University
and a member of the Board of Directors and Executive Committee for the United
Way of Massachusetts Bay.

COMPENSATION OF THE TRUST'S BOARD OF TRUSTEES; PAYMENT IN COMMON SHARES

The Trust paid each of its non-employee trustees a pro rated fee in 1997 of
$20,000. For the full year of 1998, the Trust expects to pay each of its
non-employee trustees an annual fee of $40,000. In addition, non-employee
trustees who serve on the Executive Committee, Compensation Committee or Audit
Committee receive an additional $1,000 per annum for each committee on which
they serve. Committee chairs receive an additional $500 per annum. These fees
have been and generally are expected to be paid in Common Shares. Trustees who
are employees of the Trust are not paid any trustees' or committee fees. The
Trust reimburses its trustees for travel expenses incurred in connection with
their activities on behalf of the Trust.

Upon the effective date of the Trust's IPO in July 1997, Mr. Zell and Ms.
Rosenberg received grants of options to purchase 200,000 and 50,000 Common
Shares, respectively, at $21.00 per share, which options will vest in three
equal annual installments (rounded to the nearest whole Common Share) over three
years. After the IPO, each trustee (other than Messrs. Zell and Callahan and Ms.
Rosenberg) received a grant of options to purchase 10,000 Common Shares at the
IPO price. In addition, upon joining the Board of Trustees, Mr. Runstad received
options to purchase 3,700 Common Shares at a price of $31.56 per share and Mr.
Sidman received options to purchase 2,100 Common Shares at a price of $29.50 per
share, each representing a prorated portion of the options granted to the
trustees after the IPO. Under the Trust's Amended and Restated 1997 Employee
Share Option and Share Award Plan (the "Employee Plan"), each trustee then in
office (including Messrs. Zell and Callahan and Ms. Rosenberg for the years
after 1997) 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 Trust 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 on the first anniversary
of 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 Trust may receive additional options under the Employee Plan.

On February 17, 1998, the Compensation Committee granted fully vested
options to purchase 500,000 Common Shares to Mr. Zell, 94,500 Common Shares to
each of Ms. Rosenberg and Mr. Harper and 47,250
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<PAGE> 72

Common Shares to each of Messrs. Dobrowski, Linneman, Reinsdorf, Goodyear and
McKown, at an exercise price of $29.50 per share.

EXECUTIVE COMPENSATION

The following tables show information with respect to the annual
compensation (including option grants) for services rendered to the Trust for
the fiscal year ended December 31, 1997, by the chief executive officer and
those persons who were, at December 31, 1997, the other four most highly
compensated executive officers of the Trust.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------- --------------------------------------
AWARDS PAYOUTS
-------------------------- ---------
RESTRICTED SECURITIES LONG-TERM
SHARE UNDERLYING INCENTIVE ALL OTHER
NAME AND SALARY BONUS AWARD(S) OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3) GRANTED(#)(4) ($) ($)(5)
- ---------------------------- ---- -------- ---------- --------- ------- -- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Timothy H. Callahan......... 1997 $600,000 $1,050,000 4,976,875 450,000 0 $9,600
President and Chief
Executive Officer
Michael A. Steele........... 1997 265,000 525,000 1,523,375 250,000 0 9,600
Chief Operating Officer
and Executive Vice
President--Real Estate
Operations
Richard D. Kincaid.......... 1997 235,000 465,000 1,523,375 250,000 0 9,600
Executive Vice President
and Chief Financial
Officer
Stanley M. Stevens.......... 1997 325,000 375,000 627,000 225,000 0 9,600
Executive Vice President
and Chief Legal Counsel
Jeffrey L. Johnson.......... 1997 225,000 275,000 330,000 183,500 0 9,600
Senior Vice President and
Chief Investment Officer
</TABLE>

- -------------------------
(1) Amounts shown include cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of these
officers.

(2) Cash bonuses are reported in the year earned, even if paid in a subsequent
year.

(3) On September 22, 1997 and December 16, 1997, the Compensation Committee of
the Board of Trustees granted restricted shares to certain of the Trust's
executive officers pursuant to the Employee Plan. Mr. Callahan was granted
awards of 85,000 and 70,000 Common Shares, respectively, and Mr. Steele and
Mr. Kincaid were each granted awards of 17,000 and 30,000 Common Shares,
respectively. In addition, on December 16, 1997, the Compensation Committee
of the Board of Trustees granted Mr. Stevens an award of 19,000 Common
Shares and Mr. Johnson an award of 10,000 Common Shares. These awards will
vest over a five-year period after being granted (50% after year three, 25%
after year four, and 25% after year five). The dollar value shown in the
table for the restricted Common Shares is based on the closing prices of the
Common Shares on September 22, 1997 and December 16, 1997, the dates of
grant. This valuation does not take into account the diminution in value
attributable to the restrictions applicable to the Common Shares. The total
number of restricted Common Shares held by

67
<PAGE> 73

each named executive officer and the value of such restricted shares at
December 31, 1997, the last trading day of the year, was as follows:

<TABLE>
<CAPTION>
NUMBER OF
RESTRICTED VALUE AT
NAME COMMON SHARES DECEMBER 31, 1997($)
---- ------------- --------------------
<S> <C> <C>
Timothy H. Callahan..................................... 155,000 $4,892,188
Michael A. Steele....................................... 47,000 1,483,438
Richard D. Kincaid...................................... 47,000 1,483,438
Stanley M. Stevens...................................... 19,000 599,688
Jeffrey L. Johnson...................................... 10,000 315,625
</TABLE>

Distributions are paid on all restricted Common Shares at the same rate as
on unrestricted Common Shares.

(4) Securities underlying options are reported in the year granted.

(5) Includes employer matching and profit-sharing contributions to the Trust's
401(k) Retirement Savings Plan.

OPTION GRANTS IN FISCAL YEAR 1997

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL RATES
NUMBER OF TOTAL OPTIONS OF COMMON SHARE PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES AND PRICE PER OPTION TERM(1)
OPTIONS TRUSTEES IN COMMON ---------------------------
NAME GRANTED(2) FISCAL YEAR SHARE(3) EXPIRATION DATE 5%(4) 10%(5)
---- ---------- ------------- --------- --------------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Timothy H. Callahan....... 200,000 9.6% $21.00 July 7, 2007 $2,642,000 $ 6,694,000
250,000 33.00 December 16, 2007 5,187,500 13,147,500
Michael A. Steele......... 150,000 5.3 21.00 July 7, 2007 1,981,500 5,020,500
100,000 33.00 December 16, 2007 2,075,000 5,259,000
Richard D. Kincaid........ 150,000 5.3 21.00 July 7, 2007 1,981,500 5,020,500
100,000 33.00 December 16, 2007 2,075,000 5,259,000
Stanley M. Stevens........ 150,000 4.8 21.00 July 7, 2007 1,981,500 5,020,500
75,000 33.00 December 16, 2007 1,556,250 3,944,250
Jeffrey L. Johnson........ 125,000 3.9 21.00 July 7, 2007 1,651,250 4,183,750
58,500 33.00 December 16, 2007 1,213,875 3,076,515
</TABLE>

- -------------------------
(1) In accordance with the rules of the SEC, 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 were 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 annual installments (rounded
to the nearest whole Common Share) over three years.

(3) The exercise price for the initial grant of options on July 7, 1997 was
based on the IPO price. The exercise price for the grant of options on
December 16, 1997 was the closing price of the Common Shares on the date of
grant.

(4) An annual compound share price appreciation of 5% from the IPO price of
$21.00 and the December 16, 1997 closing price of $33.00 per Common Share
yields a price of $34.21 and $53.75 per Common Share, respectively.

(5) An annual compound share price appreciation of 10% from the IPO price of
$21.00 and the December 16, 1997 closing price of $33.00 per Common Share
yields a price of $54.47 and $85.59 per Common Share, respectively.

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<PAGE> 74

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997

AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ------------------------- ----------------------------
<S> <C> <C>
Timothy H. Callahan................ 0/450,000 0/2,112,500
Michael A. Steele.................. 0/250,000 0/1,584,375
Richard D. Kincaid................. 0/250,000 0/1,584,375
Stanley M. Stevens................. 0/225,000 0/1,584,375
Jeffrey L. Johnson................. 0/183,500 0/1,320,313
</TABLE>

- -------------------------
(1) Represents the market value of a Common Share at December 31, 1997
($31.5625) less the exercise price of in-the-money options.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee members are Messrs. Harper and McKown and Ms.
Rosenberg.

Mr. Zell and Ms. Rosenberg serve as members of the board of directors of
EGI, as well as numerous other non-public companies owned in whole or in part by
Mr. Zell or his affiliates (the "Equity Group Companies"), which companies do
not have compensation committees. Ms. Rosenberg is the President and Chief
Executive Officer of EGI and, with respect to the Equity Group Companies, the
directors and executive officers of those companies include Mr. Zell and Ms.
Rosenberg.

For a description of certain transactions with members of the Board of
Trustees or their affiliates, see "Certain Relationships and Related
Transactions."

LIMITATION OF LIABILITY AND INDEMNIFICATION

Title 8 of the Corporations and Associations Article of the Annotated Code
of Maryland, as amended from time to time (the "Maryland REIT Law"), permits a
Maryland REIT 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 Trust's declaration of trust, as amended from time to time,
and as filed with the State Department of Assessments and Taxation of Maryland
(the "Declaration of Trust"), contains such a provision which eliminates such
liability to the maximum extent permitted by the Maryland REIT Law.

The Declaration of Trust authorizes the Trust, 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 Trust and at the request of the Trust, 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 Trust. The Bylaws obligate the Trust, 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 Trust and at the request of the Trust, 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
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

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<PAGE> 75

Trust to indemnify and advance expenses to any person who served a predecessor
of the Trust in any of the capacities described above and to any employee or
agent of the Trust or a predecessor of the Trust. The Bylaws require the Trust
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 against
reasonable expenses incurred in connection with the proceeding.

The Maryland REIT Law permits a Maryland REIT to indemnify and advance
expenses to its trustees, officers, employees and agents to the same extent as
permitted by the Maryland General Corporation Law, as amended from time to time
(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. The foregoing limitations on indemnification are
expressly set forth in the Bylaws. 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. Under the MGCL, as a condition to
advancing expenses, as required by the Bylaws, the Trust must first receive (a)
a written affirmation by the trustee or officer of his good faith belief that he
has met the standard of conduct necessary for indemnification by the Trust and
(b) a written undertaking by or on his behalf to repay the amount paid or
reimbursed by the Trust if it shall ultimately be determined that the standard
of conduct was not met. In addition, Mr. Dobrowski will be indemnified by GMIMCO
and will be covered by an insurance policy maintained by GM, of which GMIMCO is
a subsidiary, in connection with serving on the Board.

The limited partnership agreement of the Company (the "Partnership
Agreement") also provides for indemnification of the Trust and its officers and
trustees to the same extent that indemnification is provided to officers and
trustees of the Trust in its Declaration of Trust, and limits the liability of
the Trust and its officers and trustees to the Company and its respective
partners to the same extent that the Declaration of Trust limits the liability
of the officers and trustees of the Trust to the Trust and its shareholders.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to trustees, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.

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<PAGE> 76

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

FORMATION TRANSACTIONS

Background. The Trust was formed pursuant to the consolidation (the
"Consolidation") in July 1997 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 office property management
business of EOH and the office property asset management business and the
parking asset management business of EGI and EOH relating to the Properties that
were contributed to the Company in the Consolidation (the "Management Business")
owned by the Equity Group (as defined below). 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 consisted 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
was controlled by Mr. Zell and in which Merrill Lynch & Co. ("Merrill Lynch")
was a limited partner and (iii) a Delaware corporation or Maryland real estate
investment trust (each a "ZML REIT"), as the case may be, that served 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 were several
institutional investor limited partners in ZML Opportunity Partnerships I and II
(collectively, "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 interests were subsequently converted into Common Shares as
described below), and all but one Investor Limited Partner (in ZML Opportunity
Partnership II) elected to do so.

Consolidation. In advance of or simultaneous with the IPO, the Trust and
the Company engaged in the transactions described below, which were designed to
consolidate the ownership of the Office Properties, Parking Facilities and the
Management Business, to facilitate the IPO and to enable the Trust 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 that comprised the Company's initial
portfolio, contributed to the Company all of their interests in such
Office Properties and Parking Facilities.

- The ZML REITs (each a majority or sole limited partner of a ZML
Opportunity Partnership) merged into the Trust, with the Trust succeeding
to their interest in, and also becoming the managing general partner of,
the ZML Opportunity Partnerships.

- 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, contributed to the Company substantially all
of the interests in the Management Business.

- Shareholders in the ZML REITs received Common Shares in exchange for
their interests in the ZML REITs.

- Partners in the ZML Opportunity Partnerships (including the Trust as the
successor to the ZML REITs) received Units (to be distributed over the
two-year period ending July 11, 1999). Such Units are intended to
correspond in value to, and be exchangeable commencing two years
following the closing of the IPO for, Common Shares or, at the Trust's
option, cash equal to the fair market value of such Common Shares.

- Units in the Company were issued to the Equity Group in exchange for the
Management Business, which Units will be exchangeable for Common Shares,
or, at the Trust's option, the cash equivalent thereof, commencing one
year following the closing of the IPO.

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<PAGE> 77

- The Management Business made a distribution to the Equity Group Owners of
cash on hand from pre-closing operations, which funds were not acquired
by the Company pursuant to the Consolidation. Affiliates of Mr. Zell
received approximately $11.4 million of such distribution.

- The Company and EOH transferred the Managed Property Business to EOP
Management Company, in which the Company now owns nonvoting stock
representing 95% of the equity interest and EOH owns all of the voting
stock, representing 5% of the equity interest.

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 Trust's business, including, but not limited
to, financial and accounting services, tax services, investor relations, and
other services. The Company paid approximately $5,272,100, $12,684,700 and
$12,786,000 during the three months ended March 31, 1998 and the years ended
December 31, 1997 and 1996, respectively, to EGI and its affiliates for such
office space and services, which amounts were calculated to approximate a market
rental rate for the office space and the actual cost of providing these
services. The independent members of the Board of Trustees of the Trust 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 $69,700, $2,959,600, $3,471,500
and $2,657,500 for the three months ended March 31, 1998 and the years ended
December 31, 1997, 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 lease certain Parking Facilities 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, 1998 and the years ended
December 31, 1997, 1996 and 1995 under these lease agreements was approximately
$3,090,700, $11,049,000, $3,161,500 and $1,691,600, respectively. 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 $4,386,500, $30,322,500 and
$8,603,600 for the three months ended March 31, 1998 and the years ended
December 31, 1997 and 1996, respectively.

WRIGHT RUNSTAD ACQUISITION

In connection with the Wright Runstad Acquisition, H. Jon Runstad was
elected as a trustee of the Trust effective January 1, 1998. Mr. Runstad
received, directly and indirectly, 552,968 Units in exchange for his interest in
the ten Office Properties and WRALP. Also, Thomas E. Dobrowski, a trustee of the
Trust, is the managing director of real estate and alternative investments of
GMIMCO, an investment advisor to several pension funds of GM and its
subsidiaries and to several clients also controlled by GM, including First
Plaza, which received $192.4 million in cash, 3,435,688 Common Shares and
warrants to purchase 3,350,000

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<PAGE> 78

Common Shares in exchange for First Plaza's interest in the Office Properties
acquired in the Wright Runstad Acquisition.

MISCELLANEOUS

In March 1997, the general 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.

EOP Management Company has entered 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 in Connection with Formation and Business
of the Trust and the Company." Income recognized for similar services rendered
for the three months ended March 31, 1998 and the years ended December 31, 1997,
1996, and 1995, was approximately $1,161,400, $4,949,600, $5,120,000, and
$5,899,000, respectively.

Rosenberg & Liebentritt, P.C., a law firm in which Ms. Rosenberg, a
trustee, was a principal until September 11, 1997, received legal fees from the
Trust of $2,215,900, $3,005,700, $3,480,500 and $3,230,100 for the three months
ended March 31, 1998 and the years ended December 31, 1997, 1996 and 1995,
respectively.

Certain services for the Company's tenants that may not be permissibly
undertaken by a REIT are conducted through Tenant Services Corp. owned entirely
by affiliates of the Equity Group Owners. The Company pays Tenant Services Corp.
a fee for such services. The Company has no control over, or ownership interest
in, Tenant Services Corp., which operates as an independent contractor. The
Company may terminate such services at any time upon 30-days' notice.

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<PAGE> 79

POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

The following is a discussion of the policies with respect to investments,
financing and certain other activities of the Company and the Trust. These
policies are determined by the Board of Trustees and may be amended or revised
from time to time at the discretion of the Board without notice to or a vote of
the Trust's shareholders, or the limited partners of the Company, 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. All of the
investment activities of the Trust are conducted through the Company. The
Company's investment objectives are to increase cash flow and the value of the
Properties and to acquire established income-producing office properties and
parking facilities 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 Company 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,
which may include markets outside 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 Trust'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 two 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. 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. Although the Company has no current intention of
making such an investment, the Company also may legally 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, subject to
the gross income and asset tests necessary for REIT qualification. 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 Trust 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 imposed on the
Company under the Credit Facilities and the Indenture, 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 Trust's Debt to Market Capitalization Ratio is equal to
the total consolidated and unconsolidated debt of the Company as a percentage of
the market value of outstanding Common Shares, Preferred Shares and Units (not
owned by the Trust) plus total consolidated and unconsolidated debt, but
excluding (i) all nonrecourse consolidated debt in excess of the Company's
proportionate share of such debt

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and (ii) all nonrecourse unconsolidated debt of partnerships in which the Trust
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 Trust and 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 Declaration of Trust, the Bylaws or
the Partnership Agreement. To the extent that the Trust determines to obtain
additional capital, the Trust may issue equity securities, cause the Company to
issue additional Units or debt securities, 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 Company is in
existence, the net proceeds of all equity capital raised by the Trust will be
contributed to the Company in exchange for additional Units in the Company,
which will dilute the ownership interest, if any, of the Equity Group and any
other holders of Units.

It is the Trust's policy that it will not incur indebtedness other than
short-term trade, employee compensation, distributions payable or similar
indebtedness that will be paid in the ordinary course of business, and that
indebtedness shall instead be incurred by the Company to the extent necessary to
fund the business activities conducted by the Company and its Subsidiaries. To
the extent that the Trust as managing general partner of the Company determines
to obtain debt financing in addition to the existing mortgage indebtedness, the
Company intends to do so generally through mortgages on its Properties, the
Credit Facilities and offerings similar to the February 1998 Notes Offering;
however, the Trust may cause the Company to issue additional debt securities in
the future. Such indebtedness may be recourse, nonrecourse or
cross-collateralized and may contain cross-default provisions. The net proceeds
of any debt securities issued directly by the Trust (rather than by the Company)
will be lent to the Company on substantially the same terms and conditions as
are incurred by the Trust. 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 Credit Facilities, 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, 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 TRUST. 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 Trust and the Trust's shareholders. See
"Risk Factors -- Conflicts of Interest Could Result In Decisions Not In The
Company's Best Interest." Under Maryland law, contracts or other transactions
between the Trust 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 Trust and its trustees. The Trust believes that this
procedure and Mr. Zell's noncompetition agreement will help to eliminate or
minimize certain potential conflicts of interest. Pursuant to the Bylaws,
without the approval of a majority of the disinterested trustees, the Trust and
its Subsidiaries will not (i) acquire from or sell to any trustee, officer or
employee of the Trust, or any entity in which a trustee, officer or employee of
the Trust 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 Trust or its

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<PAGE> 81

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 Trust and its Subsidiaries. The
foregoing does not apply to the Noncontrolled Subsidiaries.

POLICIES APPLICABLE TO ALL TRUSTEES. Under Maryland law, each trustee is
obligated to offer to the Trust any opportunity (with certain limited
exceptions) which comes to him or her and which the Trust 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 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 has 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 $12,684,700 and
$12,786,000 during the years ended December 31, 1997 and 1996, respectively, to
EGI and its affiliates for such office space and services, which amounts were
calculated to approximate a market rental rate for the office space and the
actual cost of providing these services. The independent members of the Board of
Trustees annually review and approve the rates charged by EGI for services
rendered to the Company.

POLICIES WITH RESPECT TO OTHER ACTIVITIES

The Trust and the Company may, but do 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 Trust will make
investments only through the Company or through Noncontrolled Subsidiaries. The
Trust will have authority to offer Common Shares or other equity or debt
securities of the Trust in exchange for property and to repurchase or otherwise
reacquire Common Shares or any other securities and may engage in such
activities in the future. Similarly, the Company may offer additional Units or
other equity interests in the Company that are exchangeable into Common Shares
or Preferred Shares in exchange for property. The Company also may make loans to
joint ventures in which it may or may not participate in the future. Neither the
Trust nor the Company will engage in trading, underwriting or the agency
distribution or sale of securities of other issuers. At all times, the Trust
intends to cause the Company 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 Trust to continue to qualify as a REIT. The Trust's policies
with respect to such activities may be reviewed and modified from time to time
by the Board of Trustees without notice to holders of the Notes.

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<PAGE> 82

PRINCIPAL SHAREHOLDERS OF THE TRUST

The following table sets forth certain information regarding the beneficial
ownership of Common Shares (or Common Shares for which Units are exchangeable)
as of March 1, 1998 by (i) each trustee of the Trust, (ii) each named executive
officer of the Trust, (iii) all trustees and officers of the Trust as a group
and (iv) each person or entity which is the beneficial owner of 5% or more of
the outstanding Common Shares. 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 PERCENTAGE
COMMON SHARES PERCENTAGE OF ALL
AND UNITS OF ALL COMMON SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON SHARES(1) AND UNITS(2)
------------------------ ------------------ ---------------- -------------
<S> <C> <C> <C>
State Street Bank & Trust Co., as
trustee(3).............................. 14,480,472 5.79% 5.19%
Samuel Zell(4)(5)......................... 8,388,014 3.27 3.00
Timothy H. Callahan(4)(6)................. 514,109 * *
Michael A. Steele(4)...................... 51,886 * *
Richard D. Kincaid(4)..................... 49,702 * *
Stanley M. Stevens(4)(7).................. 350,255 * *
Jeffrey L. Johnson(4)..................... 12,995 * *
Sheli Z. Rosenberg(4)(8).................. 8,058,059 3.14 2.88
Thomas E. Dobrowski(9).................... 50,583 * *
James D. Harper(10)....................... 98,466 * *
Peter Linneman(11)........................ 53,933 * *
Jerry M. Reinsdorf(12).................... 54,209 * *
William M. Goodyear(13)................... 54,224 * *
David K. McKown(14)....................... 54,221 * *
H. Jon Runstad(15)(16).................... 4,348,945 1.71 1.56
Edwin N. Sidman(17)(18)................... 1,214,532 * *
FMR Corp.(19)............................. 14,091,933 5.64 5.05
All trustees and executive officers as a
group (15 persons)...................... 14,809,826 5.66% 5.30%
---------- ---- ----
</TABLE>

- ---------------
* Less than 1%.

(1) Assumes Common Shares outstanding as of March 1, 1998. Assumes that all
Units and/or warrants beneficially held by the identified person (and no
other person) are redeemed and/or exchanged for Common Shares.

(2) Assumes a total of 279,190,093 Common Shares and Units outstanding as of
March 1, 1998 (250,030,403 Common Shares and 29,159,690 Units). Assumes
that all outstanding Units are redeemed for Common Shares.

(3) Includes 14,480,472 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, Massachusetts 02171.

(4) The business address for this shareholder is Two North Riverside Plaza,
Chicago, Illinois 60606.

(5) Includes 7,886,675 Common Shares (assuming exchange of 6,048,130 Units)
held by the ZML Partners, ZFT Partnership, EGI Holdings, Inc., EGIL
Investments, Inc., Samstock/ZFT, L.L.C., Samstock/SZRT, L.L.C., and
Samstock/Alpha, L.L.C., which may be deemed to be beneficially owned by Mr.
Zell; however, Mr. Zell disclaims beneficial ownership of 3,983,493 Common
Shares, including Units exchangeable for Common Shares.

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<PAGE> 83

(6) Includes 324,816 Common Shares held by the ZML Partners which may be deemed
to be beneficially owned by Mr. Callahan as he is a director and/or
executive officer of such entity; however, Mr. Callahan disclaims
beneficial ownership of 309,433 of such Common Shares.

(7) Includes 324,816 Common Shares held by the ZML Partners which may be deemed
to be beneficially owned by Mr. Stevens as he is a director and/or
executive officer of such entity; however, Mr. Stevens disclaims beneficial
ownership of 322,968 of such Common Shares, including Units exchangeable
for Common Shares.

(8) Includes 7,886,675 Common Shares (assuming exchange of 6,048,130 Units)
held by the ZML Partners, ZFT Partnership, EGI Holdings, Inc., EGIL
Investments, Inc., Samstock/ZFT, L.L.C., Samstock/SZRT, L.L.C., and
Samstock/Alpha, L.L.C., which may be deemed to be beneficially owned by Ms.
Rosenberg as she is a director and/or executive officer of such entities;
however, Ms. Rosenberg disclaims beneficial ownership of 7,886,675 of such
Common Shares, including Units exchangeable for Common Shares.

(9) The business address for this trustee is General Motors Investment
Management Corporation, 767 5th Avenue, 16th Floor, New York, New York
10153.

(10) The business address for this trustee is JDH Realty Company, 3250 Mary
Street, Suite 206, Coconut Grove, Florida 33133.

(11) The business address for this trustee 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 is Chicago White Sox, 333 W. 35th
Street, Chicago, Illinois 60616.

(13) The business address for this trustee is Bank of America Illinois, 231
South LaSalle Street, Suite 1322, Chicago, Illinois 60697.

(14) The business address for this trustee is BankBoston, N.A., 100 Federal
Street, Boston, Massachusetts 02110.

(15) The business address for this trustee is Wright Runstad & Company, 1191
Second Avenue, Suite 2000, Seattle, Washington 98101.

(16) Includes 4,265,700 Common Shares (assuming exchange of 2,615,700 Units and
exercise of 1,650,000 warrants to purchase Common Shares) held by Wright
Runstad Asset Management L.P. and Wright Runstad Holdings L.P., which may
be deemed to be beneficially owned by Mr. Runstad; however, Mr. Runstad
disclaims beneficial ownership of 2,144,848 Common Shares, including Units
and 1,374,671 warrants exchangeable for Common Shares.

(17) The business address for this trustee is 50 Rowes Wharf, Boston,
Massachusetts 02110.

(18) Includes 898,605 Common Shares (assuming exchange of 652,650 Units) held by
The Leventhal Family Limited Partnership (the "Leventhal Partnership").
Paula Sidman, Mr. Sidman's spouse, is a general partner of the Leventhal
Partnership, with a one-third interest. Mrs. Sidman disclaims beneficial
ownership of the Common Shares and Units beneficially owned by the
Leventhal Partnership, except for 81,895 Common Shares and 217,550 Units in
which she has a pecuniary interest.

(19) Includes 14,091,933 Common Shares held by FMR Corp. for the benefit of its
clients by its separate accounts, externally managed accounts, registered
investment companies, subsidiaries and/or other affiliates. FMR Corp. may
have direct or indirect voting and/or investment discretion over these
Common Shares. The business address of this shareholder is 82 Devonshire
Street, Boston, Massachusetts 02109.

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<PAGE> 84

THE EXCHANGE OFFER

PURPOSE OF THE EXCHANGE OFFER

The Exchange Offer is designed to provide holders of Private Notes the
opportunity to acquire Exchange Notes which, unlike the Private Notes, will be
freely transferable under the Securities Act at all times (subject to certain
exceptions relating to the nature of the holders, as described below under the
caption "-- Resale of Exchange Notes"). The $1.25 Billion Exchange Notes and the
Exchange MOPPRS will only be transferable in blocks of at least $100,000
aggregate principal amount.

The $1.25 Billion Notes were sold by the Company on February 18, 1998 to
the Initial Purchasers (as defined in the Glossary) pursuant to a purchase
agreement, dated as of February 12, 1998, among the Company and the Initial
Purchasers. The MOPPRS were sold by the Company on February 18, 1998 to Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as Initial Purchaser, pursuant to a
purchase agreement, dated as of February 12, 1998, between the Company and the
Initial Purchaser. The Initial Purchasers subsequently sold the $1.25 Billion
Notes and the MOPPRS to "qualified institutional buyers" ("QIBs"), as defined in
Rule 144A under the Securities Act ("Rule 144A"), in reliance on Rule 144A. As a
condition to the sale of the $1.25 Billion Notes and the MOPPRS, the Company and
the Initial Purchasers entered into a registration rights agreement, dated as of
February 12, 1998 (the "Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement, the Company agreed that it would use its
reasonable best efforts to (i) cause an exchange offer registration statement
under the Securities Act with respect to the $1.25 Billion Exchange Notes and
the Exchange MOPPRS to be filed with the Commission and (ii) cause such
registration statement to remain effective under the Securities Act until the
closing of the Exchange Offer or such date as is otherwise required by law to
consummate the Exchange Offer on or before August 17, 1998. A copy of the
Registration Rights Agreement has been filed as an exhibit to the registration
statement of which this Prospectus is a part (the "Registration Statement"). If,
(i) because of any change in law or in currently prevailing interpretations of
the staff of the Commission, the Company is not permitted to effect the Exchange
Offer, (ii) the Exchange Offer is not consummated within 180 days of the Closing
Date, or (iii) in the case of any holder that participates in the Exchange
Offer, such holder does not receive Exchange Notes on the date of the exchange
that may be sold without restriction under state and federal securities laws
(other than due solely to the status of such holder as an affiliate of the
Company within the meaning of the Securities Act or as a broker-dealer), then in
each case, the Company will (x) promptly deliver to the holders written notice
thereof and (y) at the Company's sole expense (a) as promptly as practicable
(but in no event more than 60 days after so required or requested pursuant to
the Registration Rights Agreement), file a shelf registration statement covering
resales of the $1.25 Billion Notes and the MOPPRS (the "Shelf Registration
Statement"), (b) use its reasonable best efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act and (c) use its
reasonable best efforts to keep effective the Shelf Registration Statement until
the earlier of two years (or, if Rule 144(k) is amended to provide a shorter
restrictive period, such shorter period) after the Closing Date or such time as
all of the applicable Notes have been sold thereunder. If the Company fails to
consummate the Exchange Offer with respect to the $1.25 Billion Notes and the
MOPPRS prior to August 17, 1998 or, if applicable, fails to fulfill its
obligations under the Registration Rights Agreement to obtain and maintain
effectiveness of the Shelf Registration Statement during specified time periods,
then liquidated damages will accrue on the principal amounts of the $1.25
Billion Notes and the MOPPRS at an annual rate of 0.50%.

The $180 Million Notes were sold by the Company in a private placement on
September 3, 1997 to Teachers Insurance and Annuity Association of America
("Teachers") pursuant to a Note Purchase Agreement, dated September 2, 1997,
between the Company and Teachers (the "Teachers Purchase Agreement"). Pursuant
to the Teachers Purchase Agreement, the Company agreed that, subject to and
following an additional offering of senior notes of the Company, it would file
with the Commission an exchange offer registration statement under the
Securities Act with respect to the Exchange Notes and use its best efforts to
cause such registration statement to be declared effective under the Securities
Act and remain effective until the closing of the Exchange Offer or such date as
is otherwise required by law to consummate the Exchange Offer on or before
, 1998. A copy of the Teachers Purchase Agreement has been filed
as an exhibit to the Registration Statement. If (i) the Company determines that
such an exchange offer
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<PAGE> 85

registration is not available or may not be consummated as soon as practicable
after the Expiration Date because it would violate applicable law or an
applicable interpretation of the staff of the Commission or (ii) in the opinion
of counsel to the holders of not less than 51% of the aggregate principal amount
of the outstanding $180 Million Notes, a registration statement must be filed
and a prospectus must be delivered in connection with any offering or sale of
$180 Million Notes, then, in each case, the Company will use its best efforts to
cause to be filed, as soon as practicable after such determination by, or notice
of opinion of counsel is given to, the Company, a shelf registration statement
covering resales of the $180 Million Notes and to have such shelf registration
statement declared effective by the Commission.

The Exchange Offer is intended to satisfy the Company's obligations under
the Registration Rights Agreement and the Teachers Purchase Agreement.

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Private
Notes validly tendered and not withdrawn prior to the Expiration Date.

The Company will issue $1.25 Billion Exchange Notes, Exchange MOPPRS and
$180 Million Exchange Notes in exchange for an equal aggregate principal amount
of outstanding $1.25 Billion Notes, MOPPRS and $180 Million Notes, respectively,
validly tendered pursuant to the Exchange Offer and not withdrawn prior to the
Expiration Date. Private Notes may only be tendered in integral multiples of
$1,000 principal amount and, in the case of the $1.25 Billion Notes and the
Exchange MOPPRS, minimum denominations of $100,000 aggregate principal amount.

The form and terms of the Exchange Notes are the same as the form and terms
of the Private Notes except that (i) the Exchange Notes have been registered
under the Securities Act and, therefore, will not bear legends restricting the
transfer thereof and (ii) holders of the Exchange Notes will not be entitled to
any of the registration rights of holders of Private Notes under the
Registration Rights Agreement or the Teachers Purchase Agreement, as applicable,
which rights will terminate upon the consummation of the Exchange Offer. The
Exchange Notes will evidence the same indebtedness as the Private Notes (which
they replace) and will be issued under, and be entitled to the benefits of, the
Indenture, which also authorized the issuance of the Private Notes, such that
each of the 2003 Notes, the 6.375% Exchange Notes due 2003, the 2005 Notes, the
6.625% Exchange Notes due 2005, the 2008 Notes, the 6.750% Exchange Notes due
2008, the 2018 Notes, the 7.250% Exchange Notes due 2018, the MOPPRS, the
Exchange MOPPRS, the 2004 Senior Notes, the 7.24% Exchange Notes due 2004, the
2005 Senior Notes, the 7.36% Exchange Notes due 2005, the 2006 Senior Notes, the
7.44% Exchange Notes due 2006, the 2007 Senior Notes and the 7.41% Exchange
Notes due 2007 will respectively be treated as a single series under the
Indenture.

In the Letter of Transmittal, holders of $1.25 Billion Notes or MOPPRS, as
the case may be, whose $1.25 Billion Notes or MOPPRS are accepted for exchange
will waive the right to receive any payment in respect of interest on the $1.25
Billion Notes or MOPPRS, as the case may be, accrued from the later of February
18, 1998 or the Interest Payment Date immediately preceding the date of issuance
of the $1.25 Billion Exchange Notes or Exchange MOPPRS, as applicable, to the
date of issuance of the $1.25 Billion Exchange Notes or Exchange MOPPRS, as
applicable. In the Letter of Transmittal, holders of $180 Million Notes whose
$180 Million Notes are accepted for exchange will waive the right to receive any
payment in respect of interest on the $180 Million Notes accrued from the
Interest Payment Date immediately preceding the date of issuance of the $180
Million Exchange Notes (currently expected to be the Interest Payment Date on
March 1, 1998) to the date of issuance of the $180 Million Exchange Notes.

As of the date of this Prospectus, $300 million in aggregate principal
amount of the 2003 Notes is outstanding, $400 million in aggregate principal
amount of the 2005 Notes is outstanding, $300 million in aggregate principal
amount of the 2008 Notes is outstanding, $250 million in aggregate principal
amount of the 2018 Notes is outstanding, $250 million in aggregate principal
amount of the MOPPRS is outstanding, $30 million in aggregate principal amount
of the 2004 Senior Notes is outstanding, $50 million in aggregate principal
amount of the 2005 Senior Notes is outstanding, $50 million in aggregate
principal amount of the
80
<PAGE> 86

2006 Senior Notes is outstanding and $50 million in aggregate principal amount
of the 2007 Senior Notes is outstanding. Only a registered holder of the Private
Notes (or such holder's legal representative or attorney-in-fact), as reflected
on the records of the Trustee under the Indenture, may participate in the
Exchange Offer. There will be no fixed record date for determining registered
holders of the Private Notes entitled to participate in the Exchange Offer.

Holders of the Private Notes do not have any appraisal or dissenters'
rights under the Delaware Revised Uniform Limited Partnership Act or the
Indenture in connection with the Exchange Offer. The Company intends to conduct
the Exchange Offer in accordance with the provisions of the Registration Rights
Agreement, the applicable provisions of the Teachers Purchase Agreement and the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations of the Commission thereunder.

The Company shall be deemed to have accepted validly tendered Private Notes
when, and if, the Company has given oral or written notice of acceptance to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Private Notes for the purpose of receiving the Exchange Notes from the
Company.

Holders who tender Private Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "-- Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.

In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will notify the registered
holders through a press release or other public announcement thereof, each prior
to 9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.

The Company reserves the right, in its sole discretion, (i) to delay
accepting any Private Notes, (ii) to extend the Exchange Offer or (iii) if, in
the opinion of counsel for the Company, the consummation of the Exchange Offer
would violate any applicable law, rule or regulation or any applicable
interpretation of the staff of the Commission, to terminate or amend the
Exchange Offer by giving oral or written notice of such delay, extension,
termination or amendment to the Exchange Agent. Any such delay, extension,
termination or amendment will be followed as promptly as practicable by notice
thereof to the registered holders through a press release or other public
announcement. If the Exchange Offer is amended in a manner determined by the
Company to constitute a material change, the Company will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered holders, and the Company will extend the Exchange Offer to the extent
required by the rules promulgated under the Exchange Act.

Without limiting the manner in which the Company may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than as required by
law or by making a timely release to an appropriate news agency.

INTEREST ON THE EXCHANGE NOTES AND ACCRUED INTEREST ON THE PRIVATE NOTES

commencing August 15, 1998. The 7.24% Exchange Notes due 2004, the 7.36%
Exchange Notes due 2005, the 7.44% Exchange Notes due 2006 and the 7.41%
Exchange Notes due 2007 will bear interest at an annual rate of 7.24%, 7.36%,
7.44% and 7.41%, respectively, payable semi-annually in arrears on March 1 and
September 1 of each year, commencing September 1, 1998. The Exchange Notes will
bear interest from their date of issuance. Interest on the Private Notes which
are exchanged for the Exchange Notes will cease to accrue on the day preceding
the date of issuance of the Exchange Notes. Interest payable on the first
Interest Payment Date with respect to the Exchange Notes will include accrued
but unpaid interest due on the Private Notes (which they replace) for the period
from the later of (i) with respect to the $1.25 Billion Exchange Notes and the
Exchange MOPPRS, February 18, 1998 or (ii) the Interest Payment Date immediately
preceding the date of issuance of the applicable Exchange Notes (currently
expected to be the Interest Payment Date of March 1, 1998 with respect to the
$180 Million Notes) to the date of such issuance and will be paid to the persons
in whose names the applicable Exchange Notes are registered in the security
register applicable to the Exchange Notes as of the close of business on the
date 15 days prior to such payment date.

RESALE OF THE EXCHANGE NOTES

Based upon interpretations by the staff of the Commission set forth in
certain no-action letters issued to third parties, the Company believes that a
holder who exchanges Private Notes for Exchange Notes in the ordinary course of
business, who is not participating, does not intend to participate, and has no
arrangement with any person to participate, in a distribution of the Exchange
Notes, and who is not an "affiliate" of the Company within the meaning of Rule
405 of the Securities Act, will be allowed to resell Exchange Notes to the
public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. If, however, any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in the distribution of the Exchange Notes, such holder cannot rely
on the position of the staff of the Commission enumerated in certain no-action
letters issued to third parties and instead must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction, unless an exemption from registration is otherwise
available. In addition, each broker-dealer that receives Exchange Notes for its
own account in exchange for Private Notes acquired by such broker-dealer as a
result of market-making or other trading activities must acknowledge that it
will deliver a prospectus in connection with any resale of Exchange Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Such broker-dealer may
use this Prospectus in connection with resales of any Exchange Notes received in
exchange for Private Notes acquired by such broker-dealer (other than Private
Notes acquired directly from the Company) as a result of market-making or other
trading activities. Pursuant to the Registration Rights Agreement, the Company
has agreed to make this Prospectus available to any such broker-dealer that
requests copies of such Prospectus in the Letter of Transmittal for use in
connection with any such resale for a period not to exceed 180 days after the
closing of the Exchange Offer. The Company will undertake to update such
Prospectus during such 180-day period. See "Plan of Distribution."

PROCEDURES FOR TENDERING

Only a registered holder of Private Notes may tender such Private Notes in
the Exchange Offer. To tender in the Exchange Offer, a holder of Private Notes
must complete, sign and date the Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by the Letter of Transmittal,
and mail or otherwise deliver such Letter of Transmittal or such facsimile or an
Agent's Message (as defined below) to the Exchange Agent at the address set
forth below under "-- Exchange Agent" for receipt prior to the Expiration Date.
In addition, prior to the Expiration Date, either (i) certificates for such
Private Notes must be received by the Exchange Agent along with the Letter of
Transmittal, (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Private Notes, if such procedure is available, into the
Exchange Agent's account at The Depository Trust Company, New York, New York
("DTC"), pursuant to the procedure for book-entry transfer described below, must
be received by the Exchange Agent or (iii) the holder must comply with the
guaranteed delivery procedures described below.

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<PAGE> 88

A tender of Private Notes by a holder that is not withdrawn prior to the
Expiration Date will constitute an agreement between such holder and the Company
in accordance with the terms and subject to the conditions set forth herein and
in the Letter of Transmittal.

THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS
USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. DO NOT SEND THE LETTER OF TRANSMITTAL OR ANY PRIVATE
NOTES TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.

Any beneficial owner of the Private Notes whose Private Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the registered holder
promptly and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such owner's own
behalf, such owner either must make appropriate arrangements to register
ownership of the Private Notes in such owner's name or must obtain a properly
completed bond power from the registered holder prior to completing and
executing the Letter of Transmittal and delivering such owner's Private Notes.
The transfer of registered ownership may take considerable time.

Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "-- Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution (as defined below) unless the Private Notes tendered
pursuant thereto are tendered (i) by a registered holder to whom Exchange Notes
are to be issued directly and who has not completed the box titled "Special
Delivery Instructions" nor the box titled "Special Registration Instructions" on
the Letter of Transmittal or (ii) for the account of an Eligible Institution. In
the event that signatures on a Letter of Transmittal or a notice of withdrawal,
as the case may be, are required to be guaranteed, such guarantee must be made
by a member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an
"Eligible Institution").

If the Letter of Transmittal is signed by a person other than the
registered holder of any Private Notes listed therein, such Private Notes must
be endorsed or accompanied by a properly completed bond power, signed by such
registered holder exactly as such registered holder's name appears on such
Private Notes.

If the Letter of Transmittal or any Private Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.

The Exchange Agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may utilize DTC's Automated Tender Offer
Program ("ATOP") to tender Private Notes. Accordingly, participants in DTC's
ATOP may, in lieu of physically completing and signing the Letter of Transmittal
and delivering it to the Exchange Agent, electronically transmit their
acceptance of the Exchange Offer by causing DTC to transfer the Private Notes to
the Exchange Agent in accordance with DTC's ATOP procedures for transfer. DTC
will then send an Agent's Message to the Exchange Agent.

The term "Agent's Message" means a message transmitted by DTC, received by
the Exchange Agent and forming part of the Book-Entry Confirmation, which states
that DTC has received an express acknowledgment from a participant in DTC's ATOP
that is tendering Private Notes which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal (or, in the case of an Agent's Message
relating to guaranteed delivery, that such

83
<PAGE> 89

participant has received and agrees to be bound by the applicable notice of
guaranteed delivery), and that the agreement may be enforced against such
participant.

DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Private Notes will be resolved
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Private
Notes not properly tendered or any Private Notes the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any defects, irregularities or conditions of
tender as to particular Private Notes. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the instructions in the Letter
of Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Private Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify holders of defects or irregularities with respect to tenders
of Private Notes, none of the Company, the Exchange Agent or any other person
shall incur any liability for failure to give such notification. Tenders of
Private Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.

While the Company has no present plan to acquire any Private Notes that are
not tendered in the Exchange Offer, the Company reserves the right in its sole
discretion to purchase or make offers for any Private Notes that remain
outstanding subsequent to the Expiration Date and, to the extent permitted by
applicable law, to purchase Private Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offer.

By tendering, each holder of Private Notes will represent to the Company
that, among other things, (i) any Exchange Notes acquired in exchange for
Private Notes tendered thereby are being acquired in the ordinary course of
business of the person receiving such Exchange Notes, (ii) the person receiving
such Exchange Notes is not engaging in and does not intend to engage in a
distribution of the Exchange Notes, (iii) the person receiving such Exchange
Notes does not have an arrangement or understanding with any person to
participate in the distribution of such Exchange Notes and (iv) neither the
holder nor any other person receiving the Exchange Notes from the holder is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company. If
the holder is a broker-dealer that will receive Exchange Notes for its own
account in exchange for Private Notes that were acquired as a result of
market-making activities or other trading activities, such holder will be
required to acknowledge in the Letter of Transmittal that such holder will
deliver a prospectus in connection with any resale of such Exchange Notes. Such
acknowledgement and prospectus delivery by such holder will not be deemed to
constitute an admission by such holder that it is an "underwriter" within the
meaning of the Securities Act. By tendering, each holder of Private Notes will
be required to acknowledge that, if it is participating in the Exchange Offer
for the purpose of distributing the Exchange Notes, (i) it cannot rely on the
position of the staff of the Commission in certain no-action letters and, in the
absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the Exchange Notes, in which case the
registration statement must contain the selling security holder information
required by Item 507 or Item 508, as applicable, of Regulation S-K of the
Securities Act and (ii) failure to comply with such requirements in such
instance could result in such holder incurring liability under the Securities
Act for which it is not indemnified by the Company.

RETURN OF PRIVATE NOTES

If any tendered Private Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Private Notes are
withdrawn, such unaccepted, withdrawn or non-exchanged Private Notes will be
returned without expense to the tendering holder thereof (or, in the case of
Private Notes tendered by book-entry transfer into the Exchange Agent's account
at DTC pursuant to the book-entry transfer procedures described below, such
Private Notes will be credited to an account maintained with DTC) as promptly as
practicable.

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BOOK-ENTRY TRANSFER

The Exchange Agent will make a request to establish an account with respect
to the Private Notes with DTC for purposes of the Exchange Offer within two
business days after the date of this Prospectus, and any financial institution
that is a participant in DTC's system may make book-entry delivery of Private
Notes by causing DTC to transfer such Private Notes into the Exchange Agent's
account at DTC in accordance with DTC's procedures for transfer. However,
although delivery of Private Notes may be effected through book-entry transfer
at DTC, the Letter of Transmittal or facsimile thereof, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth below
under "-- Exchange Agent" on or prior to the Expiration Date or pursuant to the
guaranteed delivery procedures described below.

GUARANTEED DELIVERY PROCEDURES

Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available, (ii) who cannot deliver their Private Notes, the
Letter of Transmittal or any other required documents to the Exchange Agent
prior to the Expiration Date or (iii) who are unable to complete the procedure
for book-entry transfer on a timely basis, may effect a tender if:

(a) The tender is made through an Eligible Institution;

(b) Prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed notice of
guaranteed delivery (a "Notice of Guaranteed Delivery") substantially in
the form provided by the Company (by facsimile transmission, mail or hand
delivery) setting forth the name and address of the holder, the certificate
number(s) of such Private Notes and the principal amount of Private Notes
tendered, stating that the tender is being made thereby and guaranteeing
that, within three (3) New York Stock Exchange, Inc. ("NYSE") trading days
after the Expiration Date, either (x) the Letter of Transmittal (or
facsimile thereof) together with the Private Notes (or a Book-Entry
Confirmation) in proper form for transfer will be deposited by the Eligible
Institution with the Exchange Agent or (y) an Agent's Message will be
properly transmitted to the Exchange Agent; and

(c) Such properly executed Letter of Transmittal (or facsimile
thereof), as well as the certificate(s) for all physically tendered shares
of Private Notes, in proper form for transfer, or Book-Entry Confirmation,
as the case may be, and all other documents required by the Letter of
Transmittal or a properly transmitted Agent's Message, are received by the
Exchange Agent within three (3) NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.

Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.

WITHDRAWAL OF TENDERS

Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date. To withdraw a tender of
Private Notes in the Exchange Offer, a written or facsimile transmission notice
of withdrawal must be received by the Exchange Agent at its address set forth
herein prior to the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having deposited the Private Notes to be
withdrawn, (ii) identify the Private Notes to be withdrawn (including the
certificate number or numbers) and (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such
Private Notes were tendered (including any required signature guarantees). All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, in its sole discretion, whose
determination shall be final and binding on all parties. Any Private Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer, and no Exchange Notes will be issued with respect thereto unless
the Private Notes so withdrawn are validly retendered. Properly withdrawn
Private Notes may be retendered by following one of the procedures described
above under "-- Procedures for Tendering" at any time prior to the Expiration
Date.

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TERMINATION OF CERTAIN RIGHTS

All registration rights under the Registration Rights Agreement and the
Teachers Purchase Agreement accorded to holders of the Private Notes eligible to
participate in the Exchange Offer (and all rights to receive additional interest
due to failure to consummate the Exchange Offer on a timely basis, if the
Exchange Offer is not consummated on or before August 17, 1998, with respect to
the $1.25 Billion Notes and the MOPPRS) will terminate upon consummation of the
Exchange Offer except with respect to the Company's duty to keep the
Registration Statement effective until the closing of the Exchange Offer and,
for a period of 180 days after the closing of the Exchange Offer, to provide
copies of the latest version of the Prospectus to any broker-dealer that
requests copies of such Prospectus in the Letter of Transmittal for use in
connection with any resale by such broker-dealer of Exchange Notes received for
its own account pursuant to the Exchange Offer in exchange for Private Notes
that were acquired for its own account as a result of market-making or other
trading activities.

EXCHANGE AGENT

State Street Bank and Trust Company has been appointed as Exchange Agent
for the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:

By Facsimile Transmission:
(For Eligible Institutions Only)
(617) 664-5290

Confirm by Telephone:
(617) 664-5249

<TABLE>
<CAPTION>
By Mail: By Overnight Delivery: By Hand:
<S> <C> <C>
State Street Bank and Trust State Street Bank and Trust State Street Bank and Trust
Company Company Company
P.O. Box 778 Two International Place Two International Place
Boston, Massachusetts 4th Floor 4th Floor
02102-0778 Boston, Massachusetts 02110 Boston, Massachusetts 02110
Attention: Corporate Trust Attention: Corporate Trust Window Attention: Corporate Trust
Window Window
</TABLE>

State Street Bank and Trust Company also serves as Trustee under the
Indenture.

FEES AND EXPENSES

The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitations
may be made by telegraph, facsimile transmission, telephone or in person by
officers and regular employees of the Company and their affiliates.

The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable, out-of-pocket expenses in connection therewith.

The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$ . Such expenses include registration fees, fees and expenses of the
Exchange Agent and the Trustee, accounting and legal fees and printing costs,
among others.

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<PAGE> 92

The Company will pay all transfer taxes, if any, applicable to the exchange
of Private Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the Private Notes pursuant to
the Exchange Offer, then the amount of any such transfer tax (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.

CONSEQUENCES OF FAILURE TO EXCHANGE

Participation in the Exchange Offer is voluntary. Holders of the Private
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.

Private Notes that are not exchanged for the Exchange Notes pursuant to the
Exchange Offer will remain "restricted securities" within the meaning of Rule
144(a)(3)(iv) of the Securities Act. Accordingly, such Private Notes may not be
offered, sold, pledged or otherwise transferred except (i) to a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act or
to a person whom the seller reasonably believes is a qualified institutional
buyer purchasing for its own account in a transaction meeting the requirements
of Rule 144A, (ii) to the Company or any subsidiary thereof, (iii) pursuant to
an effective registration statement under the Securities Act or (iv) to
institutional accredited investors for investment purposes and not with a view
to, or for offer or sale in connection with, any distribution in violation of
the Securities Act, in a transaction exempt from the registration requirements
of the Securities Act, and, in each case, in accordance with all other
applicable securities laws and the transfer restrictions set forth in the
Indenture.

ACCOUNTING TREATMENT

For accounting purposes, the Company will recognize no gain or loss as a
result of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the remaining term of the Notes.

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<PAGE> 93

DESCRIPTION OF THE EXCHANGE NOTES

The Exchange Notes will be issued under the Indenture, a copy of which is
filed as an exhibit to the Registration Statement and which will be made
available upon request. The terms of the Exchange Notes include those provisions
contained in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The
Exchange Notes are subject to all such terms, and holders of Exchange Notes are
referred to the Indenture and the Trust Indenture Act for a statement thereof.
The following summary of certain provisions of the Exchange Notes and the
Indenture does not purport to be complete and is subject to and qualified in its
entirety by reference to the actual provisions of the Exchange Notes and the
Indenture. As used in this section, the term "Company" means EOP Operating
Limited Partnership and not any of its Subsidiaries unless otherwise expressly
stated or the context otherwise requires.

GENERAL

Each of the 6.375% Exchange Notes due 2003, the 6.625% Exchange Notes due
2005, the 6.750% Exchange Notes due 2008, the 7.250% Exchange Notes due 2018,
the Exchange MOPPRS, the 7.24% Exchange Notes due 2004, the 7.36% Exchange Notes
due 2005, the 7.44% Exchange Notes due 2006 and the 7.41% Exchange Notes due
2007 constitute a separate series of securities under the Indenture and is
limited to an aggregate principal amount of $300 million, $400 million, $300
million, $250 million, $250 million, $30 million, $50 million, $50 million and
$50 million, respectively. The Exchange Notes will be direct, unsecured and
unsubordinated obligations of the Company and will rank equally with each other
and with all other unsecured and unsubordinated indebtedness of the Company from
time to time outstanding. The Exchange Notes will be effectively subordinated to
mortgages and other secured indebtedness of the Company to the extent of the
value of the property securing such indebtedness. The Exchange Notes also will
be effectively subordinated, in the context of a bankruptcy proceeding, to all
existing and future third-party indebtedness and other liabilities of the
Company's Subsidiaries. As of December 31, 1997, on a Pro Forma Basis, such
secured indebtedness of the Company and its Subsidiaries aggregated
approximately $2.3 billion and the total liabilities of the Company's
Subsidiaries was approximately $5.2 billion. See "Capitalization." Subject to
certain limitations set forth in the Indenture, and as described under
"-- Certain Covenants -- Limitations on Incurrence of Debt" below, the Indenture
will permit the Company to incur additional secured and unsecured indebtedness.
Such additional indebtedness may consist of, but is not limited to, indebtedness
issued under the Indenture.

Unless redeemed prior to maturity as described under "-- Optional
Redemption," the 6.375% Exchange Notes due 2003 will mature on February 15,
2003; the 6.625% Exchange Notes due 2005 will mature on February 15, 2005; the
6.750% Exchange Notes due 2008 will mature on February 15, 2008; the 7.250%
Exchange Notes due 2018 will mature on February 15, 2018; the 7.24% Exchange
Notes due 2004 will mature on September 1, 2004; the 7.36% Exchange Notes due
2005 will mature on September 1, 2005; the 7.44% Exchange Notes due 2006 will
mature on September 1, 2006; and the 7.41% Exchange Notes due 2007 will mature
on September 1, 2007 (each, a "Stated Maturity Date"). The stated maturity date
of the Exchange MOPPRS is February 15, 2012 (also a "Stated Maturity Date");
however, the Exchange MOPPRS are subject to mandatory tender by the holders
thereof on the Remarketing Date for purchase by the Remarketing Dealer or the
Company, as the case may be, as described below. The Exchange Notes are not
subject to any sinking fund provisions.

Except as described under "-- Certain Covenants -- Limitations on
Incurrence of Debt" and "-- Merger, Consolidation or Sale" below, the Indenture
does not contain any other provisions that would limit the ability of the
Company to incur indebtedness or that would afford holders of the Exchange Notes
protection in the event of (i) a highly leveraged or similar transaction
involving the Company, the management of the Company or the Trust, or any
Subsidiary of any of them, (ii) a change of control of the Company or the Trust
or (iii) a reorganization, restructuring, merger or similar transaction
involving the Company that may adversely affect the holders of the Exchange
Notes. In addition, subject to the limitations set forth under "-- Merger,
Consolidation or Sale," the Company may, in the future, enter into certain
transactions such as the sale of all or substantially all of its assets or the
merger or consolidation of the Company that would increase the amount of the
Company's indebtedness or substantially reduce or eliminate

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<PAGE> 94

the Company's assets, which may have an adverse effect on the Company's ability
to service its indebtedness, including the Exchange Notes. The Company and its
management have no present intention of engaging in a highly leveraged or
similar transaction involving the Company.

PRINCIPAL AND INTEREST

The 6.375% Exchange Notes due 2003, the 6.625% Exchange Notes due 2005, the
6.750% Exchange Notes due 2008 and the 7.250% Exchange Notes due 2018 will bear
interest at an annual rate of 6.375%, 6.625%, 6.750% and 7.250%, respectively,
payable semi-annually in arrears on February 15 and August 15 of each year,
commencing August 15, 1998 (each, an "Interest Payment Date"), and on the
applicable Stated Maturity Date or date of earlier redemption or accelerated
payment, as the case may be (each, a "Maturity Date"). The annual interest rate
on the Exchange MOPPRS to the Remarketing Date is 6.376%, payable semi-annually
in arrears on February 15 and August 15 of each year, commencing August 15, 1998
(each, also an "Interest Payment Date") and on the applicable Stated Maturity
Date or date of accelerated payment (each, also a "Maturity Date"). The 7.24%
Exchange Notes due 2004, the 7.36% Exchange Notes due 2005, the 7.44% Exchange
Notes due 2006 and the 7.41% Exchange Notes due 2007 will bear interest at an
annual rate of 7.24%, 7.36%, 7.44% and 7.41%, respectively, payable
semi-annually in arrears on March 1 and September 1 of each year, commencing
September 1, 1998 (each, also an "Interest Payment Date"), and on the applicable
Stated Maturity Date or date of earlier redemption or accelerated payment, as
the case may be (each, also a "Maturity Date"). The Exchange Notes will bear
interest from their date of issuance. Interest on the Private Notes which are
exchanged for the Exchange Notes will cease to accrue on the day preceding the
date of issuance of the Exchange Notes. Interest payable on the first Interest
Payment Date with respect to the Exchange Notes will include accrued but unpaid
interest due on the Private Notes (which they replace) for the period from the
later of (i) with respect to the $1.25 Billion Exchange Notes and the Exchange
MOPPRS, February 18, 1998, and with respect to the $180 Million Exchange Notes,
September 3, 1997, or (ii) the Interest Payment Date immediately preceding the
date of issuance of the Exchange Notes (currently expected to be the Interest
Payment Date of March 1, 1998, with respect to the $180 Million Notes) to the
date of such issuance and will be paid to the persons in whose names the
applicable Exchange Notes are registered in the security register applicable to
the Exchange Notes (the "Holders") as of the close of business on the date 15
days prior to such payment day, regardless of whether such day is a Business
Day, as defined below (each, a "Regular Record Date"). Interest on the Exchange
Notes will be computed on the basis of a 360-day year composed of twelve 30-day
months.

The principal of, and Make-Whole Amount (as defined below), if any, with
respect to, each Exchange Note payable on the applicable Maturity Date will be
paid against presentation and surrender of such Exchange Note at the corporate
trust office of the Trustee, located initially at Two International Place,
Financial Services, Corporate Trust Department, Boston, Massachusetts 02110, or
at the corporate trust window of the Trustee initially maintained at 61
Broadway, Concourse Level, New York, New York 10006, in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.

If any Interest Payment Date or a Maturity Date falls on a day that is not
a Business Day, the required payment shall be made on the next Business Day as
if it were made on the date such payment was due and no interest shall accrue on
the amount so payable for the period from and after such Interest Payment Date
or such Maturity Date, as the case may be, to such next Business Day. "Business
Day" means any day, other than a Saturday or Sunday, on which banking
institutions in New York, New York, and Boston, Massachusetts, are open for
business.

OPTIONAL REDEMPTION

The Exchange Notes other than the Exchange MOPPRS may be redeemed at any
time at the option of the Company, in whole or from time to time in part
(provided that the remaining principal amount of any $1.25 Billion Exchange Note
is at least $100,000), at a redemption price equal to the sum of (i) 100% of the
principal amount of the Exchange Notes being redeemed plus accrued interest
thereon to the redemption date and (ii) the Make-Whole Amount, if any, with
respect to such Exchange Notes (collectively, the
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<PAGE> 95

"Redemption Price"); provided, however, that interest installments due on an
Interest Payment Date which is on or prior to the Redemption Date will be
payable to the Holders of such Exchange Notes (or one or more predecessor
Exchange Notes) as of the close of business on the Record Date preceding such
Interest Payment Date.

If notice has been given as provided in the Indenture and funds for the
redemption of any Exchange Notes called for redemption shall have been made
available on the redemption date referred to in such notice, such Exchange Notes
will cease to bear interest on the date fixed for such redemption specified in
such notice and the only right of the Holders of such Exchange Notes will be to
receive payment of the Redemption Price.

Notice of any optional redemption of any Exchange Notes will be given to
Holders at their addresses, as shown in the security register for the Exchange
Notes, not more than 60 nor less than 30 days prior to the date fixed for
redemption. The notice of redemption will specify, among other items, the
Redemption Price and the principal amount of Exchange Notes held by such Holder
to be redeemed.

If less than all the Exchange Notes are to be redeemed at the option of the
Company, the Company will notify the Trustee at least 45 days prior to giving
notice of redemption (or such shorter period as is satisfactory to the Trustee)
of the series and aggregate principal amount of Exchange Notes to be redeemed
and their redemption date. The Trustee shall select, in such manner as it shall
deem fair and appropriate, Exchange Notes to be redeemed of such series in whole
or in part.

As used herein:

"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Exchange Notes, the excess, if any, of (i)
the aggregate present value as of the date of such redemption or
accelerated payment of each dollar of principal being redeemed or paid and
the amount of interest (exclusive of interest accrued to the date of
redemption or accelerated payment) that would have been payable in respect
of each such dollar if such redemption or accelerated payment had not been
made, determined by discounting, on a semi-annual basis, such principal and
interest at the Reinvestment Rate (determined on the third Business Day
preceding the date such notice of redemption or accelerated payment is
given) from the respective dates on which such principal and interest would
have been payable if such redemption or accelerated payment had not been
made to the date of redemption or accelerated payment, over (ii) the
aggregate principal amount of the Exchange Notes being redeemed or paid.

"Reinvestment Rate" means .25% plus the arithmetic mean of the yields
under the heading "Week Ending" published in the most recent Statistical
Release under the caption "Treasury Constant Maturities" for the maturity
(rounded to the nearest month) corresponding to the remaining life to
maturity, as of the payment date of the principal being redeemed or paid.
If no maturity exactly corresponds to such maturity, yields for the two
published maturities most closely corresponding to such maturity shall be
calculated pursuant to the immediately preceding sentence and the
Reinvestment Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding in each of such relevant periods to the
nearest month. For the purposes of calculating the Reinvestment Rate, the
most recent Statistical Release published prior to the date of
determination of the Make-Whole Amount shall be used. If the format or
content of the Statistical Release changes in a manner that precludes
determination of the Treasury yield in the above manner, then the Treasury
yield shall be determined in the manner that most closely approximates the
above manner, as reasonably determined by the Company.

"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which reports yields on actively traded United
States government securities adjusted to constant maturities, or, if such
statistical release is not published at the time of any determination under
the Indenture, then such other reasonably comparable index which shall be
designated by the Company.

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TENDER OF EXCHANGE MOPPRS; REMARKETING

The following description sets forth the terms and conditions of the
remarketing of the Exchange MOPPRS, in the event that the Remarketing Dealer
elects to purchase the Exchange MOPPRS and remarkets the Exchange MOPPRS on the
Remarketing Date. In the event the Remarketing Dealer does not purchase the
Exchange MOPPRS on the Remarketing Date, the Company will purchase the Exchange
MOPPRS on such date.

THE EXCHANGE MOPPRS WILL BE REDEEMED OR REPURCHASED ON THE REMARKETING
DATE.

MANDATORY TENDER. Provided that the Remarketing Dealer gives notice to the
Company and the Trustee on a Business Day not later than five Business Days
prior to the Remarketing Date of its intention to purchase the Exchange MOPPRS
for remarketing (the "Notification Date"), each Exchange MOPPRS will be
automatically tendered, or deemed tendered, to the Remarketing Dealer for
purchase on the Remarketing Date, except in the circumstances described under
"-- Repurchase of Exchange MOPPRS" below. The purchase price for the tendered
Exchange MOPPRS to be paid by the Remarketing Dealer will equal 100% of the
principal amount thereof. See "-- Notification of Results; Settlement" below.
When the Exchange MOPPRS are tendered for remarketing, the Remarketing Dealer
may remarket the Exchange MOPPRS for its own account at varying prices to be
determined by the Remarketing Dealer at the time of each sale. From and after
the Remarketing Date, the Exchange MOPPRS will bear interest at the rate
determined by the Remarketing Dealer equal to the Base Rate plus the Applicable
Spread (each, as defined below) (the "Interest Rate to Maturity"). If the
Remarketing Dealer elects to remarket the Exchange MOPPRS, the obligation of the
Remarketing Dealer to purchase the Exchange MOPPRS on the Remarketing Date is
subject, among other things, to the conditions that, since the Notification
Date, no material adverse change in the condition of the Company and its
Subsidiaries, considered as one enterprise, shall have occurred and that no
Event of Default (as defined in the Indenture), or any event which, with the
giving of notice or passage of time, or both, would constitute an Event of
Default, with respect to the Exchange MOPPRS shall have occurred and be
continuing. If for any reason the Remarketing Dealer does not purchase all
tendered Exchange MOPPRS on the Remarketing Date, the Company will be required
to repurchase the Exchange MOPPRS from the Beneficial Owners thereof at a price
equal to the principal amount thereof plus all accrued and unpaid interest, if
any, on the Exchange MOPPRS to the Remarketing Date. See "-- Repurchase of
Exchange MOPPRS" below.

The Interest Rate to Maturity shall be determined by the Remarketing Dealer
by 3:30 p.m., New York City time, on the third Business Day immediately
preceding the Remarketing Date (the "Determination Date") to the nearest one
hundred-thousandth (0.00001) of one percent per annum and will be equal to
5.488% (the "Base Rate") plus the Applicable Spread (as defined below) which
will be based on the Dollar Price (as defined below) of the Exchange MOPPRS.

The "Applicable Spread" will be the lowest bid indication, expressed as a
spread (in the form of a percentage or in basis points) above the Base Rate,
obtained by the Remarketing Dealer on the Determination Date from the bids
quoted by five Reference Corporate Dealers (as defined below) for the full
aggregate principal amount of the Exchange MOPPRS at the Dollar Price, but
assuming (i) an issue date equal to the Remarketing Date, with settlement on
such date without accrued interest, (ii) a maturity date equal to the Stated
Maturity Date of the Exchange MOPPRS, and (iii) a stated annual interest rate,
payable semiannually on each Interest Payment Date, equal to the Base Rate plus
the spread bid by the applicable Reference Corporate Dealer. If fewer than five
Reference Corporate Dealers bid as described above, then the Applicable Spread
shall be the lowest of such bid indications obtained as described above. The
Interest Rate to Maturity announced by the Remarketing Dealer, absent manifest
error, shall be binding and conclusive upon the Beneficial Owners and Holders of
the Exchange MOPPRS, the Company and the Trustee.

"Dollar Price" means, with respect to the Exchange MOPPRS, the present
value, as of the Remarketing Date, of the Remaining Scheduled Payments (as
defined below) discounted to the Remarketing Date, on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months), at the Treasury
Rate (as defined below).

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"Reference Corporate Dealers" mean leading dealers of publicly traded debt
securities of the Company in The City of New York (which may include the
Remarketing Dealer or one of its affiliates) selected by the Remarketing Dealer.

"Treasury Rate" means, with respect to the Remarketing Date, the rate per
annum equal to the semiannual equivalent yield to maturity or interpolated (on a
day count basis) yield to maturity of the Comparable Treasury Issues (as defined
below), assuming a price for the Comparable Treasury Issues (expressed as a
percentage of its principal amount), equal to the Comparable Treasury Price (as
defined below) for such Remarketing Date.

"Comparable Treasury Issues" means the United States Treasury security or
securities selected by the Remarketing Dealer as having an actual or
interpolated maturity or maturities comparable to the remaining term of the
Exchange MOPPRS being purchased.

"Comparable Treasury Price" means, with respect to the Remarketing Date,
(a) the offer prices for the Comparable Treasury Issues (expressed in each case
as a percentage of its principal amount) on the Determination Date, as set forth
on "Telerate Page 500" (or such other page as may replace Telerate Page 500) or
(b) if such page (or any successor page) is not displayed or does not contain
such offer prices on such Business Day, (i) the average of the Reference
Treasury Dealer Quotations for such Remarketing Date, after excluding the
highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the
Remarketing Dealer obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Reference Treasury Dealer Quotations.
"Telerate Page 500" means the display designated as "Telerate Page 500" on Dow
Jones Markets Limited (or such other page as may replace Telerate Page 500 on
such service) or such other service displaying the offer prices specified in (a)
above as may replace Dow Jones Markets Limited. "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and the
Remarketing Date, the offer prices for the Comparable Treasury Issues (expressed
in each case as a percentage of its principal amount) quoted to the Remarketing
Dealer by such Reference Treasury Dealer by 3:30 p.m., New York City time, on
the Determination Date.

"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc for
their respective affiliates which are primary U.S. Government securities dealers
and their respective successors; provided, however, that if any of the foregoing
or their affiliates shall cease to be a primary U.S. Government securities
dealer in The City of New York (a "Primary Treasury Dealer"), the Remarketing
Dealer shall substitute therefor another Primary Treasury Dealer.

"Remaining Scheduled Payments" means, with respect to the Exchange MOPPRS,
the remaining scheduled payments of the principal thereof and interest thereon,
calculated at the Base Rate only, that would be due after the Remarketing Date
to and including the Stated Maturity Date.

NOTIFICATION OF RESULTS; SETTLEMENT. Provided the Remarketing Dealer has
previously notified the Company and the Trustee on the Notification Date of its
intention to purchase all tendered Exchange MOPPRS on the Remarketing Date, the
Remarketing Dealer will notify the Company, the Trustee and DTC by telephone,
confirmed in writing (which may include facsimile or other electronic
transmission), by 4:00 p.m., New York City time, on the Determination Date, of
the Interest Rate to Maturity.

All of the tendered Exchange MOPPRS will be automatically delivered to the
account of the Trustee, by book-entry through DTC pending payment of the
purchase price therefor, on the Remarketing Date.

In the event that the Remarketing Dealer purchases the tendered Exchange
MOPPRS on the Remarketing Date, the Remarketing Dealer will make or cause the
Trustee to make payment to the DTC Participant of each tendering Beneficial
Owner of Exchange MOPPRS, by book entry through DTC by the close of business on
the Remarketing Date against delivery through DTC of such Beneficial Owner's
tendered Exchange MOPPRS, of 100% of the principal amount of the tendered
Exchange MOPPRS that have been purchased for remarketing by the Remarketing
Dealer. If the Remarketing Dealer does not purchase all of the Exchange MOPPRS
on the Remarketing Date, it will be the obligation of the Company to make or
cause to be made such payment for the Exchange MOPPRS, as described below under
"Repurchase." In any case, the
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Company will make or cause the Trustee to make payment of interest to each
Beneficial Owner of Exchange MOPPRS due on the Remarketing Date by book-entry
through DTC by the close of business on the Remarketing Date.

The transactions described above will be executed on the Remarketing Date
through DTC in accordance with the procedures of DTC, and the accounts of the
respective DTC Participants will be debited and credited and the Exchange MOPPRS
delivered by book entry as necessary to effect the purchases and sales thereof.

Transactions involving the sale and purchase of Exchange MOPPRS remarketed
by the Remarketing Dealer on and after the Remarketing Date will settle in
immediately available funds through DTC's Same-Day Funds Settlement System.

The tender and settlement procedures described above, including provisions
for payment by purchasers of Exchange MOPPRS in the remarketing or for payment
to selling Beneficial Owners of tendered Exchange MOPPRS, may be modified to the
extent required by DTC or to the extent required to facilitate the tender and
remarketing of Exchange MOPPRS in certificated form, if the book-entry system is
no longer available for the Exchange MOPPRS at the time of the remarketing. In
addition, the Remarketing Dealer may, in accordance with the terms of the
Indenture, modify the tender and settlement procedures set forth above in order
to facilitate the tender and settlement process.

As long as DTC's nominee holds the certificates representing any Exchange
MOPPRS in the book-entry system of DTC, no certificates for such Exchange MOPPRS
will be delivered by any selling Beneficial Owner to reflect any transfer of
such Exchange MOPPRS effected in the remarketing. In addition, under the terms
of the Exchange MOPPRS and the Remarketing Agreement (described below), the
Company has agreed that, notwithstanding any provision to the contrary set forth
in the Indenture, (i) it will use its best efforts to maintain the Exchange
MOPPRS in book-entry form with DTC or any successor thereto and to appoint a
successor depositary to the extent necessary to maintain the Exchange MOPPRS in
book-entry form, and (ii) it will waive any discretionary right it otherwise has
under the Indenture to cause the Exchange MOPPRS to be issued in certificated
form.

For further information with respect to transfers and settlement through
DTC, see "-- Global Securities" below.

THE REMARKETING DEALER. The Company and the Remarketing Dealer, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, an investment banking firm, have
entered into a Remarketing Agreement, the general terms and provisions of which
are summarized below.

The Remarketing Dealer will not receive any fees or reimbursement of
expenses from the Company in connection with the remarketing.

The Company has agreed to indemnify the Remarketing Dealer against certain
liabilities, including liabilities under the Securities Act, arising out of or
in connection with its duties under the Remarketing Agreement.

In the event that the Remarketing Dealer elects to remarket the Exchange
MOPPRS as described herein, the obligation of the Remarketing Dealer to purchase
Exchange MOPPRS from tendering Beneficial Owners of Exchange MOPPRS will be
subject to several conditions precedent set forth in the Remarketing Agreement,
including the conditions that, since the Notification Date, no material adverse
change in the condition of the Company and its Subsidiaries, considered as one
enterprise, shall have occurred, and that no Event of Default (as defined in the
Indenture), or any event which, with the giving of notice or passage of time, or
both, would constitute an Event of Default, with respect to the Exchange MOPPRS
shall have occurred and be continuing. In addition, the Remarketing Agreement
provides for the termination thereof, or redetermination of the Interest Rate to
Maturity, by the Remarketing Dealer on or before the Remarketing Date, upon the
occurrence of certain events as set forth in the Remarketing Agreement.

No Holder or Beneficial Owner of any Exchange MOPPRS shall have any rights
or claims under the Remarketing Agreement or against the Remarketing Dealer as a
result of the Remarketing Dealer not purchasing such Exchange MOPPRS.
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The Remarketing Agreement also provides that the Remarketing Dealer may
resign at any time as Remarketing Dealer, such resignation to be effective 10
days after the delivery to the Company and the Trustee of notice of such
resignation. In such case, it shall be the sole obligation of the Company to
appoint a successor Remarketing Dealer.

The Remarketing Dealer, in its individual or any other capacity, may buy,
sell, hold and deal in any of the Exchange MOPPRS. The Remarketing Dealer may
exercise any vote or join in any action which any Beneficial Owner of Exchange
MOPPRS may be entitled to exercise or take with like effect as if it did not act
in any capacity under the Remarketing Agreement. The Remarketing Dealer, in its
individual capacity, either as principal or agent, may also engage in or have an
interest in any financial or other transaction with the Company as freely as if
it did not act in any capacity under the Remarketing Agreement.

REPURCHASE OF EXCHANGE MOPPRS

In the event that (i) the Remarketing Dealer for any reason does not notify
the Company of the Interest Rate to Maturity by 4:00 p.m., New York City time,
on the Determination Date, (ii) prior to the Remarketing Date, the Remarketing
Dealer has resigned and no successor has been appointed on or before the
Determination Date, (iii) since the Notification Date, the Remarketing Dealer
terminates the Remarketing Agreement due to the occurrence of a material adverse
change in the condition of the Company and its Subsidiaries, considered as one
enterprise, or an Event of Default, or any event which, with the giving of
notice or passage of time, or both, would constitute an Event of Default, with
respect to the Exchange MOPPRS, or any other event constituting a termination
event under the Remarketing Agreement, (iv) the Remarketing Dealer elects not to
remarket the Exchange MOPPRS or (v) the Remarketing Dealer for any reason does
not purchase all tendered Exchange MOPPRS on the Remarketing Date, the Company
will repurchase the Exchange MOPPRS as a whole on the Remarketing Date at a
price equal to 100% of the principal amount of the Exchange MOPPRS plus all
accrued and unpaid interest, if any, on the Exchange MOPPRS to the Remarketing
Date. In any such case, payment will be made by the Company to the DTC
Participant of each tendering Beneficial Owner of Exchange MOPPRS, by book-entry
through DTC by the close of business on the Remarketing Date against delivery
through DTC of such Beneficial Owner's tendered Exchange MOPPRS.

REDEMPTION OF EXCHANGE MOPPRS

If the Remarketing Dealer elects to remarket the Exchange MOPPRS on the
Remarketing Date, the Exchange MOPPRS will be subject to mandatory tender to the
Remarketing Dealer for remarketing on such date, in each case subject to the
conditions described above under "-- Tender of Exchange MOPPRS; Remarketing" and
"-- Repurchase of Exchange MOPPRS" and to the Company's right to redeem the
Exchange MOPPRS from the Remarketing Dealer as described in the next sentence.
The Company will notify the Remarketing Dealer and the Trustee, not later than
the Business Day immediately preceding the Determination Date, if the Company
irrevocably elects to exercise its right to redeem the Exchange MOPPRS, in whole
but not in part, from the Remarketing Dealer on the Remarketing Date at the
Optional Redemption Price.

The "Optional Redemption Price" shall be the greater of (i) 100% of the
principal amount of the Exchange MOPPRS and (ii) the Dollar Price, plus in
either case accrued and unpaid interest from the Remarketing Date on the
principal amount being redeemed to the date of redemption. If the Company elects
to redeem the Exchange MOPPRS, it shall pay the redemption price therefor in
same-day funds by wire transfer to an account designated by the Remarketing
Dealer on the Remarketing Date.

CERTAIN INDENTURE COVENANTS

LIMITATIONS ON INCURRENCE OF DEBT. The Company will not, and will not
permit a Subsidiary to, incur any Debt (as defined below), other than
intercompany Debt (representing Debt to which the only parties are the Trust,
the Company and any of their Subsidiaries, but only so long as such Debt is held
solely by any of the Trust, the Company and any Subsidiary and provided that, in
the case of Debt owed to Subsidiaries of the

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Company, such Debt is subordinate in right of payment to the Exchange Notes),
if, immediately after giving effect to the incurrence of such additional Debt,
the aggregate principal amount of all outstanding Debt of the Company and its
Subsidiaries on a consolidated basis determined in accordance with GAAP is
greater than 60% of the sum of (i) Total Assets (as defined below) as of the end
of the fiscal quarter covered in the Company's Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, as the case may be, most recently filed with the
Commission (or, if such filing is not required under the Exchange Act, with the
Trustee) prior to the incurrence of such additional Debt and (ii) the increase
or decrease in Total Assets from the end of such quarter including, without
limitation, any increase in Total Assets resulting from the incurrence of such
additional Debt (such increase or decrease together with the Company's Total
Assets is referred to as the "Adjusted Total Assets") (Indenture Section
1004(a)).

In addition to the foregoing limitations on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Secured Debt
(as defined below) of the Company or any Subsidiary if, immediately after giving
effect to the incurrence of such additional Secured Debt, the aggregate
principal amount of all outstanding Secured Debt of the Company and its
Subsidiaries on a consolidated basis is greater than 40% of Adjusted Total
Assets (Indenture Section 1004(b)). The Exchange Notes do not require that, for
the purpose of calculating compliance with Sections 1004(b) and (d) of the
Indenture, the amount of "Secured Debt" of any Subsidiary be deemed to include
all Debt of that Subsidiary, whether or not that Debt provides recourse to the
general assets of that Subsidiary, other than (i) intercompany Debt
(representing Debt to which the only parties are the Company, the Trust and any
of their Subsidiaries, but only so long as such Debt is held solely by any of
the Company, the Trust and any Subsidiary) that is subordinate in right of
payment to the $180 Million Notes and (ii) trade payables incurred in the
ordinary course of business. The Teachers Purchase Agreement imposed such an
additional covenant upon the $180 Million Notes until such time as they were
registered for resale or replaced by the $180 Million Exchange Notes.

In addition to the foregoing limitation on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt, other
than intercompany Debt (provided that, in the case of Debt owed to Subsidiaries
of the Company, such Debt is subordinate in right of payment to the Exchange
Notes), if the ratio of Consolidated Income Available for Debt Service to the
Annual Debt Service Charge (in each case as defined below) for the period
consisting of the four consecutive fiscal quarters most recently ended prior to
the date on which such additional Debt is to be incurred shall have been less
than 1.5 to 1 on a pro forma basis after giving effect to the incurrence of such
Debt and to the application of the proceeds therefrom, and calculated on the
assumption that (i) such Debt and any other Debt incurred by the Company or its
Subsidiaries since the first day of such four-quarter period, which was
outstanding at the end of such period, had been incurred at the beginning of
such period and continued to be outstanding throughout such period, and the
application of the proceeds of such Debt, including to refinance other Debt, had
occurred at the beginning of such period, (ii) the repayment or retirement of
any other Debt by the Company or its Subsidiaries since the first day of such
four-quarter period had been repaid or retired at the beginning of such period
(except that, in determining the amount of Debt so repaid or retired, the amount
of Debt under any revolving credit facility shall be computed based upon the
average daily balance of such Debt during such period), (iii) in the case of
Acquired Indebtedness or Debt incurred in connection with any acquisition since
the first day of the four-quarter period, the related acquisition had occurred
as of the first day of the period with the appropriate adjustments with respect
to the acquisition being included in the pro forma calculation and (iv) in the
case of any increase or decrease in Total Assets, or any other acquisition or
disposition by the Company or any Subsidiary of any asset or group of assets,
since the first day of such four-quarter period, including, without limitation,
by merger, stock purchase or sale, or asset purchase or sale, such increase,
decrease or other acquisition or disposition or any related repayment of Debt
had occurred as of the first day of such period with the appropriate adjustments
to revenues, expenses and Debt levels with respect to such increase, decrease or
other acquisition or disposition being included in such pro forma calculation
(Indenture Section 1004(c)).

MAINTENANCE OF TOTAL UNENCUMBERED ASSETS. The Company is required at all
times to maintain Total Unencumbered Assets of not less than 150% of the
aggregate outstanding principal amount of all outstanding Unsecured Debt of the
Company and its Subsidiaries on a consolidated basis (Indenture Section
1004(d)).

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As used in the Indenture and the description thereof herein:

"Acquired Indebtedness" means Debt of a Person (i) existing at the
time the Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from the Person, in each case, other than Debt
incurred in connection with, or in contemplation of, the Person becoming a
Subsidiary or that acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person
or the date the acquired Person becomes a Subsidiary.

"Annual Debt Service Charge" as of any date means the amount which is
expensed in any 12-month period for Consolidated Interest Expense of the
Company and its Subsidiaries.

"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income plus amounts which have been deducted in
determining Consolidated Net Income during such period for (i) Consolidated
Interest Expense, (ii) provision for taxes of the Company and its
Subsidiaries based on income, (iii) amortization (other than amortization
of debt discount) and depreciation, (iv) provisions for losses from sales
or joint ventures, (v) increases in deferred taxes and other noncash items,
(vi) charges resulting from a change in accounting principles, and (vii)
charges for early extinguishment of debt, and less amounts which have been
added in determining Consolidated Net Income during such period for (a)
provisions for gains from sales or joint ventures and (b) decreases in
deferred taxes and other noncash items.

"Consolidated Interest Expense" means, for any period, and without
duplication, all interest (including the interest component of rentals on
leases reflected in accordance with GAAP as capitalized leases on the
Company's consolidated balance sheet, letter of credit fees, commitment
fees and other like financial charges) and all amortization of debt
discount on all Debt (including, without limitation, payment-in-kind, zero
coupon and other securities) of the Company and its Subsidiaries, but
excluding legal fees, title insurance charges and other out-of-pocket fees
and expenses incurred in connection with the issuance of Debt, all
determined in accordance with GAAP.

"Consolidated Net Income" for any period means the amount of net
income (or loss) of the Company and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP.

"Debt" of the Company or any Subsidiary means, without duplication,
any indebtedness of the Company and its Subsidiaries, whether or not
contingent, in respect of (i) borrowed money evidenced by bonds, notes,
debentures or similar instruments, (ii) indebtedness secured by any
mortgage, pledge, lien, charge, encumbrance or any security interest
existing on property owned by the Company and its Subsidiaries, (iii) the
reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued or amounts representing the balance
deferred and unpaid of the purchase price of any property except any such
balance that constitutes an accrued expense or trade payable or (iv) any
lease of property by the Company and its Subsidiaries as lessee which is
reflected in the Company's consolidated balance sheet as a capitalized
lease in accordance with GAAP, in the case of items of indebtedness under
(i) through (iii) above to the extent that any such items (other than
letters of credit) would appear as a liability on the Company's
consolidated balance sheet in accordance with GAAP, and also includes, to
the extent not otherwise included, any obligation by the Company or any
Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise
(other than for purposes of collection in the ordinary course of business),
indebtedness of another person (other than the Company or any Subsidiary)
(it being understood that "Debt" shall be deemed to be incurred by the
Company and its Subsidiaries on a consolidated basis whenever the Company
and its Subsidiaries on a consolidated basis shall create, assume,
guarantee or otherwise become liable in respect thereof; Debt of a
Subsidiary of the Company existing prior to the time it became a Subsidiary
of the Company shall be deemed to be incurred upon such Subsidiary's
becoming a Subsidiary of the Company; and Debt of a person existing prior
to a merger or consolidation of such person with the Company or any
Subsidiary of the Company in which such person is the successor to the
Company or such Subsidiary shall be deemed to be incurred upon the
consummation of such merger or consolidation); provided, however, the term
Debt shall not

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include any such indebtedness that has been the subject of an "in
substance" defeasance in accordance with GAAP.

"Secured Debt" means, without duplication, Debt secured by any
mortgage, trust deed, deed of trust, deed to secure debt, security
agreement, pledge, conditional sale or other title retention agreement,
capitalized lease, or other like agreement granting or conveying security
title to or a security interest in real property or other tangible assets.
Secured Debt shall be deemed to be incurred (i) on the date the Company or
any Subsidiary creates, assumes, guarantees or otherwise becomes liable in
respect thereof if it is secured in the manner described in the preceding
sentence on such date or (ii) on the date the Company or any Subsidiary
first secures such Debt in the manner described in the preceding sentence
if such Debt was not so secured on the date it was incurred.

"Subsidiary" means (i) a corporation, partnership, limited liability
company, trust, real estate investment trust or other entity a majority of
the voting power of the voting equity securities of which are owned,
directly or indirectly, by the Company or by one or more Subsidiaries of
the Company, (ii) a partnership, limited liability company, trust, real
estate investment trust or other entity not treated as a corporation for
federal income tax purposes, the majority of the value of the equity
interests of which are owned, directly or indirectly, by the Company or by
one or more other Subsidiaries of the Company and (iii) one or more
corporations which, either individually or in the aggregate, would be
Significant Subsidiaries (as defined below, except that the investment,
asset and equity thresholds for purposes of this definition shall be 5%),
the majority of the value of the equity interests of which are owned,
directly or indirectly, by the Company or by one or more Subsidiaries.

"Total Assets" as of any date means the sum of (i) Undepreciated Real
Estate Assets and (ii) all other assets of the Company and its Subsidiaries
on a consolidated basis determined in accordance with GAAP (but excluding
intangibles and accounts receivable).

"Total Unencumbered Assets" as of any date means the sum of (i) those
Undepreciated Real Estate Assets not securing any portion of Secured Debt
and (ii) all other assets of the Company and its Subsidiaries on a
consolidated basis not securing any portion of Secured Debt determined in
accordance with GAAP (but excluding intangibles and accounts receivable).

"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the
Company and its Subsidiaries on such date, before depreciation and
amortization, determined on a consolidated basis in accordance with GAAP.

"Unsecured Debt" means Debt of the Company or any Subsidiary that is
not Secured Debt.

EXISTENCE. Except as permitted under "-- Merger, Consolidation or Sale"
below, the Company is required to do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights and franchises;
provided, however, that the Company shall not be required to preserve any right
or franchise if the Board of Trustees of the Trust determines that the
preservation thereof is no longer desirable in the conduct of the Company's
business and that the loss thereof is not disadvantageous in any material
respect to the Holders (Indenture Section 1006).

MAINTENANCE OF PROPERTIES. The Company is required to cause all of its
material properties used or useful in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and to cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the reasonable judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that the Company and
its Subsidiaries shall not be prevented from discontinuing the operation and
maintenance of any of the properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business and not disadvantageous
in any material respect to the Holders (Indenture Section 1007).

INSURANCE. The Company is required to, and is required to cause each of
its Subsidiaries to, maintain insurance coverage by financially sound and
reputable insurance companies in such forms and amounts and

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against such risks as are customary for companies of established reputation
engaged in the same or a similar business (Indenture Section 1008).

PAYMENT OF TAXES AND OTHER CLAIMS. The Company is required to pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent (i) all material taxes, assessments and governmental charges levied
or imposed upon it or any Subsidiary or upon its income, profits or property or
that of any Subsidiary and (ii) all material lawful claims for labor, materials
and supplies which, if unpaid, might by law become a lien upon the property of
the Company or any Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings so long as appropriate
reserves are established therefor in accordance with GAAP (Indenture Section
1009).

PROVISION OF FINANCIAL INFORMATION. Whether or not the Company is subject
to Section 13 or 15(d) of the Exchange Act and for so long as any Exchange Notes
are outstanding, the Company will, to the extent permitted under the Exchange
Act, be required to file with the Commission the annual reports, quarterly
reports and other documents which the Company would have been required to file
with the Commission pursuant to such Section 13 or 15(d) if the Company were so
subject (the "Financial Statements"), such documents to be filed with the
Commission on or prior to the respective dates by which the Company would have
been required to file such documents if the Company were so subject (the
"Required Filing Dates"). The Company will also in any event (x) within 15 days
of each Required Filing Date (i) transmit by mail to all Holders of Exchange
Notes, as their names and addresses appear in the security register for the
Exchange Notes, without cost to such Holders, copies of the annual reports and
quarterly reports which the Company would have been required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act if the Company
were subject to such Sections and (ii) file with the Trustee copies of the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act if the Company were subject to such Sections and (y) if
filing such documents by the Company with the Commission is not made under the
Exchange Act, promptly upon written request and payment of the reasonable cost
of duplication and delivery, supply copies of such documents to any prospective
Holder (Indenture Section 1010).

MERGER, CONSOLIDATION OR SALE

The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other
corporation, limited liability company, association, partnership, real estate
investment trust, company or business trust (collectively, a "Corporation"),
provided that (a) the Company shall be the continuing Corporation, or the
successor Corporation or its transferees or assignees of such assets (if other
than the Company) formed by or resulting from any such consolidation or merger
or which shall have received the transfer of such assets by lease (subject to
the continuing obligations of the Company set forth in the Indenture) or
otherwise, either directly or indirectly, shall expressly assume payment of the
principal of (and premium or Make-Whole Amount, if any) and interest on all the
debt securities issued by the Company under the Indenture ("Debt Securities")
and the due and punctual performance and observance of all of the covenants and
conditions contained in the Indenture; (b) the successor Corporation formed by
or resulting from any such consolidation or merger or which shall have received
the transfer of assets shall be a United States Corporation; (c) immediately
after giving effect to such transaction and treating any indebtedness which
becomes an obligation of the Company or any Subsidiary of the Company as a
result thereof as having been incurred by the Company or such Subsidiary at the
time of such transaction, no Event of Default under the Indenture, and no event
which, after notice or the lapse of time, or both, would become such an Event of
Default, shall have occurred and be continuing; and (d) an officer's certificate
and legal opinion covering such conditions shall be delivered to the Trustee
(Indenture Sections 801 and 803).

EVENTS OF DEFAULT, NOTICE AND WAIVER

The following events are "Events of Default" with respect to the Notes of a
series: (a) default for 30 days in the payment of any installment of interest on
any Note of such series; (b) default in the payment of the principal of (or
premium or Make-Whole Amount, if any, on) any Note at its maturity; (c) default
in the
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performance of any other covenant of the Company contained in the Indenture,
such default having continued for 60 days after written notice as provided
pursuant to the Indenture; (d) default in the payment of an aggregate principal
amount exceeding $5,000,000 of any evidence of recourse indebtedness of the
Company or any mortgage, indenture or other instrument under which such
indebtedness is issued or by which such indebtedness is secured, such default
having occurred after the expiration of any applicable grace period and having
resulted in the acceleration of the maturity of such indebtedness, but only if
such indebtedness is not discharged or such acceleration is not rescinded or
annulled, such default having continued for a period of 10 days after written
notice as provided pursuant to the Indenture; and (e) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Company or any Significant Subsidiary or any of
their respective property. The term "Significant Subsidiary" means each
significant subsidiary (as defined in Regulation S-X promulgated under the
Securities Act) of the Company (Indenture Section 501).

If an Event of Default under the Indenture occurs and is continuing, then
in every such case the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Notes of a series may declare the principal amount of
all of the Notes of such series to be due and payable immediately by written
notice thereof to the Company (and to the Trustee if given by the Holders).
However, at any time after such a declaration of acceleration with respect to
such Notes has been made, but before a judgment or decree for payment of the
money due has been obtained by the Trustee, the Holders of not less than a
majority in principal amount of such Outstanding Notes may rescind and annul
such declaration and its consequences if (a) the Company shall have paid or
deposited with the Trustee all required payments of the principal of (and
premium or Make-Whole Amount, if any) and interest on such Notes, plus certain
fees, expenses, disbursements and advances of the Trustee and (b) all Events of
Default, other than the nonpayment of accelerated principal of (or specified
portion thereof) or premium (if any) or interest on such Notes have been cured
or waived as provided in the Indenture (Indenture Section 502). The Indenture
also provides that the Holders of not less than a majority in principal amount
of the Outstanding Notes of a series may waive any past default with respect to
such series and its consequences, except a default (x) in the payment of the
principal of (or premium or Make-Whole Amount, if any) or interest on any such
Note or (y) in respect of a covenant or provision contained in the Indenture
that cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected thereby (Indenture Section 513).

The Trustee will be required to give notice to the Holder of Exchange Notes
within 90 days of a default under the Indenture unless such default has been
cured or waived; provided, however, that the Trustee may withhold notice to the
Holders of any default (except a default in the payment of the principal of (or
premium or Make-Whole Amount, if any) or interest on any Exchange Note or in the
payment of any sinking fund installment in respect of any Exchange Note) if
specified Responsible Officers of the Trustee consider such withholding to be in
the interest of such Holders (Indenture Section 601).

The Indenture provides that no Holder of Exchange Notes may institute any
proceedings, judicial or otherwise, with respect to the Indenture or for any
remedy thereunder, except in the case of failure of the Trustee, for 60 days, to
act after it has received a written request to institute proceedings in respect
of an Event of Default from the Holders of not less than 25% in principal amount
of the Outstanding Notes of a series, as well as an offer of indemnity
reasonably satisfactory to it (Indenture Section 507). This provision will not
prevent, however, any holder of Notes from instituting suit for the enforcement
of payment of the principal of (and premium or Make-Whole Amount, if any) and
interest on such Exchange Notes at the respective due dates thereof (Indenture
Section 508).

Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
Exchange Notes then Outstanding under the Indenture, unless such Holders shall
have offered to the Trustee thereunder reasonable security or indemnity (Section
602). The Holders of not less than a majority in principal amount of the
Outstanding Notes of a series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
in respect of such Notes, or of exercising any trust or power conferred upon the
Trustee in respect of such Notes. However, the Trustee may refuse to follow any
direction which is in conflict with any law or the Indenture, which may involve
the Trustee in
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personal liability or which may be unduly prejudicial to the holders of Notes of
such series not joining therein (Indenture Section 512).

Within 120 days after the close of each fiscal year, the Company must
deliver to the Trustee a certificate, signed by one of several specified
officers of the Company, stating whether or not such officer has knowledge of
any default under the Indenture and, if so, specifying each such default and the
nature and status thereof (Indenture Section 1011).

MODIFICATION OF THE INDENTURE

Modifications and amendments of the Indenture will be permitted to be made
only with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Debt Securities of each series which is affected by
such modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holders of each such Debt Security
affected thereby, (a) change the Stated Maturity of the principal of, or premium
or Make-Whole Amount, if any, or any installment of interest on, any such Debt
Security; (b) reduce the principal amount of, or the rate or amount of interest
on, or any premium or Make-Whole Amount, if any, payable on redemption of, any
such Debt Security; (c) change the place of payment, or the coin or currency,
for payment of principal of, or premium or Make-Whole Amount, if any, or
interest on any such Debt Security; (d) impair the right to institute suit for
the enforcement of any payment on or with respect to any such Debt Security; (e)
reduce the above stated percentage in principal amount of Outstanding Debt
Securities of any series necessary to modify or amend the Indenture, to waive
compliance with certain provisions thereof or certain defaults and consequences
thereunder or to reduce the quorum or voting requirements set forth in the
Indenture; or (f) modify any of the foregoing provisions or any of the
provisions relating to the waiver of certain past defaults or certain covenants,
except to increase the required percentage to effect such action or to provide
that certain other provisions may not be modified or waived without the consent
of the Holders of each such Debt Security affected thereby (Indenture Section
902). A Debt Security shall be deemed outstanding ("Outstanding") if it has been
authenticated and delivered under the Indenture unless, among other things, such
Debt Security has been cancelled or redeemed.

The Indenture provides that the Holders of not less than a majority in
principal amount of Outstanding Debt Securities of a series have the right to
waive compliance by the Company with certain covenants in the Indenture in
respect of such Debt Securities (Indenture Section 1013). Compliance with the
covenants described herein and such additional covenants with respect to the
Debt Securities of a series generally may not be waived by the Board of Trustees
of the Trust, as managing general partner of the Company, or by the Trustee.

Modifications and amendments of the Indenture will be permitted to be made
by the Company and the Trustee without the consent of any Holder for any of the
following purposes: (i) to evidence the succession or addition of another Person
to the Company as obligor under the Indenture; (ii) to add to the covenants of
the Company for the benefit of the Holders or to surrender any right or power
conferred upon the Company in the Indenture; (iii) to add Events of Default for
the benefit of the Holders; (iv) to permit or facilitate the issuance of Debt
Securities in uncertificated form, provided, that such action shall not
adversely affect the interests of the Holders in any material respect; (v) to
secure the Debt Securities; (vi) to establish the form or terms of additional
Debt Securities of any series; (vii) to provide for the acceptance of
appointment by a successor Trustee or facilitate the administration of the
trusts under the Indenture by more than one Trustee; (viii) to cure any
ambiguity, defect or inconsistency in the Indenture, provided that such action
shall not adversely affect the interests of Holders in any material respect; or
(ix) to supplement any of the provisions of the Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of Debt
Securities under the Indenture, provided that such action shall not adversely
affect the interests of the Holders in any material respect (Indenture Section
901).

The Indenture contains provisions for convening meetings of the Holders of
Debt Securities (Indenture Section 1501). A meeting will be permitted to be
called at any time by the Trustee, and also, upon request, by the Company or the
Holders of at least 10% in principal amount of the Outstanding Debt Securities,
in any

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such case upon notice given as provided in the Indenture (Indenture Section
1502). Except for any consent that must be given by the Holder of each Debt
Security affected by certain modifications and amendments of the Indenture, any
resolution presented at a meeting or adjourned meeting duly reconvened at which
a quorum is present will be permitted to be adopted by the affirmative vote of
the Holders of a majority in principal amount of the Outstanding Debt Securities
of that series; provided, however, that, except as referred to above, any
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by the
Holders of a specified percentage, which is less than a majority, in principal
amount of the Outstanding Debt Securities may be adopted at a meeting or
adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the Holders of such specified percentage in principal amount
of the Outstanding Debt Securities. Any resolution passed or decision taken at
any meeting of Holders of Debt Securities duly held in accordance with the
Indenture will be binding on all Holders of Debt Securities of such series. The
quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be Persons holding or representing a majority in principal amount
of the Outstanding Debt Securities; provided, however, that if any action is to
be taken at such meeting with respect to a consent or waiver which may be given
by the Holders of not less than a specified percentage in principal amount of
the Outstanding Debt Securities of a series, the Persons holding or representing
such specified percentage in principal amount of the Outstanding Debt Securities
of such series will constitute a quorum (Indenture Section 1504).

Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
the Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of all Outstanding Debt Securities
affected thereby, or of the Holders of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting and
(ii) the principal amount of the Outstanding Debt Securities that vote in favor
of such request, demand, authorization, direction, notice, consent, waiver or
other action shall be taken into account in determining whether such request,
demand, authorization, direction, notice, consent, waiver or other action has
been made, given or taken under the Indenture (Indenture Section 1504).

SATISFACTION AND DISCHARGE

The Company may discharge certain obligations to Holders of Exchange Notes
that have not already been delivered to the Trustee for cancellation and that
either have become due and payable or will become due and payable within one
year (or scheduled for redemption within one year) by irrevocably depositing
with the Trustee, in trust, funds in such currency or currencies, currency unit
or units or composite currency or currencies in which such Exchange Notes are
payable in an amount sufficient to pay the entire indebtedness on such Exchange
Notes in respect of principal (and premium or Make-Whole Amount, if any) and
interest to the date of such deposit (if such Exchange Notes have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may be
(Indenture Section 401).

The defeasance and covenant defeasance provisions of Article Fourteen of
the Indenture will apply to the Exchange Notes upon satisfaction of certain
conditions specified therein.

NO CONVERSION RIGHTS

The Exchange Notes will not be convertible into or exchangeable for any
equity interest in or debt security of the Trust or equity interest in the
Company.

GLOBAL SECURITIES

Exchange Notes issued in exchange for Private Notes currently evidenced by
one or more fully registered global notes will be evidenced by one or more
global notes of the related series (the "Global Securities"), which will be
deposited upon issuance with, or on behalf of, DTC and registered in the name of
Cede & Co. ("Cede"), as DTC's nominee. Exchange Notes issued in exchange for
Private Notes in non-book-entry-form will be issued in registered, certificated
form.

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Holders may hold their interests in any of the Global Securities directly
through DTC, or indirectly through organizations which are participants in DTC
("Participants"). Transfers between Participants will be effected in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds.

Holders who are not Participants may beneficially own interests in a Global
Security held by DTC only through Participants, including certain banks,
brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly, and have indirect access to the DTC system ("Indirect
Participants"). So long as Cede, as the nominee of DTC, is the registered owner
of any Global Security, Cede for all purposes will be considered the sole holder
of such Global Security. Except as provided below, owners of beneficial
interests in a Global Security will not be entitled to have certificates
registered in their names, will not receive or be entitled to receive physical
delivery of certificates in definitive form, and will not be considered the
holder thereof.

Neither the Company nor the Trustee (nor any registrar or paying agent)
will have any responsibility for the performance by DTC or their Participants or
Indirect Participants of their respective obligations under the rules and
procedures governing their operations. DTC has advised the Company that it will
take any action permitted to be taken by a holder of Notes only at the direction
of one or more Participants whose accounts are credited with DTC interests in a
Global Security.

DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions, such as transfers and pledges, among Participants in
deposited securities through electronic book-entry changes to accounts of its
Participants, thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. Certain of
such Participants (or their representatives), together with other entities, own
DTC. The rules applicable to DTC and its Participants are on file with the
Commission.

DTC has further advised the Company that pursuant to the procedures
established by it, (i) upon deposit of the Global Securities representing
Private Notes, DTC will credit the accounts of its Participants with portions of
the principal amount of the Global Securities representing the Exchange Notes
issued in exchange for the Private Notes that each such Participant has
instructed DTC to surrender for exchange and (ii) ownership of such interests in
the Global Securities will be shown on, and the transfer of ownership thereof
will be effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with respect
to other owners of beneficial interests in the Global Securities).

Purchases of Exchange Notes under the DTC system must be made by or through
Participants, which will receive a credit for the Exchange Notes on DTC's
records. The ownership interest of each actual purchaser of each Exchange Note
(a "Beneficial Owner") is in turn to be recorded on the Participant's and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Participant or Indirect
Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Exchange Notes are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Exchange Notes, except in the event that use of the book-entry
system for the Exchange Notes is discontinued.

The deposit of Exchange Notes with DTC and their registration in the name
of Cede effect no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Exchange Notes; DTC's records reflect only the
identity of the Participants whose accounts such Exchange Notes are credited,
which

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may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.

Redemption notices shall be sent to Cede. If less than all of the principal
amount of the Global Securities of the same series is being redeemed, DTC's
practice is to determine by lot the amount of the interest of each Participant
therein to be redeemed.

Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.

Principal, Make-Whole Amount, if any, and interest payments on the Exchange
Notes will be made to DTC by wire transfer of immediately available funds. DTC's
practice is to credit Participants' accounts on the payable date in accordance
with their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payment on the payable date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payments of principal, Make-Whole Amount, if any, and interest to DTC is the
responsibility of the Company, disbursement of such payments to Participants
shall be the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Participants and Indirect
Participants. Neither the Company nor the Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the Global Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.

DTC may discontinue providing its services as securities depository with
respect to the Exchange Notes at any time by giving reasonable notice to the
Company. In the event that DTC notifies the Company that it is unwilling or
unable to continue as depository for any Global Security or if at any time DTC
ceases to be a clearing agency registered as such under the Exchange Act when
DTC is required to be so registered to act as such depository and no successor
depository shall have been appointed within 90 days of such notification or of
the Company becoming aware of DTC's ceasing to be so registered, as the case may
be, certificates for the relevant Exchange Notes will be printed and delivered
in exchange for interests in such Global Security. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
relevant Exchange Notes in authorized denominations registered in such names as
DTC shall direct. It is expected that such instruction will be based upon
directions received by DTC from its Participants with respect to ownership of
beneficial interests in such Global Security.

The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
certificates representing the Exchange Notes will be printed and delivered.

FEDERAL INCOME TAX CONSEQUENCES

The following discussion summarizes, subject to the limitations described
below, the material federal income tax considerations relating to the exchange
of the Private Notes for the Exchange Notes pursuant to the Exchange Offer. 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 addresses only Notes held as
capital assets by initial holders who purchased Private Notes at the "issue
price" (generally, the first price to the public (excluding bond houses, brokers
or similar persons or organizations acting as underwriters, placement agents or
wholesalers) at which a substantial amount of the issue of which such Private
Notes were a part was sold for money). This summary does not purport to deal
with persons in special tax situations, such as financial institutions,
insurance companies, regulated investment companies, dealers in securities or
currencies, persons holding Notes as a hedge against currency risk or as a

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position in a "straddle" for U.S. tax purposes, persons whose functional
currency is not the U.S. dollar, tax-exempt organizations or foreign
corporations and persons who are not citizens or residents of the United States
(except as described under the heading "-- Taxation of Non-U.S. Holders"). In
addition, because the Exchange MOPPRS are subject to mandatory tender on the
Remarketing Date, this summary only addresses the federal income tax
consequences of the Exchange MOPPRS until the Remarketing Date. It does not give
a detailed discussion of any state, local or foreign tax consequences and does
not discuss all aspects of federal income taxation that might be relevant to a
specific holder in light of its particular investment or tax circumstances.

As used herein, the term "U.S. Holder" means a holder of Notes 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, (iii) is an estate the income of which is subject to United
States federal income taxation regardless of its source or (iv) is a trust whose
administration is subject to the primary supervision of a United States court
and which has one or more United States persons who have the authority to
control all substantial decisions of the trust. The term "Non-U.S. Holder" means
a holder of Notes who is not a U.S. Holder.

The information in this section is based on the Internal Revenue Code of
1986, as amended (the "Code"), current, temporary and proposed Treasury
Regulations thereunder, the legislative history of the Code, current
administrative interpretations and practices of the IRS 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 current law or adversely affect existing
interpretations of current law. Any such change could apply retroactively to
transactions preceding the date of the change. 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.

Hogan & Hartson L.L.P., tax counsel to the Company, has reviewed the
following discussion and is of the opinion that, to the extent it constitutes
matters of law or legal conclusions or purports to describe certain provisions
of the federal tax laws, the discussion is a correct summary in all material
respects of the matters discussed therein.

EACH PROSPECTIVE PURCHASER IS STRONGLY ADVISED TO CONSULT WITH ITS OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO IT OF THE EXCHANGE OF THE
PRIVATE NOTES FOR THE EXCHANGE NOTES IN LIGHT OF ITS SPECIFIC TAX AND INVESTMENT
SITUATIONS AND THE SPECIFIC FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS
APPLICABLE TO IT.

THE EXCHANGE

The exchange of Private Notes for Exchange Notes pursuant to the Exchange
Offer will not be treated as an exchange for federal income tax purposes because
the Exchange Notes will not differ materially in kind or extent from the Private
Notes and because the exchange will occur by operation of the original terms of
the Private Notes. As a result, Holders who exchange their Private Notes for
Exchange Notes will not recognize any income, gain or loss for federal income
tax purposes. A Holder will have the same adjusted basis and holding period in
the Exchange Notes immediately after the exchange as it had in the Private Notes
immediately before the exchange.

TAXATION OF U.S. HOLDERS

INTEREST ON NOTES. Except as described below with respect to Exchange
MOPPRS, interest on the Notes will be taxable to a U.S. Holder as ordinary
interest income at the time such payments are accrued or received (in accordance
with the U.S. Holder's method of tax accounting).

SALE, EXCHANGE OR RETIREMENT OF NOTES. Except as described below with
respect to Exchange MOPPRS, upon the sale, exchange or retirement of a Note, a
U.S. Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement
(other than amounts

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representing accrued and unpaid interest) and such U.S. Holder's adjusted tax
basis in the Note. A U.S. Holder's adjusted tax basis in a Note generally will
equal such U.S. Holder's initial investment in the Note. Such gain or loss will
be capital if the Note is held as a capital asset. In the case of a U.S. Holder
who is an individual or an estate or trust, such gain or loss will be long-term
capital gain or loss, subject to a 28% tax rate, if the Notes have been held for
more than one year but not more than 18 months, and long-term capital gain or
loss, subject to a 20% tax rate, if the Notes have been held for more than 18
months. In the case of a U.S. Holder that is a corporation, such gain or loss
will be long-term capital gain or loss if the Notes have been held for more than
one year.

INTEREST ON EXCHANGE MOPPRS. The federal income tax treatment of debt
obligations such as the Exchange MOPPRS is not certain. Because the Exchange
MOPPRS are subject to mandatory tender on the Remarketing Date, the Company
intends to treat the Exchange MOPPRS as maturing on the Remarketing Date for
federal income tax purposes. By purchasing the Exchange MOPPRS, the U.S. Holder
agrees to follow such treatment for federal income tax purposes. There can be no
assurance that the IRS will agree with the Company's treatment of the Exchange
MOPPRS and it is possible that the IRS could assert another treatment. For
instance, it is possible that the IRS could seek to treat the Exchange MOPPRS as
maturing on the Stated Maturity Date. See "-- Possible Characterization of
Exchange MOPPRS as Having Contingent Interest" below.

In accordance with such treatment, interest on the Exchange MOPPRS will
constitute "qualified stated interest" and the Exchange MOPPRS will be taxed as
described above under the headings "-- Interest on Notes" and "Sale, Exchange or
Retirement of Notes."

POSSIBLE CHARACTERIZATION OF EXCHANGE MOPPRS AS HAVING CONTINGENT
INTEREST. It is possible that the IRS might seek to treat the Exchange MOPPRS as
maturing on their Stated Maturity Date (instead of on the Remarketing Date, as
discussed under "-- Interest on Exchange MOPPRS" above) for federal income tax
purposes. Pursuant to such treatment, since the Interest Rate to Maturity will
not be determined until the Determination Date, the Exchange MOPPRS would be
treated as having contingent interest under the Code. In such event, under
Treasury Regulations governing debt instruments that provide for contingent
payments (the "Contingent Payment Regulations"), the Company would be required
to construct a projected payment schedule for the Exchange MOPPRS, based upon
the Company's current borrowing costs for comparable debt instruments of the
Company, from which an estimated yield on the Exchange MOPPRS would be
calculated. A U.S. Holder would be required to include in income original issue
discount in an amount equal to the sum of the daily portions of original issue
discount on the Exchange MOPPRS that would be deemed to accrue at this estimated
yield for each day during the U.S. Holder's taxable year on which the U.S.
Holder holds the Exchange MOPPRS. The amount of original issue discount that
would be deemed to accrue in any accrual period would equal the product of this
estimated yield (properly adjusted for the length of the accrual period) and the
Exchange MOPPRS' adjusted issue price (as defined below) at the beginning of the
accrual period. The daily portions of original issue discount would be
determined by allocating to each day in the accrual period the ratable portion
of the original issue discount that would be deemed to accrue during the accrual
period. In general, for these purposes, an Exchange MOPPRS' adjusted issue price
would equal the Exchange MOPPRS' issue price increased by the original issue
discount previously accrued on the Exchange MOPPRS and reduced by all payments
made on the Exchange MOPPRS. As a result of the application of the Contingent
Payment Regulations, it is possible that a U.S. Holder would be required to
include original issue discount in income in excess of actual cash payments
received for certain taxable years.

Under the Contingent Payment Regulations, upon the sale or exchange of an
Exchange MOPPRS (including a sale pursuant to the mandatory tender on the
Remarketing Date), a U.S. Holder would be required to recognize taxable income
or loss in an amount equal to the difference, if any, between the amount
realized by the U.S. Holder upon such sale or exchange and the U.S. Holder's
adjusted tax basis in the Exchange MOPPRS as of the date of disposition. A U.S.
Holder's adjusted tax basis in an Exchange MOPPRS generally would equal such
U.S. Holder's initial investment in the Exchange MOPPRS increased by any
original issue discount previously included in income with respect to the
Exchange MOPPRS by the U.S. Holder and decreased by any payments received by the
U.S. Holder. Any such taxable income generally would be treated as ordinary
income. Any such taxable loss generally would be treated (i) first as an offset
to
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any interest otherwise includible in income by the U.S. Holder with respect to
the Exchange MOPPRS for the taxable year in which the sale or exchange occurs to
the extent of the amount of such includible interest and (ii) then as an
ordinary loss to the extent of the U.S. Holder's total interest inclusions on
the Exchange MOPPRS in previous taxable years. Any remaining loss in excess of
the amounts described in (i) and (ii) above generally would be treated as
short-term, mid-term or long term-capital loss (depending upon the U.S. Holder's
holding period for the Exchange MOPPRS). All amounts includible in income by a
U.S. Holder as ordinary interest pursuant to the Contingent Payment Treasury
Regulations would be treated as original issue discount.

TAXATION OF NON-U.S. HOLDERS

A Non-U.S. Holder will not be subject to federal income taxes on payments
of principal, premium (if any) or interest on a Note unless such Non-U.S. Holder
is a direct or indirect 10% or greater partner of the Company, a controlled
foreign corporation related to the Company or a bank receiving interest
described in section 881(c)(3)(A) of the Code, and provided that the interest
(including original issue discount, if any) is not effectively connected with
the conduct of a trade or business in the United States by the Non-U.S. Holder.
To qualify for the exemption from taxation, the last United States payor in the
chain of payment prior to payment to a Non-U.S. Holder (the "Withholding Agent")
must have received in the year in which a payment of interest or principal
occurs, or in either of the two preceding calendar years, a statement that (i)
is signed by the beneficial owner of the Note under penalties of perjury, (ii)
certifies that such owner is not a U.S. Holder and (iii) provides the name and
address of the beneficial owner. The statement may be made on an IRS Form W-8 or
a substantially similar form, and the beneficial owner must inform the
Withholding Agent of any change in the information on the statement within 30
days of such change. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However, in
such case, the signed statement must be accompanied by a copy of the IRS Form
W-8 or the substitute form provided by the beneficial owner to the organization
or institution. The Treasury Department is considering implementation of further
certification requirements aimed at determining whether the issuer of a debt
obligation is related to holders thereof.

Generally, a Non-U.S. Holder will not be subject to federal income taxes on
any amount which constitutes gain upon retirement or disposition of a Note,
provided the gain is not effectively connected with the conduct of a trade or
business in the United States by the Non-U.S. Holder. Certain other exceptions
may be applicable, and a Non-U.S. Holder should consult its tax advisor in this
regard.

If a Non-U.S. Holder of a Note is engaged in a trade or business in the
United States and interest (including original issue discount, if any) or gain
on the Note is effectively connected with the conduct of such trade or business,
such holder, although exempt from U.S. federal withholding tax as discussed in
the preceding paragraph (or by reason of the delivery of properly completed Form
4224), is subject to U.S. federal income tax on such interest (including
original issue discount) and on any gain realized on the sale, exchange or other
dispositions of a Note in the same manner as if it were a U.S. Holder. In
addition, if such Non-U.S. Holder is a foreign corporation, it may be subject to
a branch profits tax equal to 30% of its effectively connected earnings and
profits for that taxable year, unless it qualifies for a lower rate under an
applicable income tax treaty.

The Note will not be includible in the estate of a Non-U.S. Holder unless
the individual is a direct or indirect 10% or greater partner of the Company or,
at the time of such individual's death, payments in respect of the Note would
have been effectively connected with the conduct by such individual of a trade
or business in the United States.

BACKUP WITHHOLDING AND INFORMATION REPORTING

Backup withholding of federal income tax at a rate of 31% may apply to
payments made in respect of the Notes to registered owners who are not "exempt
recipients" and who fail to provide certain identifying information (such as the
registered owner's taxpayer identification number) in the required manner.
Generally, individuals are not exempt recipients, whereas corporations and
certain other entities generally are

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exempt recipients. Payments made in respect of the Notes to a U.S. Holder must
be reported to the IRS, unless the U.S. Holder is an exempt recipient or
establishes an exemption. Compliance with the identification procedures
described in the preceding section would establish an exemption from backup
withholding for those Non-U.S. Holders who are not exempt recipients.

In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a Non-U.S. Holder, certifies that such seller is a Non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS unless either (i) the broker determines that the seller
is an exempt recipient or (ii) the seller certifies its non-U.S. status (and
certain other conditions are met). Certification of the registered owner's
non-U.S. status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.

Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States federal income tax provided the required
information is furnished to the IRS.

The United States Treasury has recently finalized regulations regarding the
withholding and information reporting rules discussed above. In general, these
regulations do not alter the substantive withholding and information reporting
requirements but unify certification procedures and forms and clarify and modify
reliance standards. Pursuant to IRS Notice 98-16, these regulations generally
are effective for payments made after December 31, 1999, subject to certain
transition rules. Valid withholding certificates that are held on December 31,
1999 will remain valid until the earlier of December 31, 2000 or the date of
expiration of the certificate under rules currently in effect (unless otherwise
invalidated due to changes in the circumstances of the person whose name is on
such certificate). A Non-U.S. Holder should consult its own advisor regarding
the effect of the new Treasury Regulations.

PLAN OF DISTRIBUTION

This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of any Exchange Notes
received in exchange for Private Notes acquired by such broker-dealer for its
own account as a result of market-making or other trading activities. Each
broker-dealer that receives Exchange Notes for its own account in exchange for
such Private Notes pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. The
Company has agreed that for a period of up to 180 days after the closing of the
Exchange Offer, it will make this Prospectus, as amended or supplemented,
available to any such broker-dealer that requests copies of this Prospectus in
the Letter of Transmittal for use in connection with any such resale.

The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers or any other persons. Exchange Notes received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes,
or a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were received
by it for its own account pursuant to the Exchange Offer and any broker-dealer
that participates in a distribution of such Exchange Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus a
broker-dealer that receives Exchange Notes in exchange for Private Notes
acquired by such broker-dealer as a result of market-making or other trading
activities will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
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The Company has agreed to pay all expenses incident to the Company's
performance of, or compliance with, the Registration Rights Agreement and the
Teachers Purchase Agreement, and will indemnify the holders of Private Notes
(including any broker-dealers), and certain parties related to such holders,
against certain liabilities, including liabilities under the Securities Act.

EXPERTS

The consolidated financial statements of EOP Operating Limited Partnership
as of December 31, 1997 and for the period from July 11, 1997 to December 31,
1997, the combined financial statements of Equity Office Predecessors as of
December 31, 1996 and for the period from January 1, 1997 to July 10, 1997 and
the years ended December 31, 1996 and 1995, the statements of revenue and
certain expenses for 177 Broad Street, Preston Commons, Oakbrook Terrace Tower,
One Maritime Plaza, 201 Mission Street, 30 N. LaSalle, Columbus America
Properties, Prudential Properties, 550 South Hope Street, Acorn Properties, 10 &
30 South Wacker Drive, One Lafayette Centre, PPM Properties and Wright Runstad
Properties, 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.

The consolidated balance sheets of Beacon Properties, L.P. as of December
31, 1996 and 1995 and the related statements of operations, partners' capital
and cash flows for the years ended December 31, 1996 and 1995 and the period May
26, 1994 to December 31, 1994, the combined statement of operations, owners'
equity and cash flows of the Predecessor for the period January 1, 1994 to May
25, 1994 and the related financial statement schedules of Beacon Properties,
L.P. as of December 31, 1996, included herein have been so included in reliance
on the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.

LEGAL MATTERS

The legality of the Exchange Notes will be passed upon for the Company by
Hogan & Hartson L.L.P., Washington, D.C. 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., special tax counsel for the
Company.

AVAILABLE INFORMATION

The Trust and the Company are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended, and, in accordance therewith,
are required to file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the Public Reference Section of the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
regional offices at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of the reports, proxy statements and other information can be
obtained form the Public Reference Section of the Commission, Washington, D.C.
20549, upon payment of prescribed rates, or in certain cases by accessing the
Commission's World Wide Web site at http://www.sec.gov. The Common Shares of the
Trust are listed on the NYSE under the symbol "EOP." The Series A Preferred
Shares of the Trust are listed on the NYSE under the symbol "EOPpfA."

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GLOSSARY

For purposes of this Prospectus, the following capitalized terms shall have
the meanings set forth below:

"Adjusted Total Assets" means Total Assets together with the increase or
decrease in Total Assets, as described in "Description of the Exchange Notes --
Certain Indenture Covenants -- Limitations on Incurrence of Debt."

"Agent's Message" means a message transmitted by DTC, received by the
Exchange Agent and forming part of the Book-Entry Confirmation, which states
that DTC has received an express acknowledgement from a participant in DTC's
ATOP that is tendering Private Notes which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal (or, in the case of an Agent's Message
relating to guaranteed delivery, that such participant has received and agrees
to be bound by the applicable notice of guaranteed delivery), and that the
agreement may be enforced against such participant.

"Applicable Spread" means the lowest bid indication, expressed as a spread
(in the form of a percentage or in basis points) above the Base Rate, obtained
by the Remarketing Dealer on the Determination Date from the bids quoted by five
Reference Corporate Dealers for the full aggregate principal amount of the
Exchange MOPPRS at the Dollar Price, but assuming (i) an issue date equal to the
Remarketing Date, with settlement on such date without accrued interest, (ii) a
maturity date equal to the Stated Maturity Date of the Exchange MOPPRS, and
(iii) a stated annual interest rate, payable semiannually on each Interest
Payment Date, equal to the Base Rate plus the spread bid by the applicable
Reference Corporate Dealer. If fewer than five Reference Corporate Dealers bid
as described above, then the Applicable Spread shall be the lowest of such bid
indications obtained as described above. The Interest Rate to Maturity announced
by the Remarketing Dealer, absent manifest error, shall be binding and
conclusive upon the Beneficial Owners and Holders of the Exchange MOPPRS, the
Company and the Trustee.

"ATOP" means Automated Tender Offer Program.

"Base Rate" means 5.488%.

"Beacon" means Beacon Properties Corporation, a Maryland corporation.

"Beacon Facility" means the credit facility under which the $533 million of
unsecured indebtedness of Beacon was issued and subsequently assumed by the
Company in the Beacon Merger.

"Beacon Management Company" means Beacon Property Management Corporation, a
Delaware corporation.

"Beacon Merger" means the merger of Beacon with and into the Trust and the
merger of Beacon Partnership with and into the Company.

"Beacon Partnership" means Beacon Properties, L.P., a Delaware limited
partnership.

"Beacon Properties" means the Office Properties the Company acquired
pursuant to the Beacon Merger.

"Beneficial Owner" means an actual purchaser of an Exchange Note.

"Book-Entry Confirmation" means a confirmation of a book-entry transfer.

"BPMLP" means Beacon Property Management, L.P., a Delaware limited
partnership.

"Business Day" means any day, other than a Saturday or Sunday, on which
banking institutions in New York, New York, and Boston, Massachusetts, are open
for business.

"Bylaws" means the bylaws adopted by the Board of Trustees of the Trust, as
amended from time to time.

"CBDs" means central business districts.

"Cede" means Cede & Co., as DTC's nominee.

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"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 Trust.

"Company" means either EOP Operating Limited Partnership, a Delaware
limited partnership, alone as an entity, or, as the context may require, the
combined enterprise consisting of EOP Operating Limited Partnership and one or
more of its subsidiaries, and the predecessors thereof, except as defined in
"Description of the Exchange Notes," where "the Company" does not include the
subsidiaries. All references to the historical activities of EOP Operating
Limited Partnership refer to the activities of the Equity Office Predecessors.

"Consolidation" means all of the transactions described under "Certain
Relationships and Related Transactions -- Formation Transactions."

"Contingent Payment Regulations" means Treasury Regulations that govern
debt instruments that provide for contingent payments.

"Contribution Agreement" means the agreement pursuant to which the ZML
Funds and the Trust agreed to consolidate.

"Core Portfolio" means the properties that were held by the Equity Office
Predecessors during the entire period for both periods being compared.

"Credit Facilities" means both the $600 Million Credit Facility and the
$1.5 Billion Credit Facility.

"Debt Securities" means all the debt securities issued by the Company under
the Indenture.

"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, Preferred 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
partner in excess of the Company's proportionate share of such debt.

"Declaration of Trust" means the Trust's declaration of trust, as amended
from time to time, and as filed with the State Department of Assessments and
Taxation of Maryland.

"Determination Date" means the third business day immediately preceding the
Remarketing Date.

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"Dollar Price" means, with respect to the Exchange MOPPRS, the present
value, as of the Remarketing Date, of the Remaining Scheduled Payments
discounted to the Remarketing Date, on a semiannual basis (assuming a 360-day
year consisting of twelve 30-day months), at the Treasury Rate.

"DTC" means The Depository Trust Company, New York, New York.

"EGI" means Equity Group Investments, Inc., an owner, manager and financier
of real estate and corporations.

"Eligible Institution" means an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act.

"Employee Plan" means the Trust's 1997 Amended and Restated Employee Share
Option and Share Award Plan.

"EOH" means Equity Office Holdings, L.L.C., a Delaware limited liability
company.

"EOP Management Company" means Equity Office Properties Management Corp., a
Delaware corporation.

"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 Companies" means numerous non-public companies owned, in
whole or in part, by Mr. Zell or his affiliates.

"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 were combined into the Company pursuant to the
Consolidation.

"Exchange Agent" means State Street Bank and Trust Company.

"Exchange MOPPRS" means the MOPPRS issued in a registered exchange offer
for the MOPPRS of the same series with terms identical in all material respects
to the MOPPRS.

"Exchange Notes" means the 6.375% Notes due 2003, 6.625% Notes due 2005,
6.750% Notes due 2008, 7.250% Notes due 2018, 6.376% MOPPRS due 2012, 7.24%
Senior Notes due 2004, 7.36% Senior Notes due 2005, 7.44% Senior Notes due 2006
and 7.41% Senior Notes due 2007 offered in this Exchange Offer.

"Exchange Offer" means the offer by the Company to exchange the $1.25
Billion Exchange Notes, the Exchange MOPPRS and the $180 Million Exchange Notes,
which have been registered under the Securities Act, for an equal principal
amount of the Company's outstanding $1.25 Billion Notes, MOPPRS and $180 Million
Notes, respectively.

"Exchange Offer Registration Statement" means the registration statement
filed with the Commission relating to the Exchange Offer.

"Expiration Date" means , 1998.

"Financial Statements" means the annual reports, quarterly reports and
other documents which the Company would have been required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act if the Company
were so subject.

"First Plaza" means First Plaza Group Trust.

"Formation Transactions" means the transactions pursuant to which the Trust
and the Company were formed.

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"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 Trust's cash needs, including its
ability to make distributions.

"GAAP" means generally accepted accounting principles in the United States.

"Global Securities" means one or more global notes evidencing each series
of Exchange Notes in book-entry form.

"GM" means General Motors Corporation.

"GMIMCO" means General Motors Investment Management Corporation, an
investment adviser to several pension funds of GM.

"Holders" means the persons in whose names the applicable Notes are
registered in the security register applicable to the Notes.

"Indenture" means the indenture, dated as of September 2, 1997, as amended
or supplemented, between the Company and the Trustee.

"Indirect Participants" means Participants, including certain banks,
brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly, and have indirect access to the DTC system.

"Initial Purchasers" means, in the case of the $1.25 Billion Notes, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Lehman Brothers Inc., J.P. Morgan
Securities Inc., Salomon Brothers Inc, and, in the case of the 2003 Notes, the
2005 Notes and the 2018 Notes, UBS Securities LLC and, in the case of the 2008
Notes, BancAmerica Robertson Stephens. In the case of the MOPPRS, "Initial
Purchaser" means Merrill Lynch, Pierce, Fenner & Smith Incorporated.

"Interest Payment Date" means the semi-annual dates February 15 and August
15, commencing August 15, 1998, with respect to the $1.25 Billion Exchange Notes
and the Exchange MOPPRS, and the semi-annual dates of March 1 and September 1,
commencing September 1, 1998, with respect to the $180 Million Exchange Notes.

"Interest Rate to Maturity" means interest at the rate determined by the
Remarketing Dealer equal to the Base Rate plus the Applicable Spread.

"Investor Limited Partners" means the several institutional investor
limited partners in ZML Opportunity Partnerships I and II.

"IPO" means the Trust's July 1997 initial public offering of 28,750,000
Common Shares.

"IRS" means the United States Internal Revenue Service.

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"Joint Venture Properties" means 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.

"Letter of Transmittal" means the letter of transmittal accompanying this
Prospectus.

"Leventhal Partnership" means the Leventhal Family Limited Partnership.

"LIBOR" means the London Interbank Offering Rate.

"Managed Properties" means the properties managed by the Management
Companies.

"Managed Property Business" means that portion of the Management Business
that relates to property management of the Managed Properties and the Joint
Venture Properties that were contributed to the Company in the Consolidation,
which business is owned and conducted by EOP Management Company.

"Management Business" means the office property management business of EOH
and the office property asset management business and the parking asset
management business of EGI and EOH relating to those Properties that were
contributed to the Company in the Consolidation.

"Management Companies" means EOP Management Company and Beacon Management
Company.

"Maryland REIT Law" means Title 8 of the Corporations and Associations
Article of the Annotated Code of Maryland, as amended from time to time.

"Maturity Date" means the applicable Stated Maturity Date or date of
earlier redemption or acceleration, as the case may be.

"Merger Agreement" means the Agreement and Plan of Merger, dated September
15, 1997, as amended, among the Trust, the Company, Beacon and Beacon
Partnership.

"Merrill Lynch" means Merrill Lynch & Co.

"MGCL" means the Maryland General Corporation Law, as amended from time to
time.

"MOPPRS" means the $250 million of 6.376% MandatOry Par Put Remarketed
Securities which the Company has agreed to sell in the MOPPRS Offering.

"NAREIT" means the National Association of Real Estate Investment Trusts.

"Noncontrolled Subsidiaries" means the Management Companies, EOP Office
Company, a Delaware corporation, Beacon Design Corporation, a Massachusetts
corporation and Beacon Construction Company, Inc., a Massachusetts corporation.

"Notes" means the Private Notes and the Exchange Notes.

"Notice of Guaranteed Delivery" means a properly completed and duly
executed notice of guaranteed delivery.

"Notification Date" means a Business Day not later than five Business Days
prior to the Remarketing Date on which the Remarketing Dealer gives notice to
the Company and the Trustee of its intention to purchase the MOPPRS for
remarketing.

"NYSE" means the New York Stock Exchange, Inc.

"occupied" means all space which is leased and for which the lease term has
commenced.

"Office Properties" means the office properties and appurtenant commercial
facilities owned by the Company or in which the Company has an interest.

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"$1.25 Billion Notes" means the 2003 Notes, the 2005 Notes, the 2008 Notes
and the 2018 Notes.

"$1.25 Billion Notes Offering" means the private placement of $1.25 billion
of senior unsecured notes completed by the Company in February 1998.

"$1.25 Billion Exchange Notes" means the 6.375% Exchange Notes due 2003,
the 6.625% Exchange Notes due 2005, the 6.750% Exchange Notes due 2008 and the
7.250% Exchange Notes due 2018.

"$1.5 Billion Credit Facility" means the Company's $1.5 billion unsecured
term loan facility entered into on October 2, 1997 with Morgan Guaranty Trust
Company of New York.

"$180 Million Exchange Notes" means the 7.24% Exchange Notes due 2004, the
7.36% Exchange Notes due 2005, the 7.44% Exchange Notes due 2006 and the 7.41%
Exchange Notes due 2007.

"$180 Million Notes" means the 2004 Senior Notes, the 2005 Senior Notes,
the 2006 Senior Notes and the 2007 Senior Notes.

"$180 Million Notes Offering" means the $180 million private placement of
unsecured notes closed on by the Company on September 3, 1997.

"Other Acquisitions" means the twelve completed acquisition transactions
and the partially completed thirteenth acquisition transaction in which the
Company acquired an aggregate of 36 Office Properties during the period from the
Trust's IPO through April 30, 1998.

"Outstanding" means the Debt Security has been authenticated and delivered
under the Indenture unless, among other things, such Debt Security has been
cancelled or redeemed.

"Parking Facilities" means the stand-alone parking facilities owned by the
Company or in which the Company has an interest.

"Participants" means organizations which are participants in DTC.

"Partnership Agreement" means the limited partnership agreement of the
Company.

"Person" means any individual, corporation, partnership, limited liability
company, joint venture, joint-stock company, trust, unincorporated organization,
real estate investment trust, or government or any agency or political
subdivision thereof.

"Primary Treasury Dealer" means a primary U.S. Government securities dealer
in The City of New York.

"Private Notes" means the $1.25 Billion Notes, the MOPPRS and the $180
Million Notes.

"Probable Acquisitions" means the twelve additional office properties which
the Company has, as of April 1998, entered into agreements to acquire.

"Pro Forma Basis" means giving effect to the following transactions which
occurred subsequent to December 31, 1997; (a) the acquisition of 21 office
properties and one parking facility; (b) the February 1998 Notes Offering; (c)
the Series B Preferred Offering and (d) the UIT Offering.

"Properties" means both the Office Properties and the Parking Facilities.

"Property Operating Expenses" means real estate taxes and insurance,
repairs and maintenance and property operating expenses.

"Property Revenues" means rental revenues, tenant reimbursements, parking
income and other income.

"Prospectus" means this prospectus, as the same may be amended or
supplemented from time to time.

"QIB" means "qualified institutional buyer," as defined in Rule 144A.

"Redemption Price" means the sum of (i) the principal amount of the
Exchange Notes other than the Exchange MOPPRS being redeemed plus accrued
interest thereon the redemption date and (ii) the Make-Whole Amount, if any,
with respect to such Exchange Notes.

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"Reference Corporate Dealers" means leading dealers of publicly traded debt
securities of the Company in the City of New York (which may include the
Remarketing Dealer or one of its affiliates) selected by the Remarketing Dealer.

"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc or
their respective affiliates which are primary U.S. Government securities dealers
and their respective successors; provided, however, that if any of the foregoing
or their affiliates shall cease to be a Primary Treasury Dealer, the Remarketing
Dealer shall substitute therefor another Primary Treasury Dealer.

"Registration Rights Agreement" means the registration rights agreement
between the Company and the Initial Purchasers, dated as of February 12, 1998.

"Registration Statement" means the registration statement of the Company on
Form S-4, together with all amendments and exhibits, of which this Prospectus is
a part.

"Regular Record Date" means the date 15 calendar days prior to such payment
day, regardless of whether such day is a Business Day.

"REIT" means a real estate investment trust as defined under Sections 856
through 860 of the Code and applicable Treasury regulations.

"Remarketing Date" means February 15, 2002.

"Remarketing Dealer" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated.

"Required Filing Dates" means the dates by which the Company would have
been required to file the Financial Statements if the Company were subject to
Section 13 or 15(d) of the Exchange Act.

"Restricted Common Shares" means Common Shares issued in transactions not
registered under the Securities Act.

"Rule 144A" means Rule 144A under the Securities Act.

"Securities Act" means the Securities Act of 1933, as amended.

"Series B Preferred Offering" means the Trust's sale of 6,000,000 Series B
Preferred Shares, in a private placement, in February 1998.

"Series B Preferred Shares" means the 5.25% Preferred Income Equity
Redeemable Shares(SM), designated by the Trust as its 5.25% Series B
Convertible, Cumulative Preferred Shares of Beneficial Interest, $.01 par value
per share, $50.00 liquidation preference per share.

"Series B Preferred Units" means the 5.25% Series B Convertible, Cumulative
Preference Units issued by the Company to the Trust in exchange for the proceeds
of the Series B Preferred Offering.

"Shelf Registration Statement" means the shelf registration statement
covering resales of the $1.25 Billion Notes and the MOPPRS.

"$600 Million Credit Facility" means the Company's $600 million unsecured
revolving line of credit.

"SPLP" means Standard Parking Limited Partnership.

"Staff" means the staff of the Commission.

"Stated Maturity Date" means February 15, 2003, in the case of the 6.375%
Exchange Notes due 2003; February 15, 2005, in the case of the 6.625% Exchange
Notes due 2005; February 15, 2008, in the case of the 6.750% Exchange Notes due
2008; February 15, 2018, in the case of the 7.250% Exchange Notes due 2018;

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September 1, 2004, in the case of the 7.24% Exchange Notes due 2004; September
1, 2005, in the case of the 7.36% Exchange Notes due 2005; September 1, 2006, in
the case of the 7.44% Exchange Notes due 2006; September 1, 2007, in the case of
the 7.41% Exchange Notes due 2007; and February 15, 2012, in the case of the
Exchange MOPPRS.

"Subsidiary" or "Subsidiaries" of any Person means, generally, any
corporation, partnership, limited liability company, joint venture, trust or
other legal entity of which such Person owns (either directly or through or
together with another Subsidiary of such Person) either (i) a general partner,
managing member or other similar interest, or (ii) (A) 10% or more of the voting
power of the voting capital stock or other equity interest, or (B) 10% or more
of the outstanding voting capital stock or other voting equity interests of such
corporation, partnership, limited liability company, joint venture or other
legal entity. In addition to the entities described above, the term Subsidiary
includes the Noncontrolled Subsidiaries.

"Teachers" means Teachers Insurance and Annuity Association of America.

"Teachers Purchase Agreement" means the Note Purchase Agreement, dated
September 2, 1997, between the Company and Teachers.

"$300 Million PIERS Offering" means the $300 million 5.25% PIERS private
offering completed in February 1998.

"Total Portfolio" means the 258 Office Properties and the 17 stand-alone
Parking Facilities which the Company owned or had an interest in as of December
31, 1997.

"Treasury Rate" means, with respect to the Remarketing Date, the rate per
annum equal to the semiannual equivalent yield to maturity or interpolated (on a
day count basis) yield to maturity of the Comparable Treasury Issues, assuming a
price for the Comparable Treasury Issues (expressed as a percentage of its
principal amount), equal to the Comparable Treasury Price for such Remarketing
Date.

"Trust" means Equity Office Properties Trust, a Maryland real estate
investment trust.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.

"Trustee" means State Street Bank and Trust Company.

"$250 Million MOPPRS Offering" means the Company's private placement of the
MOPPRS in February 1998.

"2003 Notes" means the Company's 6.375% Notes due 2003.

"2004 Senior Notes" means the 7.24% Senior Notes due 2004.

"2005 Notes" means the Company's 6.625% Notes due 2005.

"2005 Senior Notes" means the 7.36% Senior Notes due 2005.

"2006 Senior Notes" means the 7.44% Senior Notes due 2006.

"2007 Senior Notes" means the 7.41% Senior Notes due 2007.

"2008 Notes" means the Company's 6.750% Notes due 2008.

"2018 Notes" means the Company's 7.250% Notes due 2018.

"UIT" means Equity Investor Fund Cohen & Steers Realty Majors Portfolio (A
Unit Investment Trust).

"UIT Offering" means the Trust's private placement of $44 million of
Restricted Common Shares in April 1998.

"Units" means the common units of partnership interest in the Company.

"Withholding Agent" means the last U.S. payor in the chain of payment prior
to payment to a non-U.S. holder.

116
<PAGE> 122

"WRALP" means Wright Runstad Asset Limited Partnership.

"Wright Runstad Acquisition" means the acquisition transaction described in
this Prospectus under "Recent Developments -- Wright Runstad Acquisition."

"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 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, each of which is a limited partnership
organized under the laws of the State of Illinois.

"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 and ZML Opportunity Partnership
IV.

"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.

117
<PAGE> 123

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
EOP OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
Basis of Presentation..................................... F-4
Pro Forma Condensed Combined Balance Sheet as of December
31, 1997............................................... F-5
Pro Forma Condensed Combined Statement of Operations for
the year ended December 31, 1997....................... F-6
Notes to the Pro Forma Condensed Combined Financial
Statements............................................. F-8
HISTORICAL CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(AUDITED)
Report of Independent Auditors............................ F-14
Consolidated and Combined Balance Sheets of EOP Operating
Limited Partnership and Equity Office Predecessors as
of December 31, 1997 and 1996.......................... F-15
Consolidated Statement of Operations of EOP Operating
Limited Partnership for the period from July 11, 1997
to December 31, 1997, and the Combined Statements of
Operations of Equity Office Predecessors for the period
from January 1, 1997 to July 10, 1997 and the years
ended December 31, 1996 and 1995....................... F-16
Consolidated Statement of Changes in Partners' Capital of
EOP Operating Limited Partnership for the period from
July 11, 1997 to December 31, 1997 and the Combined
Statements of Changes in Owners' Equity of Equity
Office Predecessors for the period from January 1, 1997
to July 10, 1997 and the years ended December 31, 1996
and 1995............................................... F-17
Consolidated Statement of Cash Flows of EOP Operating
Limited Partnership for the period from July 11, 1997
to December 31, 1997, and the Combined Statements of
Cash Flows of Equity Office Predecessors for the period
from January 1, 1997 to July 10, 1997, and the years
ended December 31, 1996 and 1995....................... F-18
Notes to Consolidated and Combined Financial Statements... F-19

SCHEDULES
Schedule III -- Real Estate and Accumulated
Depreciation........................................... F-45
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have
been omitted.
177 BROAD STREET
Report of Independent Auditors............................ F-50
Statement of Revenue and Certain Expenses for the year
ended December 31, 1996................................ F-51
Notes to Statement of Revenue and Certain Expenses........ F-52
PRESTON COMMONS
Report of Independent Auditors............................ F-53
Statement of Revenue and Certain Expenses for the year
ended December 31, 1996................................ F-54
Notes to Statement of Revenue and Certain Expenses........ F-55
OAKBROOK TERRACE TOWER
Report of Independent Auditors............................ F-56
Statements of Revenue and Certain Expenses for the three
months ended March 31, 1997 and the year ended December
31, 1996............................................... F-57
Notes to Statements of Revenue and Certain Expenses....... F-58
</TABLE>

F-1
<PAGE> 124

<TABLE>
<S> <C>
ONE MARITIME PLAZA
Report of Independent Auditors............................ F-59
Statements of Revenue and Certain Expenses for the three
months ended March 31, 1997 and the year ended December
31, 1996............................................... F-60
Notes to Statements of Revenue and Certain Expenses....... F-61
201 MISSION STREET
Report of Independent Auditors............................ F-62
Statements of Revenue and Certain Expenses for the three
months ended March 31, 1997 and the year ended December
31, 1996............................................... F-63
Notes to Statements of Revenue and Certain Expenses....... F-64
30 N. LASALLE
Report of Independent Auditors............................ F-65
Statements of Revenue and Certain Expenses for the three
months ended March 31, 1997 and the year ended December
31, 1996............................................... F-66
Notes to Statements of Revenue and Certain Expenses....... F-67
COLUMBUS AMERICA PROPERTIES
Report of Independent Auditors............................ F-68
Combined Statements of Revenue and Certain Expenses for
the period from January 1, 1997 to July 31, 1997 and
the year ended December 31, 1996....................... F-69
Notes to Combined Statements of Revenue and Certain
Expenses............................................... F-70
PRUDENTIAL PROPERTIES
Report of Independent Auditors............................ F-72
Combined Statements of Revenue and Certain Expenses for
the period from January 1, 1997 to August 31, 1997 and
the year ended December 31, 1996....................... F-73
Notes to Combined Statements of Revenue and Certain
Expenses............................................... F-74
550 SOUTH HOPE STREET
Report of Independent Auditors............................ F-75
Statements of Revenue and Certain Expenses for the period
from April 1, 1997 to July 31, 1997 and the year ended
March 31, 1997......................................... F-76
Notes to Statements of Revenue and Certain Expenses....... F-77
ACORN PROPERTIES
Report of Independent Auditors............................ F-78
Combined Statements of Revenue and Certain Expenses for
the period from January 1, 1997 to July 31, 1997 and
the year ended December 31, 1996....................... F-79
Notes to Combined Statements of Revenue and Certain
Expenses............................................... F-80
10 & 30 SOUTH WACKER DRIVE
Report of Independent Auditors............................ F-82
Combined Statements of Revenue and Certain Expenses for
the period from January 1, 1997 to July 31, 1997 and
the year ended December 31, 1996....................... F-83
Notes to Combined Statements of Revenue and Certain
Expenses............................................... F-84
ONE LAFAYETTE CENTRE
Report of Independent Auditors............................ F-85
Statements of Revenue and Certain Expenses for the period
from January 1, 1997 to July 31, 1997 and the year
ended December 31, 1996................................ F-86
Notes to Statements of Revenue and Certain Expenses....... F-87
PPM PROPERTIES
Report of Independent Auditors............................ F-88
Combined Statements of Revenue and Certain Expenses for
the period from January 1, 1997 to August 31, 1997 and
the year ended December 31, 1996....................... F-89
Notes to Combined Statements of Revenue and Certain
Expenses............................................... F-90
</TABLE>

F-2
<PAGE> 125

<TABLE>
<S> <C>
WRIGHT RUNSTAD PROPERTIES
Report of Independent Auditors............................ F-91
Combined Statements of Revenue and Certain Expenses for
the period from October 1, 1996 to August 31, 1997 and
the year ended September 30, 1996...................... F-92
Notes to Combined Statements of Revenue and Certain
Expenses............................................... F-93
BEACON PROPERTIES, L.P.
Report of Independent Accountants........................... F-95
Consolidated Balance Sheets as of December 31, 1996 and
1995...................................................... F-96
Consolidated Statements of Operations for the years ended
December 31, 1996 and 1995 and for the periods May 26,
1994 to December 31, 1994 and January 1, 1994 to May 25,
1994...................................................... F-97
Consolidated Statements of Partners' Capital for the period
January 1, 1994 to December 31, 1996...................... F-98
Consolidated Statements of Cash Flows for the period January
1, 1994 to December 31, 1996.............................. F-99
Notes to Consolidated Financial Statements.................. F-101
Report of Independent Accountants on Financial Statement
Schedules................................................. F-114
Schedule III -- Real Estate and Accumulated Depreciation as
of December 31, 1996...................................... F-115
Schedule IV -- Mortgage Loans on Real Estate as of December
31, 1996.................................................. F-119
</TABLE>

F-3
<PAGE> 126

EOP OPERATING LIMITED PARTNERSHIP

PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

AS OF AND FOR THE TWELVE MONTHS ENDED DECEMBER, 1997

(UNAUDITED)

The accompanying unaudited Pro Forma Condensed Combined Balance Sheet as of
December 31, 1997 reflects the following transactions which all occurred
subsequent to December 31, 1997: (a) the acquisition or probable acquisition of
21 office properties and one parking facility; (b) the $1.25 Billion Notes
Offering and the $250 million MOPPRS Offering (collectively the "February 1998
Notes Offering"); (c) the Series B Preferred Offering; and (d) the UIT Offering.

The accompanying unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1997 reflects the following
transactions as if they had occurred on January 1, 1997: (a) the acquisition of
66 office properties, including 20 office properties acquired by Beacon prior to
the Beacon Merger, and seven parking facilities, including an interest in four
parking facilities, acquired during the year ended December 31, 1997; (b) the
disposition of three office properties; (c) the $180 million private debt
offering (the "$180 Million Notes Offering") which occurred on September 3,
1997; (d) the transactions that occurred in connection with the consolidation of
the entities which comprise the predecessors ("Equity Office Predecessors") of
the Company (the "Consolidation") and the initial public offering (the "IPO"),
which closed on July 11, 1997, and the decrease in interest expense resulting
from the use of the net proceeds for the repayment of mortgage debt; (e) the net
change in interest expense from draws on the $1.5 Billion Credit Facility used
to refinance existing mortgage debt; (f) the Beacon Merger; (g) the acquisition
of 10 properties, acquired between January 1, 1998 and April 30, 1998; (h) the
probable acquisition of 12 office properties; (i) the February 1998 Notes
Offering; (j) the Series B Preferred Offering; and (k) the UIT Offering.

The accompanying unaudited pro forma condensed combined financial
statements have been prepared by management of the Company 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 accompanying notes to the pro forma
condensed combined financial statements as of and for the year ended December
31, 1997, included elsewhere herein.

F-4
<PAGE> 127

EOP OPERATING LIMITED PARTNERSHIP

PRO FORMA CONDENSED COMBINED BALANCE SHEET

DECEMBER 31, 1997

(UNAUDITED)

(IN THOUSANDS)

<TABLE>
<CAPTION>
EOP OPERATING 1998 ACQUIRED
LIMITED PROPERTIES AND
PARTNERSHIP PROBABLE FEBRUARY 1998 SERIES B PREFERRED UIT
HISTORICAL ACQUISITIONS NOTES OFFERING OFFERING OFFERING
---------------- -------------- -------------- ------------------ --------
(A) (E) (I)
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in real estate, net..... $10,976,319 $ 946,690 $ -- $ -- $ --
Cash and cash equivalents.......... 228,853 (222,950) -- -- --
Rents and other receivables........ 52,581 -- -- -- --
Escrow deposits and restricted
cash............................. 25,772 -- -- -- --
Investment in unconsolidated joint
ventures......................... 387,332 -- -- -- --
Other assets....................... 80,815 -- 43,371(B) -- --
----------- --------- ----------- --------- --------
TOTAL ASSETS.................. $11,751,672 $ 723,740 $ 43,371 $ -- $ --
=========== ========= =========== ========= ========
LIABILITIES AND PARTNERS' CAPITAL
Mortgage debt...................... $ 2,063,017 $ 48,109 $ -- $ -- $ --
Unsecured notes.................... 180,000 63,430 1,504,452(C) -- --
Lines of credit.................... 2,041,300 612,101 (1,461,081)(D) (289,500)(F) (44,059)
Distribution payable............... 1,191 -- -- -- --
Other liabilities.................. 306,189 -- -- -- --
----------- --------- ----------- --------- --------
TOTAL LIABILITIES............. 4,591,697 723,640 43,371 (289,500) (44,059)
Minority interests:
Partially owned properties....... 29,612 -- -- -- --
Preferred Units (100,000 authorized
and 14,000 issued)............... 200,000 -- -- 300,000(G) --
General Partners................... 6,205,157 -- -- (9,408)(H) 44,059
Limited Partners................... 725,206 100 -- (1,092)(H) --
----------- --------- ----------- --------- --------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL........... $11,751,672 $ 723,740 $ 43,371 $ -- $ --
=========== ========= =========== ========= ========

<CAPTION>
EOP OPERATING
LIMITED
PARTNERSHIP
PRO FORMA
----------------

<S> <C>
ASSETS
Investment in real estate, net..... $11,923,009
Cash and cash equivalents.......... 5,903
Rents and other receivables........ 52,581
Escrow deposits and restricted
cash............................. 25,772
Investment in unconsolidated joint
ventures......................... 387,332
Other assets....................... 124,186
-----------
TOTAL ASSETS.................. $12,518,783
===========
LIABILITIES AND PARTNERS' CAPITAL
Mortgage debt...................... $ 2,111,126(J)
Unsecured notes.................... 1,747,882(J)
Lines of credit.................... 858,761(J)
Distribution payable............... 1,191
Other liabilities.................. 306,189
-----------
TOTAL LIABILITIES............. 5,025,149
Minority interests:
Partially owned properties....... 29,612
Preferred Units (100,000 authorized
and 14,000 issued)............... 500,000
General Partners................... 6,239,808
Limited Partners................... 724,214
-----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL........... $12,518,783
===========
</TABLE>

F-5
<PAGE> 128

EOP OPERATING LIMITED PARTNERSHIP

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1997

(UNAUDITED)

(IN THOUSANDS)

<TABLE>
<CAPTION>
EOP
OPERATING CONSOLIDATION
LIMITED 1997 ACQUIRED FINANCING AND IPO BEACON PROPERTIES
PARTNERSHIP PROPERTIES DISPOSITIONS ACTIVITY ADJUSTMENTS L.P. HISTORICAL
----------- ------------- ------------ --------- ------------- -----------------
(K) (L) (M) (S)
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Rental........................... $570,379 $245,032 $(5,645) $ -- $ 8,983(O) $299,196
Tenant reimbursements............ 106,437 54,560 (62) -- -- 39,856
Parking.......................... 47,051 17,229 (573) -- -- --
Other............................ 9,863 4,307 (431) -- -- 11,907
Fees from noncombined
affiliates..................... 4,950 -- -- -- -- 3,090
Interest......................... 13,392 69 -- -- -- 10,067
-------- -------- ------- -------- -------- --------
752,072 321,197 (6,711) -- 8,983 364,116
======== ======== ======= ======== ======== ========
EXPENSES:
Property operating............... 282,964 124,069 (2,710) -- -- 107,905
Interest......................... 164,105 94,782 (36) 16,606(N) (27,042)(P) 52,344
Depreciation..................... 122,074 56,550 (2,071) -- 2,737(Q) 65,034
Amortization..................... 7,357 -- (54) -- -- 4,209
General and administrative....... 34,891 2,185 (283) -- 1,800(R) 37,455
-------- -------- ------- -------- -------- --------
611,391 277,586 (5,154) 16,606 (22,505) 266,947
-------- -------- ------- -------- -------- --------
Income before allocation to
minority interests, income from
investment in unconsolidated
joint ventures................... 140,681 43,611 (1,557) (16,606) 31,488 97,169
Minority interests:
Partially owned properties....... (1,701) -- -- -- (43) --
Income from investment in
unconsolidated joint ventures.... 5,155 1,581 -- -- -- 6,087
-------- -------- ------- -------- -------- --------
Net income from continuing
operations....................... 144,135 45,192 (1,557) (16,606) 31,445 103,256
Preferred dividends................ (649) (7,962) -- -- -- (9,349)
-------- -------- ------- -------- -------- --------
Net income available for Units..... $143,486 $ 37,230 $(1,557) $(16,606) $ 31,445 $ 93,907
======== ======== ======= ======== ======== ========
Net income available per Unit
(Basic)..........................
Weighted Average Units Outstanding
(Basic)..........................
Net income available per Unit
(Diluted)........................
Weighted Average Units Outstanding
(Diluted)........................

BEACON MERGER
AND HISTORICAL
ADJUSTMENTS
--------------

<S> <C>
REVENUES:
Rental........................... $ 5,834(T)
Tenant reimbursements............ --
Parking.......................... --
Other............................ --
Fees from noncombined
affiliates..................... --
Interest......................... --
--------
5,834
========
EXPENSES:
Property operating............... --
Interest......................... 943(U)
Depreciation..................... 5,374(V)
Amortization..................... --
General and administrative....... (20,000)(W)
--------
(13,683)
--------
Income before allocation to
minority interests, income from
investment in unconsolidated
joint ventures................... 19,517
Minority interests:
Partially owned properties....... --
Income from investment in
unconsolidated joint ventures.... --
--------
Net income from continuing
operations....................... 19,517
Preferred dividends................ --
--------
Net income available for Units..... $ 19,517
========
Net income available per Unit
(Basic)..........................
Weighted Average Units Outstanding
(Basic)..........................
Net income available per Unit
(Diluted)........................
Weighted Average Units Outstanding
(Diluted)........................
</TABLE>

F-6
<PAGE> 129

EOP OPERATING LIMITED PARTNERSHIP

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1997

(UNAUDITED)

(IN THOUSANDS)

<TABLE>
<CAPTION>
1998 ACQUIRED EOP OPERATING
PROPERTIES AND FEBRUARY 1998 LIMITED
PROBABLE NOTES SERIES B PREFERRED UIT PARTNERSHIP
ACQUISITIONS OFFERING OFFERING OFFERING PRO FORMA
-------------- ------------- ------------------ -------- -------------
(X)
<S> <C> <C> <C> <C> <C>
Revenues:
Rental................................... $ 84,229 $ -- $ -- $ -- $1,208,008
Tenant reimbursements.................... 11,241 -- -- -- 212,032
Parking.................................. 4,089 -- -- -- 67,796
Other.................................... 1,916 -- -- -- 27,562
Fees from noncombined affiliates......... -- -- -- 8,040
Interest................................. -- -- -- 23,528
-------- ------- -------- ------- ----------
Total revenues......................... 101,475 -- -- -- 1,546,966
-------- ------- -------- ------- ----------
Expenses:
Property operating....................... 44,273 -- -- -- 556,501
Interest................................. 42,273 3,735(Y) (19,976)(Z) (3,040)(AB) 324,694
Depreciation............................. 18,970 -- -- -- 268,668
Amortization............................. -- -- -- 11,512
General and administrative............... -- -- -- -- 56,048
-------- ------- -------- ------- ----------
105,516 3,735 (19,976) (3,040) 1,217,423
-------- ------- -------- ------- ----------
Income before allocation to minority
interests, income from investment in
unconsolidated joint ventures............ (4,041) (3,735) 19,976 3,040 329,543
Minority interests:
Partially owned properties............... -- -- -- -- (1,744)(AC)
Income from investment in unconsolidated
joint ventures........................... -- -- -- -- 12,823
-------- ------- -------- ------- ----------
Net income from continuing operations...... (4,041) (3,735) 19,976 3,040 340,622
Preferred dividends........................ -- -- (15,750)(AA) -- (33,710)
-------- ------- -------- ------- ----------
Net income available for Units............. $ (4,041) $(3,735) $ 4,226 $ 3,040 $ 306,912
======== ======= ======== ======= ==========
Net income available per Unit (Basic)...... $ 1.09
==========
Weighted Average Units Outstanding
(Basic).................................. 280,319
==========
Net income available per Unit (Diluted).... $ 1.08
==========
Weighted Average Units Outstanding
(Diluted)................................ 285,344
==========
</TABLE>

F-7
<PAGE> 130

EOP OPERATING LIMITED PARTNERSHIP

NOTES TO THE PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

A. To reflect the following acquisitions during the period from January 1, 1998
to April 30, 1998 and the Probable Acquisitions:

<TABLE>
<CAPTION>
LIABILITIES
ASSUMED VALUE OF
PROPERTY DATE ACQUIRED PURCHASE COST CASH PAID OR ISSUED UNITS ISSUED
-------- ---------------- ------------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
BP Garage(1)..................... January 28, 1998 $ 10,200 $ 10,200 $ -- $ --
100 Summer Street................ March 18, 1998 222,500 222,500 -- --
The Tower at New England......... March 31, 1998 27,875 27,875 -- --
Denver Post...................... April 28, 1998 53,100 53,000 -- 100
Miller Global Portfolio.......... (2) 393,015 281,476 111,539
301 Howard and 215 Fremont....... April 29, 1998 90,000 90,000 -- --
Colonnade........................ (3) 150,000 150,000 -- --
-------- -------- -------- --------
Totals........................... $946,690 $835,051 $111,539 $ 100
======== ======== ======== ========
</TABLE>

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

(1) The Company acquired leasehold interests in the parking facility
adjacent to BP Tower, an existing Office Property.

(2) This portfolio consists of 13 office properties. The Company acquired
four properties on April 30, 1998 and expects to acquire one property
on May 15, 1998 and the remaining eight properties on July 15, 1998. In
connection with this acquisition, the Company issued $63.4 million of
unsecured notes which are payable within 120 days of closing in either
cash or Units.

(3) Probable acquisition.

B. To reflect the following costs incurred in connection with the February 1998
Notes Offering:

<TABLE>
<S> <C>
Termination of interest rate swaps.......................... $32,558
Underwriting fees........................................... 9,813
Offering costs.............................................. 1,000
-------
Total.................................................. $43,371
=======
</TABLE>

C. To reflect the February 1998 Notes Offering, including an premium of $6,450
received on the $250 million MOPPRS Offering and net of an $1,998 discount
recorded on the $1.25 Billion Notes Offering.

D. To reflect the use of the net proceeds of the February 1998 Notes Offering:

<TABLE>
<S> <C>
Gross proceeds of February 1998 Notes Offering.............. $ 1,504,452
Costs incurred in connection with the February 1998 Notes
Offering (see Note B)..................................... (43,371)
-----------
Net proceeds........................................... $ 1,461,081
===========
Paydown of $1.5 Billion Credit Facility..................... $(1,056,062)
Paydown of revolving credit facility........................ (405,019)
-----------
Total.................................................. $(1,461,081)
===========
</TABLE>

E. Represents adjustments to reflect the Series B Preferred Offering of $300
million, which resulted in the Company issuing six million 5.25% Series B
Preferred Units, liquidation preference of $50.00 per unit.

F-8
<PAGE> 131

EOP OPERATING LIMITED PARTNERSHIP

NOTES TO THE PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

F. To reflect the paydown of the $1.5 Billion Credit Facility with the net
proceeds of the Series B Preferred Offering as follows:

<TABLE>
<S> <C>
Gross proceeds.............................................. $300,000
Less: Underwriting and other costs (see Note H)............. (10,500)
--------
Net proceeds........................................... $289,500
========
</TABLE>

G. To reflect the Series B Preferred Offering.

H. To reflect the underwriting and other costs incurred in connection with the
Series B Preferred Offering.

I. To reflect the UIT Offering and paydown of the Credit Facilities with the
proceeds as follows:

<TABLE>
<S> <C>
Value of Units issued....................................... $44,059
-------
Proceeds used to paydown Credit Facilities.................. $44,059
=======
</TABLE>

J. Scheduled payments of principal on total indebtedness for each of the next
five years and thereafter, on a pro forma basis are as follows:

<TABLE>
<S> <C>
1998........................................................ $ 501,331
1999........................................................ 52,908
2000........................................................ 703,997
2001........................................................ 432,962
2002........................................................ 319,584
Thereafter.................................................. 2,701,378
----------
Subtotal............................................... 4,712,160
Net premium (net of accumulated amortization of $2.1
million).................................................. 5,609
----------
Total.................................................. $4,717,769
==========
</TABLE>

F-9
<PAGE> 132

EOP OPERATING LIMITED PARTNERSHIP

NOTES TO THE PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

K. Represents the combined historical statements of operations of the Company
for the period from July 11, 1997 to December 31, 1997 and Equity Office
Predecessors for the period from January 1, 1997 to July 10, 1997, and the
Pro Forma Condensed Combined Statement of Operations for the year ended
December 31, 1997.

L. To reflect the operations and the depreciation expense for properties
acquired in 1997 for the period from January 1, 1997 through the date of
acquisition. Interest expense was also adjusted, where applicable, to a full
year, for the year ended December 31, 1997.

<TABLE>
<CAPTION>
PROPERTY DATE ACQUIRED NOTE REFERENCE
---------------------------------------------------- ----------------- --------------
<S> <C> <C>
177 Broad Street.................................... January 29, 1997
Biltmore Apartments................................. January 29, 1997
Preston Commons..................................... March 21, 1997
Oakbrook Terrace Tower.............................. April 16, 1997
50% Interest in Civic Parking, L.L.C................ April 16, 1997
One Maritime Plaza.................................. April 21, 1997
10880 Wilshire Boulevard............................ April 23, 1997 (1)
Smith Barney Tower.................................. April 29, 1997
201 Mission Street.................................. April 30, 1997
Centerpointe I and II............................... April 30, 1997 (1)
Westbrook Corporate Center.......................... May 23, 1997 (1)
225 Franklin Street................................. June 4, 1997 (1)
30 N. LaSalle....................................... June 13, 1997
Sunnyvale Business Center........................... July 1, 1997 (1)
Adams -- Wabash Parking Facility.................... August 11, 1997
Columbus America Properties......................... September 3, 1997
Civic Opera Building................................ October 1, 1997 (1)
Prudential Properties............................... October 1, 1997
550 South Hope Street............................... October 6, 1997
10 & 30 South Wacker Drive.......................... October 7, 1997
Acorn Properties.................................... October 7, 1997
200 West Adams...................................... October 8, 1997 (1)
One Lafayette Centre................................ October 17, 1997
Lakeside Office Park................................ October 20, 1997 (1)
Acorn Properties.................................... November 21, 1997
PPM Properties...................................... November 24, 1997
LaSalle Office Plaza................................ November 25, 1997
Stanwix Parking Facility............................ November 25, 1997
101 North Wacker.................................... December 11, 1997 (1)
Wright Runstad Properties........................... December 17, 1997
Wright Runstad Associates Limited Partnership....... December 17, 1997
</TABLE>

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

(1) Represents properties acquired during 1997 by Beacon prior to the
Beacon Merger.

F-10
<PAGE> 133

EOP OPERATING LIMITED PARTNERSHIP

NOTES TO THE PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The depreciation adjustment of $56.6 million in the "1997 Acquired
Properties" column in the statement of operations for the year ended
December 31, 1997, 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.

M.To eliminate the operations of Barton Oaks Plaza II, Westlakes Office Park and
8383 Wilshire for the year ended December 31, 1997. Barton Oaks Plaza II was
sold in January and Westlakes Office Park and 8383 Wilshire were sold in May
1997.

N. To reflect the additional interest expense on debt obtained in the year ended
December 31, 1997 on properties acquired before 1997 and to reflect the $180
Million Notes Offering which occurred on September 3, 1997, and the resulting
paydown of the revolving credit facility, and to reflect the $235.3 million
of mortgage indebtedness repaid from draws on the $1.5 Billion Credit
Facility and the repayment of the revolving credit facility balance. The
adjustment also eliminates amortization expense recorded on the
mark-to-market adjustment on debt repaid from draws on the $1.5 Billion
Credit Facility and reflects amortization related to the fees associated with
the $1.5 Billion Credit Facility for the year ended December 31, 1997, as
follows:

<TABLE>
<S> <C>
Additional interest from debt obtained during 1997 on
properties acquired before 1997........................... $ 1,042
Additional interest on $180 Million Notes Offering.......... 9,218
Additional interest on $1.5 Billion Credit Facility......... 24,126
Decrease in interest from repayment of mortgage
indebtedness.............................................. (13,263)
Decrease in interest from repayment of the revolving credit
facility.................................................. (8,052)
Amortization of fees associated with the $1.5 Billion Credit
Facility.................................................. 5,018
Eliminate amortization expense recorded on mark to market
adjustment on debt repaid with the $1.5 Billion Credit
Facility.................................................. (1,483)
---------
Total.................................................. $ 16,606
=========
</TABLE>

O. To reflect the adjustment for the straight-line effect of scheduled rent
increases, assuming the Consolidation and the IPO closed on January 1, 1997.

P. To reflect the net decrease in 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 $598.4 million repaid with the net proceeds of the IPO
and cash held by Equity Office Predecessors. In addition, to eliminate the
$5.9 million of amortization historically recognized as a result of the
write-off of deferred loan costs, net of the $4.1 million amortization of the
discount required to record the mortgage debt at fair value recorded in
connection with the Consolidation and the IPO.

Q. To reflect depreciation expense related to the adjustment to record the net
equity value of the investment in real estate for the year ended December 31,
1997, on a straight-line basis, as follows:

<TABLE>
<S> <C>
Historical investment in real estate before accumulated
depreciation at time of IPO............................... $5,022,946
Less: Portion allocated to land estimated to be 10%......... (502,295)
----------
Depreciable basis........................................... $4,520,651
==========
Depreciation expense based on an estimated useful life of 40
years..................................................... $ 113,016
Less: Historical depreciation expense related to properties
contributed at the Consolidation and IPO.................. (106,888)
Less: Pro forma depreciation expense on properties acquired
in 1997 prior to the Consolidation and the IPO............ (3,391)
----------
Depreciation expense adjustment............................. $ 2,737
==========
</TABLE>

F-11
<PAGE> 134

EOP OPERATING LIMITED PARTNERSHIP

NOTES TO THE PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

R. To reflect additional general and administrative expenses expected to be
incurred as a result of reporting as a public entity as follows:

<TABLE>
<S> <C>
Trustees' and officers' insurance........................... $ 375
Printing and mailing........................................ 375
Trustees' fees.............................................. 225
Investor relations.......................................... 225
Other....................................................... 600
------
Total..................................................... $1,800
======
</TABLE>

S. Represents Beacon's historical statement of operations prior to the Beacon
Merger for the period from January 1, 1997 to December 18, 1997.

T. To reflect the adjustment for the straight-line effect of scheduled rent
increases, assuming the Beacon Merger closed on January 1, 1997.

U. To reflect amortization of mark-to-market adjustment of Beacon's mortgage
debt.

V. To reflect the depreciation expense related to the adjustment to record the
net equity value of the investment in real estate and investment in joint
ventures on a straight-line basis for the year ended December 31, 1997
associated with the Beacon Merger, as follows:

<TABLE>
<S> <C>
Investment in real estate for Beacon Properties............. $4,204,502
Less: Portion allocated to land............................. (515,022)
----------
Pro Forma depreciable basis of Beacon's investment in real
estate, net............................................... $3,689,480
==========
Depreciation expense based on an estimated useful life of 40
years..................................................... $ 92,237
Less: Historical expense related to the Beacon Properties,
including the period from December 19, 1997 to December
31, 1997 after the Beacon Merger.......................... (73,393)
Less: Pro Forma depreciation expense on Beacon's 1997
acquired properties....................................... (13,470)
----------
Adjustment to depreciation expense.......................... $ 5,374
==========
</TABLE>

W.To reflect the reduction of general and administrative expenses as a result of
the Beacon Merger.

<TABLE>
<S> <C>
Salaries and benefits....................................... $14,500
Rent........................................................ 1,200
Office and computer expenses................................ 1,600
Investor relations.......................................... 1,600
Other....................................................... 1,100
-------
Total..................................................... $20,000
=======
</TABLE>

X. To reflect the operations and the depreciation expense for the properties
acquired in 1998 (see Note A). Interest expense was also adjusted, where
applicable, to a full year, for the year ended December 31, 1997.

The depreciation adjustment of $18.9 million is based on the cost to acquire
the 1998 Acquired Properties and Probable 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.

Y. To reflect the net increase in interest expense in connection with the
February 1998 Notes Offering and the paydown of the revolving credit facility
and the $1.5 Billion Credit Facility with the net proceeds of the February
1998 Notes Offering (see Note D) and to reflect amortization of the financing
costs incurred in connection with the February 1998 Notes Offering (see Note
B).

F-12
<PAGE> 135

EOP OPERATING LIMITED PARTNERSHIP

NOTES TO THE PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Z. To reflect the decrease in interest expense in connection with the paydown of
the Credit Facilities with the net proceeds of the Series B Preferred
Offering (see Note F).

AA.To reflect preferred dividends in connection with the Series B Preferred
Offering of 5.25% per annum.

AB.To reflect the decrease in interest in connection with the paydown of the
Credit Facilities with the net proceeds of the UIT Offering (see Note I).

AC.To reflect the 5% economic interest that the Company does not own in Equity
Office Properties Management Corp. (the "EOP Management Company"):

<TABLE>
<S> <C>
Historical ownership interest in partially owned
properties................................................ $ 1,701
-------
Fees from noncombined affiliates............................ 4,950
Less: EOP Management Company expenses....................... 4,100
-------
EOP Management Company net income........................... 850
-------
Economic interest of 5% in the EOP Management Company....... 43
-------
Net income allocated to minority interests ownership in
partially owned properties................................ $ 1,744
=======
</TABLE>

F-13
<PAGE> 136

REPORT OF INDEPENDENT AUDITORS

The Partners of EOP Operating Limited Partnership

We have audited the accompanying consolidated balance sheet of EOP
Operating Limited Partnership (the "Company") and the combined balance sheet of
the Equity Office Predecessors, as defined in Note 1, as of December 31, 1997
and 1996, respectively, and the related consolidated statements of operations,
partners' capital and cash flows of the Company for the period from July 11,
1997 to December 31, 1997, and the related combined statements of operations,
owners' equity and cash flows of the Equity Office Predecessors, as defined in
Note 1, for the period from January 1, 1997 to July 10, 1997, and for the years
ended December 31, 1996 and 1995. Our audits also included the financial
statement schedule III, Real Estate and Accumulated Depreciation. These
financial statements and schedule are the responsibility of the Company's
management. 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 consolidated financial position of EOP Operating
Limited Partnership and the combined financial position of the Equity Office
Predecessors, as defined in Note 1, at December 31, 1997 and 1996, respectively,
and the consolidated results of EOP Operating Limited Partnership's operations
and cash flows for the period from July 11, 1997 to December 31, 1997, and the
combined results of the Equity Office Predecessors', as defined in Note 1,
operations and cash flows for the period from January 1, 1997 to July 10, 1997
and for the years ended December 31, 1996 and 1995 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.

/s/ Ernst & Young LLP
--------------------------------------
ERNST & YOUNG LLP

Chicago, Illinois
February 23, 1998, except for Note 25,
as to which the date is March 18, 1998

F-14
<PAGE> 137

EOP OPERATING LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEET
AND EQUITY OFFICE PREDECESSORS COMBINED BALANCE SHEET

<TABLE>
<CAPTION>
EOP OPERATING EQUITY OFFICE
LIMITED PARTNERSHIP PREDECESSORS
DECEMBER 31, DECEMBER 31,
1997 1996
------------------- -------------
(DOLLARS IN THOUSANDS,
EXCEPT UNIT DATA)
<S> <C> <C>
ASSETS
Investment in real estate................................. $11,041,014 $3,549,708
Accumulated depreciation.................................. (64,695) (257,893)
----------- ----------
10,976,319 3,291,815
Cash and cash equivalents................................. 228,853 410,420
Tenant and other receivables (net of allowance for
doubtful accounts of $675 and $55, respectively)....... 32,531 8,675
Deferred rent receivable.................................. 20,050 49,986
Escrow deposits and restricted cash....................... 25,772 32,593
Investment in unconsolidated joint ventures............... 387,332 26,910
Deferred financing costs (net of accumulated amortization
of $1,855 and $3,351, respectively).................... 5,090 8,372
Deferred leasing costs (net of accumulated amortization of
$1,473 and $18,455, respectively)...................... 26,994 62,593
Prepaid expenses and other assets......................... 48,731 21,201
----------- ----------
Total Assets.............................................. $11,751,672 $3,912,565
=========== ==========
LIABILITIES AND PARTNERS' CAPITAL/OWNERS' EQUITY
Mortgage debt (including a net premium of $1,157 and $0,
respectively).......................................... $ 2,063,017 $1,837,767
Unsecured notes........................................... 180,000 --
Lines of credit........................................... 2,041,300 127,125
Accounts payable and accrued expenses..................... 260,401 81,995
Due to affiliates......................................... 733 2,074
Distribution payable...................................... 1,191 96,500
Other liabilities......................................... 45,055 29,022
----------- ----------
Total Liabilities......................................... 4,591,697 2,174,483
----------- ----------
Commitments and contingencies (Note 24)
Minority interests -- Partially Owned Properties.......... 29,612 11,080
----------- ----------
Owners' equity.............................................. -- 1,727,002
8.98% Series A Cumulative Redeemable Preferred Units,
liquidation preference $25.00 per Unit; 100,000,000
Units authorized, and 8,000,000 issued and
outstanding............................................ 200,000 --
Partners' Capital:
General Partners....................................... 6,205,157 --
Limited Partners....................................... 725,206 --
----------- ----------
Total Partners' Capital/Owners' Equity.................... 7,130,363 1,727,002
----------- ----------
Total Liabilities and Partners' Capital/Owners' Equity.... $11,751,672 $3,912,565
=========== ==========
</TABLE>

See accompanying notes.

F-15
<PAGE> 138

EOP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENT OF OPERATIONS
AND EQUITY OFFICE PREDECESSORS COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
EOP OPERATING
LIMITED EQUITY OFFICE PREDECESSORS
PARTNERSHIP -----------------------------------------
-------------- FOR THE
FOR THE PERIOD PERIOD FROM
FROM JULY 11, JANUARY 1, FOR THE YEAR FOR THE YEAR
1997 TO 1997 TO ENDED ENDED
DECEMBER 31, JULY 10, DECEMBER 31, DECEMBER 31,
1997 1997 1996 1995
-------------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT UNIT DATA)
<S> <C> <C> <C> <C>
REVENUES:
Rental......................................... $ 314,233 $256,146 $386,481 $289,320
Tenant reimbursements.......................... 63,196 43,241 62,036 41,935
Parking........................................ 25,960 21,091 27,253 15,390
Other.......................................... 3,324 6,539 17,626 10,314
Fees from noncombined affiliates............... 2,440 2,510 5,120 5,899
Interest....................................... 3,815 9,577 9,608 8,599
----------- -------- -------- --------
Total revenues............................ 412,968 339,104 508,124 371,457
----------- -------- -------- --------
EXPENSES:
Interest:
Expense incurred............................... 76,675 80,481 119,595 100,566
Amortization of deferred financing costs....... 4,178 2,771 4,275 2,025
Depreciation..................................... 64,695 57,379 82,905 64,716
Amortization..................................... 1,473 5,884 9,057 7,415
Real estate taxes................................ 47,579 34,000 52,182 37,978
Insurance........................................ 3,196 3,060 4,863 3,352
Repairs and maintenance.......................... 50,285 45,540 71,156 53,618
Property operating............................... 54,619 44,685 72,866 56,540
General and administrative....................... 17,690 17,201 23,145 21,987
Provision for value impairment................... -- -- -- 20,248
----------- -------- -------- --------
Total expenses............................ 320,390 291,001 440,044 368,445
----------- -------- -------- --------
Income before allocation to minority interests,
income from investment in unconsolidated joint
ventures, gain on sales of real estate and
extraordinary items............................ 92,578 48,103 68,080 3,012
Minority interests -- Partially Owned Properties,
net of extraordinary gain of $20,035 in 1995... (789) (912) (2,086) (2,129)
Income from unconsolidated joint ventures........ 3,173 1,982 2,093 2,305
Gain on sales of real estate..................... 126 12,510 5,338 --
----------- -------- -------- --------
Income before extraordinary items................ 95,088 61,683 73,425 3,188
Extraordinary items.............................. (16,366) (274) -- 31,271
----------- -------- -------- --------
Net income....................................... 78,722 61,409 73,425 34,459
Preferred distributions.......................... (649) -- -- --
----------- -------- -------- --------
Net income available for Units................... $ 78,073 $ 61,409 $ 73,425 $ 34,459
=========== ======== ======== ========
Net income available per weighted average
Unit outstanding -- Basic...................... $0.44
===========
Weighted average
Units outstanding -- Basic..................... 178,647,562
===========
Net income available per weighted average
Units outstanding -- Diluted $0.43
===========
Weighted average
Units outstanding -- Diluted................... 180,014,027
===========
</TABLE>

See accompanying notes.
F-16
<PAGE> 139

EOP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS'
CAPITAL AND EQUITY OFFICE PREDECESSORS COMBINED STATEMENTS OF CHANGES IN OWNERS'
EQUITY

<TABLE>
<CAPTION>
EOP OPERATING
LIMITED
PARTNERSHIP EQUITY OFFICE PREDECESSORS
-------------- ------------------------------------------
FOR THE PERIOD FOR THE PERIOD
JULY 11, JANUARY 1, YEARS ENDED
1997 TO 1997 TO DECEMBER 31,
DECEMBER 31, JULY 10, ------------------------
1997 1997 1996 1995
-------------- -------------- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL:
Balance, beginning of period.................. $ -- $ -- $ -- $ --
Net proceeds from IPO....................... 564,506 -- -- --
Contribution of net assets from
Consolidation at fair value in exchange
for Units................................ 2,830,919 -- -- --
Issuance of Units and Warrants for
acquisitions............................. 357,672 -- -- --
Sale of Units, net.......................... 273,950 -- -- --
Issuance of Units for Beacon Merger......... 2,921,838 -- -- --
Issuance of 8.98% Series A Cumulative
Redeemable Preferred Units............... 200,000 -- -- --
Units issued for restricted units and
trustee fees............................. 165 -- -- --
Net income.................................. 78,722 -- -- --
Distributions declared to Redeemable
Preference Interests..................... (649) -- -- --
Distribution declared to partners........... (96,760) -- -- --
---------- ----------- ---------- ----------
Balance, end of period........................ $7,130,363 $ -- $ -- $ --
========== =========== ========== ==========
OWNERS' EQUITY:
Balance, beginning of period/year............. $ -- $ 1,727,002 $1,089,969 $ 731,098
Contributions............................... -- 285,542 661,265 337,048
Offering expenses........................... -- -- (1,157) (128)
Distributions............................... -- (189,752) (96,500) (12,508)
Net income.................................. -- 61,409 73,425 34,459
Contribution of Owners' Equity to the
Company in connection with the
Consolidation............................ -- (1,884,201) -- --
---------- ----------- ---------- ----------
Balance, end of period/year................. $ -- $ -- $1,727,002 $1,089,969
========== =========== ========== ==========
ALLOCATION OF PARTNERS' CAPITAL:
General Partners............................ $6,205,157 $ -- $ -- $ --
========== =========== ========== ==========
Limited Partners............................ $ 725,206 $ -- $ -- $ --
========== =========== ========== ==========
8.98% Series A Cumulative Redeemable
Preferred Units.......................... $ 200,000 $ -- $ -- $ --
========== =========== ========== ==========
</TABLE>

See accompanying notes.

F-17
<PAGE> 140

EOP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENT OF CASH FLOWS AND
EQUITY OFFICE PREDECESSORS COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
EOP OPERATING EQUITY OFFICE PREDECESSORS
LIMITED PARTNERSHIP -----------------------------------------
------------------- FOR THE
FOR THE PERIOD PERIOD FROM
FROM JULY 11, JANUARY 1, FOR THE YEAR FOR THE YEAR
1997 TO 1997 TO ENDED ENDED
DECEMBER 31, JULY 10, DECEMBER 31, DECEMBER 31,
1997 1997 1996 1995
-------------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income before preferred distributions................. $ 78,722 $ 61,409 $ 73,425 $ 34,459
Adjustment to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization........................... 70,346 66,034 96,237 74,156
(Income) from unconsolidated joint ventures............. (3,173) (1,982) (2,093) (2,305)
(Gain) on sales of real estate.......................... (126) (12,510) (5,338) --
Provision for value impairment.......................... -- -- -- 20,248
Extraordinary loss from early extinguishments of debt... 16,366 274 -- --
Extraordinary (gain) on repurchase of debt.............. -- -- -- (31,271)
Provision for doubtful accounts......................... 1,686 1,175 2,284 2,096
Allocation to minority interests........................ 789 912 2,086 2,129
Changes in assets and liabilities:
Decrease (increase) in rents receivable............... 2,064 2,664 (1,550) (2,998)
(Increase) in deferred rent receivables............... (21,421) (8,061) (20,421) (14,413)
(Increase) decrease in other assets................... (29,551) (8,839) (9,747) 1,374
Increase in accounts payable and accrued expenses..... 54,076 2,916 19,241 6,931
(Decrease) increase in due to affiliates.............. (898) (722) 1,235 (89)
Increase (decrease) in other liabilities.............. 21,874 (7,310) 10,616 3,561
----------- --------- ---------- ---------
Net cash provided by operating activities........... 190,754 95,960 165,975 93,878
----------- --------- ---------- ---------
INVESTING ACTIVITIES:
Cash received from Beacon Merger.......................... 79,786 -- -- --
Property acquisitions..................................... (1,508,928) (531,968) (768,906) (317,669)
Payments for capital and tenant improvements.............. (99,586) (59,511) (129,485) (76,985)
Payment of Beacon Merger costs............................ (62,069) -- -- --
Proceeds from sales of real estate........................ -- 72,078 14,502 --
Distributions from (investments in) unconsolidated joint
ventures................................................ 4,571 (44,260) 1,688 2,300
Payments of lease acquisition costs....................... (15,043) (9,260) (29,793) (16,106)
Decrease (increase) in escrow deposits and restricted
cash.................................................... 8,997 1,853 (12,233) 27,845
----------- --------- ---------- ---------
Net cash (used for) investing activities............ (1,592,272) (571,068) (924,227) (380,615)
----------- --------- ---------- ---------
Financing activities:
Net proceeds from sale of Units........................... 838,456 -- -- --
Proceeds from exercise of Beacon options.................. 68,191 -- -- --
Distributions to Units.................................... (95,569) -- -- --
Capital contributions..................................... -- 287,949 661,265 337,048
Capital distributions..................................... -- (288,652) (12,508) (17,800)
Payments for offering expenses............................ -- -- (1,157) (128)
(Distributions to) contributions from minority
interests -- partially owned properties................. (371) (3,401) (22,593) 141
Cash contributed by Equity Office Predecessors in
connection with Consolidation........................... 181,138 -- -- --
Proceeds from mortgage debt............................... 84,466 154,090 640,953 271,482
Proceeds from unsecured notes............................. 180,000 -- -- --
Proceeds from lines of credit............................. 2,530,425 218,000 216,943 288,000
Repurchase of debt........................................ -- -- -- (40,078)
Principal payments on mortgage debt....................... (838,354) (47,472) (254,104) (182,244)
Principal payments on lines of credit..................... (1,294,750) (72,500) (165,818) (378,000)
Payments of loan costs.................................... (7,039) (1,889) (5,430) (1,908)
Prepayment penalties on early extinguishments of debt..... (16,247) (274) -- --
----------- --------- ---------- ---------
Net cash provided by financing activities........... 1,630,346 245,851 1,057,551 276,513
----------- --------- ---------- ---------
Net increase (decrease) in cash and cash equivalents........ 228,828 (229,257) 299,299 (10,224)
Cash and cash equivalents at the beginning of the period.... 25 410,420 111,121 121,345
----------- --------- ---------- ---------
Cash and cash equivalents at the end of the period.......... $ 228,853 $ 181,163 $ 410,420 $ 111,121
=========== ========= ========== =========
SUPPLEMENTAL INFORMATION:
Interest paid during the period, including capitalized
interest of $1,890, $3,669, $4,640 and $1,682,
respectively............................................ $ 70,658 $ 82,969 $ 121,813 $ 100,700
=========== ========= ========== =========
</TABLE>

See accompanying notes.

F-18
<PAGE> 141

NOTE 1 -- BUSINESS AND FORMATION OF THE COMPANY

As used herein, "Company" means EOP Operating Limited Partnership, an
Illinois limited partnership, and the predecessors thereof ("Equity Office
Predecessors"). The Company is a subsidiary of Equity Office Properties Trust
(the "Trust"), which was formed on October 9, 1996 to continue and expand the
national office property business organized by Mr. Samuel Zell, Chairman of the
Board of Trustees of the Trust and to complete the consolidation of the Equity
Office Predecessors (the "Consolidation") and its initial public offering (the
"IPO") on July 11, 1997. The Company is a fully integrated, self-administered
and self-managed real estate company engaged in acquiring, owning, managing,
leasing and renovating office properties and parking facilities. The Trust's
assets, which include investments in joint ventures, are owned by, and
substantially all of its operations are conducted through the Company. The Trust
is the managing general partner of the Company. The Trust expects to qualify as
a real estate investment trust ("REIT") for federal income tax purposes and
generally will not be subject to federal income tax if it distributes 95% of its
taxable income and complies with a number of organizational and operational
requirements (see Note 2). As of December 31, 1997, the Company owned or had an
interest in 258 office properties (the "Office Properties") containing
approximately 65.3 million rentable square feet of office space and owned 17
stand-alone parking facilities containing approximately 16,749 parking spaces
(the "Parking Facilities" and, together with the Office Properties, the
"Properties"). The Office Properties are located in 78 submarkets in 39 markets
in 24 states and the District of Columbia. The Office Properties, by rentable
square feet, are located approximately 50% in central business districts
("CBDs") and 50% in suburban markets.

On July 11, 1997, the Company completed the Consolidation in connection
with the IPO of the Trust, in which the Trust sold 28,750,000 of its common
shares of beneficial interest, $0.01 par value per share ("Common Shares")
(including 3,750,000 Common Shares relating to the underwriters overallotment
option), at $21 per Common Share, generating proceeds of approximately $603.8
million. The Trust contributed the net proceeds from the IPO (after deducting
the underwriting discount of approximately $39.2 million) of approximately
$564.5 million to the Company in exchange for 28,750,000 units of partnership
interest in the Company ("Units"). The Company used the net proceeds of the IPO,
and available cash reserves to repay debt of approximately $678.4 million, of
which $598.4 million was mortgage debt and $80 million was a revolving line of
credit.

Concurrent with the IPO, the Company also completed the following formation
transactions which resulted in the Consolidation of the Equity Office
Predecessors into the Company:

- Zell/Merrill Lynch Real Estate Opportunity Partners Limited Partnership,
Zell/Merrill Lynch Real Estate Opportunity Partners Limited Partnership
II, Zell/Merrill Lynch Real Estate Opportunity Partners Partnership
Limited III and Zell/Merrill Lynch Real Estate Opportunity Partners
Limited Partners IV (collectively, the "ZML Opportunity Partnerships"),
the predecessor owners of the Properties, contributed their interests in
the Properties to the Company in exchange for 126,419,397 Units.

- ZML Investors Inc., ZML Investors II, Inc., Zell/Merrill Lynch Real
Estate Opportunity Partners III Trust and Zell/Merrill Lynch Real Estate
Opportunity Partners IV Trust (collectively, "ZML REITs") merged into
the Trust, with the Trust succeeding to their interests in, and becoming
the managing general partner of each of the ZML Opportunity
Partnerships.

Shareholders of the ZML REITs received 122,900,572 Common Shares of the
Trust in exchange for their interests in the ZML REITs.

- Equity Group Investments, Inc., an Illinois corporation ("EGI"), and
Equity Office Holdings, L.L.C., a Delaware limited liability company
("EOH" and together with EGI, the "Equity Group") contributed
substantially all of their interests in their office property and asset
management business and parking facilities management business
(collectively the "Management Business") to the Company in exchange for
8,358,822 Units.

- The Company transferred a portion of the office property management
business of EOH, the office property asset management business and the
parking asset management business of the Equity Group
F-19
<PAGE> 142

that relates to the property management of the properties owned by the
Equity Group, together with the 18 Properties held in partnerships or
subject to participation agreements with unaffiliated parties (the
"Joint Venture Properties") (collectively, the "Managed Property
Business") to Equity Office Properties Management Corp., a Delaware
corporation (the "EOP Management Company"), in exchange for non-voting
stock representing 95% of the economic value in the EOP Management
Company and EOH contributed $150,000 to the EOP Management Company in
exchange for voting stock representing 5% of the economic value of the
EOP Management Company.

- ZML Partners Limited Partnership, ZML Partners Limited Partnership II,
ZML Partners Limited Partnership III and ZML Partners Limited
Partnership IV (the "ZML Partners"), each of which is the general
partner of one of the ZML Opportunity Partnerships, each transferred
their 5% interest in certain corporations which owned a 1% general
partnership interest in certain of the property title holding entities
to a newly formed qualified REIT subsidiary of the Trust in exchange for
26,458 Common Shares.

- The ZML Opportunity Partnerships transferred their 95% interest in
certain corporations which owned a 1% general partner interest in
certain of the property title holding entities to a subsidiary of the
Trust in exchange for 502,740 Common Shares which in turn were
contributed to the Company. Such Common Shares have been treated as
treasury stock in the accompanying financial statements. The table below
summarizes the ownership of the Company upon the completion of the
transactions described above:

The table below summarizes the ownership of the Company upon the completion
of the transactions described above:

Ownership of EOP Operating Limited Partnership (as of IPO date):

<TABLE>
<CAPTION>
NUMBER OF UNITS PERCENTAGE
--------------- ----------
<S> <C> <C>
Equity Office Properties Trust
(held directly)........................................... 28,777,458 17.6%
Equity Office Properties Trust (held
through its interests in the
ZML Opportunity Partnerships)............................. 122,900,572 75.1%
----------- ------
Equity Office Properties Trust subtotal..................... 151,678,030 92.7%
ZML Partners (held through its interest in ZML Opportunity
Partnerships)............................................. 3,229,001 2.0%
Other limited partner (held through its interest in ZML
Opportunity Partnership II)............................... 289,824 0.2%
Equity Group Investments, Inc............................... 3,737,438 2.3%
Equity Office Holdings, L.L.C............................... 4,621,384 2.8%
----------- ------
Total....................................................... 163,555,677 100.0%
=========== ======
</TABLE>

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Consolidation was accounted for as a purchase in accordance with
Accounting Principals Board Opinion No. 16. Accordingly, the fair value of the
consideration given by the Company was used as the valuation basis for the
transactions. The assets acquired and liabilities assumed by the Company were
recorded at their fair value as of July 11, 1997 and the excess of the purchase
price over the related historical basis of the net assets acquired was allocated
primarily to investment in real estate.

In regard to EOP Management Company, the Company owns a non-voting 95%
interest but does not have legal control; however, EOP Management Company is
consolidated for financial reporting purposes, the effect of which is
immaterial. The remaining 5% equity and the controlling voting interest is owned
by an affiliate of the Company.

F-20
<PAGE> 143

The Beacon Merger (as defined in Note 4) was accounted for using the
purchase method in accordance with Accounting Principles Board Opinion No. 16.
The fair value of the consideration given by the Company in the Beacon Merger
was used as the valuation basis of the combination. The assets acquired and the
Beacon liabilities assumed were recorded at their relative fair values as of
December 19, 1997 (the "Beacon Closing Date"). The results of operations of the
Beacon properties for the period from the Beacon Closing Date through December
31, 1997 are included in the Company's consolidated statements of operations and
cash flows. In connection with the Beacon Merger, the Company also acquired a
99% equity interest in (but not voting-control of) Beacon Property Management
Corporation ("Beacon Management Company"), which manages third-party and joint
venture office and commercial space, Beacon Design Company, which provided
third-party tenant design services prior to ceasing such operations upon the
sale of its design service assets in 1998, and Beacon Construction Company,
which provides third-party construction services and is expected to cease such
operations upon completion of its existing contracts. Although the Company does
not have voting control of Beacon Management Company, Beacon Design Company and
Beacon Construction Company, they are consolidated for financial reporting
purposes, the effect of which is immaterial. The remaining 1% equity and the
controlling voting interest is owned by an affiliate of the Company.

The combined financial statements of Equity Office Predecessors prior to
the Consolidation and the IPO included interests in the Properties of the ZML
Opportunity Partnerships together with their limited and general partners
(collectively, the "ZML Funds" which includes ZML Fund I, ZML Fund II, ZML Fund
III and ZML Fund IV) and the Management Business. The financial statements of
Equity Office Predecessors are presented on a combined basis, at historical
cost, because the ZML Funds and the Management Business were under common
control. Minority interests have been recorded for those entities that were not
wholly owned by the ZML Funds. Where controlling interests were not held by the
ZML Funds, the entities were accounted for as investments in unconsolidated
joint ventures utilizing equity accounting. All intercompany transactions and
balances have been eliminated in combination.

INVESTMENT IN REAL ESTATE

Subsequent to the Consolidation, 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>
ESTIMATED
ASSET CATEGORY USEFUL LIFE
-------------- -----------
<S> <C>
Building.................................................... 40 years
Building improvements....................................... 4-40 years
Tenant improvements......................................... Term 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 to Be Disposed Of "
("Statement No. 121") which established accounting standards for the evaluation
of the potential impairment of such assets. Statement No. 121 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 $20.2 million, of which $17.5 million related to the adjustment of
investment in real estate and approximately $2.7 million related to unamortized
lease acquisition cost.

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 the Company

F-21
<PAGE> 144

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.

DEFERRED LEASING AND FINANCING COSTS

Deferred leasing and financing costs are recorded at cost. The deferred
leasing costs are amortized over the terms of the respective leases and the
deferred financing costs are amortized over the terms of the respective
financings on a straight-line basis, which approximates the effective yield
method.

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. The Company records rental income for the full term of
each lease on a straight-line basis. Accordingly, the Company records a
receivable from tenants, net of reserves, which the Company expects to collect
over the remaining term of these leases rather than currently ("Deferred Rent
Receivable"). For existing leases at acquired properties, the term of the lease
is considered to commence as of the acquisition date for purposes of this
calculation. The amounts included in rental income for the periods July 11, 1997
to December 31, 1997 and January 1, 1997 to July 10, 1997 and the years ended
December 31, 1996 and 1995, which were not currently collectible as of such
dates, were approximately $20.0 million, $7.7 million, $18.4 million and $12.7
million, respectively. Deferred Rent Receivable is not recognized for income tax
purposes.

CASH EQUIVALENTS

The Company considers cash equivalents to be all highly liquid investments
purchased with a maturity of three months or less at the date of purchase. As of
December 31, 1996 cash equivalents included deposits made to a commingled bank
account which was held in an affiliate's name. Such affiliate provided
centralized cash management services to Equity Office Predecessors.

ESCROW DEPOSITS AND RESTRICTED CASH

Escrow deposits primarily consist of amounts held by lenders to provide for
future real estate tax expenditures, tenant improvements and earnest money
deposits on acquisitions. 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 the Company's long-term
debt, consisting of mortgage loans, revolving bank loans and various interest
rate protection agreements, approximate their respective fair market values as
of December 31, 1997 and 1996, respectively. 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, tenant
and other rents receivable, accounts payable and accrued expenses are reasonable
estimates of their fair value.

INTEREST RATE PROTECTION AGREEMENTS

The Company periodically enters 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 as an adjustment to interest expense over the term of the
related financing transaction on the straight-line method, which approximates
the effective yield amount.
F-22
<PAGE> 145

INCOME TAXES

The Company is not liable for federal income taxes as the partners
recognize their proportionate share of the Company's income or loss in their tax
returns, therefore, no provision for federal income taxes is made in the
financial statements of the Company. However, the Company is subject to certain
federal and state income and franchise taxes. The Company incurred federal and
state income and franchise taxes of approximately $0.2 million, $0.9 million,
$1.4 million and $1.6 million for the periods July 11, 1997 to December 31, 1997
and January 1, 1997 to July 10, 1997 and the years ended December 31, 1996 and
1995, respectively, which are included in general and administrative expenses.

Commencing with the year ended December 31, 1997, the Trust 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 Trust
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 Trust
fails to qualify as a REIT in any taxable year, the Trust 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 Trust qualifies for
taxation as a REIT, the Trust may be subject to state and local income taxes and
to federal income tax and excise tax on its undistributed income. The aggregate
cost of land and depreciable property for federal income tax purposes as of
December 31, 1997 was approximately $7.5 billion.

INCOME PER UNIT

In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share ("Statement No. 128"). Statement No. 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. All net income per weighted average
Unit and net income per weighted average Unit -- assuming dilution amounts for
all periods have been presented, and where appropriate, restated to conform to
the Statement No. 128 requirements.

MINORITY INTERESTS -- PARTIALLY OWNED PROPERTIES

The Company reflects minority interests on the balance sheet for the
portion of properties, which are consolidated by the Company, that are not
wholly owned by the Company. The earnings or losses therefrom have been
reflected as minority interest in the Company's statements of operations.

RECLASSIFICATION

Certain reclassifications have been made to the previously reported 1996
and 1995 statements in order to provide comparability with the 1997 statements
report herein. These reclassifications have not changed the 1996 and 1995
results or owners' equity.

USE OF ESTIMATES

The preparation of the consolidated financial statements of the Company and
the combined financial statements of Equity Office Predecessors 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 reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.

F-23
<PAGE> 146

NOTE 3 -- INVESTMENT IN REAL ESTATE

Investment in real estate, including Office Properties and Parking
Facilities, was as follows:

<TABLE>
<CAPTION>
EOP OPERATING EQUITY OFFICE
LIMITED PARTNERSHIP PREDECESSORS
DECEMBER 31, DECEMBER 31,
1997 1996
------------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Land........................................................ $ 1,185,411 $ 314,370
Building.................................................... 9,706,956 2,871,690
Building improvements....................................... 55,278 161,497
Tenant improvements......................................... 89,455 196,093
Furniture and fixtures...................................... 3,914 6,058
----------- ----------
Gross investment in real estate............................. 11,041,014 3,549,708
Accumulated depreciation.................................... (64,695) (257,893)
----------- ----------
Net investment in real estate............................... $10,976,319 $3,291,815
=========== ==========
</TABLE>

In connection with the initial rental operations of the 28 State Street
property in Boston, the Company incurred and capitalized approximately $5.6
million and $4.7 million of interest costs in the years ended December 31, 1997
and 1996, respectively.

F-24
<PAGE> 147

During the year ended December 31, 1997, the Company acquired the
Properties listed below. Each Property was purchased from an unaffiliated party.
The cash portions of the acquisitions were funded from the Company's lines of
credit or working capital. In connection with certain of the acquisitions listed
below, the Company assumed indebtedness of approximately $1.4 billion and issued
Units, and the Trust issued Common Shares, preferred shares and warrants with a
value of $3.4 billion.

<TABLE>
<CAPTION>
RENTABLE TOTAL ACQUISITION
DATE ACQUIRED OFFICE PROPERTY/PORTFOLIO LOCATION SQUARE FEET COST (IN THOUSANDS)
------------- ------------------------- -------- ----------- -------------------
<S> <C> <C> <C> <C>
1/29/97......... 177 Broad Street(1) Stamford, CT 187,573 $ 36,254(2)
3/21/97......... Preston Commons(1) Dallas, TX 418,604 55,174
4/16/97......... Oakbrook Terrace Tower(1) Oakbrook Terrace, IL 772,928 130,108
4/21/97......... One Maritime Plaza(1) San Francisco, CA 523,929 99,389
4/28/97......... Smith Barney Tower(1) San Diego, CA(1) 187,999 35,148
4/30/97......... 201 Mission Street(1) San Francisco, CA 483,289 74,634
6/13/97......... 30 North LaSalle(1) Chicago, IL 925,950 100,707
9/3/97.......... LL&E Tower New Orleans, LA 545,157 61,819
9/3/97.......... Texaco Center New Orleans, LA 619,714 66,819
Houston, TX; Dallas, TX;
10/1/97......... Prudential Properties Philadelphia, PA 2,481,441 284,199
10/6/97......... 550 South Hope Los Angeles, CA 566,434 100,135
10/7/97......... 10 & 30 South Wacker Drive Chicago, IL 2,003,288 484,772(3)
10/7/97......... Acorn Properties Philadelphia, PA 849,867 130,088
10/17/97........ One Lafayette Centre Washington, DC 314,634 82,546
11/21/97........ Acorn Properties Philadelphia, PA 154,894 17,285
11/24/97........ Lakeside Square Dallas, TX 392,537 55,524
11/24/97........ Fair Oaks Plaza Fairfax, VA 177,917 24,077
11/24/97........ 1600 Duke Street Alexandria, VA 68,770 11,038
11/25/97........ LaSalle Plaza Minneapolis, MN 589,432 96,704
Anchorage, AK; Portland,
12/17/97........ Wright Runstad Properties OR; Seattle, WA 3,340,055 640,000(4)
Boston, Atlanta, Chicago,
Los Angeles, San Jose and
12/19/97........ Beacon Properties Washington, DC 20,900,000 4,016,546
---------- ----------
36,504,412 $6,602,966
========== ==========
</TABLE>

<TABLE>
<CAPTION>
TOTAL ACQUISITION
DATE ACQUIRED PARKING FACILITY LOCATION PARKING SPACES COST (IN THOUSANDS)
------------- ---------------- -------- -------------- -------------------
<S> <C> <C> <C> <C>
8/11/97......... Adams Wabash Facility Chicago, IL 670 $25,212
9/3/97.......... 601 Tchoupitoulas Garage New Orleans, LA 759 11,757
11/25/97........ Stanwix Parking Pittsburgh, PA 712 17,909
----- -------
2,141 $54,878
===== =======
</TABLE>

- -------------------------
(1) These Properties were acquired by Equity Office Predecessors. The total
acquisition cost reflected above represents the cost paid by Equity Office
Predecessors to acquire each respective Property. The acquisition of the
Properties, or the interest therein, by the Company from Equity Office
Predecessors in connection with the Consolidation, was recorded as a
purchase. Accordingly, the assets were recorded by the Company at their fair
value.

(2) The total acquisition cost also included 161 residential units.

(3) The total acquisition cost includes $19.3 million related to real estate tax
liabilities assumed at closing.

(4) The Wright Runstad Properties acquisition cost includes $15.0 million
relating to 5,000,000 warrants which expire in December 2002, to purchase
Common Shares at $39.375 per Common Share (see Note 12).

F-25
<PAGE> 148

NOTE 4 -- BEACON MERGER

On December 19, 1997, the Trust, the Company, Beacon Properties
Corporation, a Maryland corporation ("Beacon") and Beacon Partnership L.P.
("Beacon Partnership") consummated the merger of Beacon with and into the Trust
and Beacon Partnership with and into the Company (the "Beacon Merger") at a cost
of approximately $4.3 billion. In the Beacon Merger, (i) the Trust issued
80,596,117 Common Shares in exchange for all of the outstanding Beacon common
shares, (ii) the Trust issued 8,000,000 Series A Preferred Shares in exchange
for all of the outstanding Beacon preferred shares, (iii) the Company issued
8,570,886 Units in exchange for the outstanding common partnership units of
Beacon Partnership exclusive of those held by Beacon, and (iv) the Company
issued to the Trust 80,596,117 Units in exchange for the outstanding common
units of Beacon Partnership held by Beacon when it merged into the Trust and
8,000,000 Series A preferred units in exchange for the corresponding preferred
units of Beacon Partnership held by Beacon when it merged into the Trust. In
addition, the Trust assumed the obligation to issue 4,732,822 Common Shares, of
which 3,829,739 had been issued as of December 31, 1997 upon the exercise of
certain outstanding Beacon employee stock options, which resulted in the Company
issuing a corresponding number of Units to the Trust. The $4.3 billion purchase
price is comprised of the following: (1) based on a Unit price of $31.30, the
Units, including Units issued for stock options, were valued at approximately
$2.853 billion (which is net of a reduction for cash received or to be received
upon exercise of the stock options of $86 million); (2) the issuance of
8,000,000 Series A Cumulative Redeemable Preferred Units valued at their
liquidation value of $200 million; (3) the assumption of approximately $627
million of secured debt and $533 million of unsecured debt; (4) merger cost of
approximately $85 million and; (5) net of the receipt of approximately $8
million of net assets.

As a result of the Beacon Merger, the Company acquired interests in 130
Beacon properties containing approximately 20.9 million rentable square feet of
office space. The Beacon properties are located in 22 submarkets in six markets:
Boston, Atlanta, Chicago, Los Angeles, San Jose and Washington, D.C. The Beacon
properties, by rentable square feet, are located 65% in suburban markets and 35%
in CBDs, primarily Boston. As of December 31, 1997, the Beacon properties were
on a weighted average basis approximately 95% leased by a total of approximately
1,694 tenants.

In connection with the Beacon Merger, the Company also acquired a 99%
equity interest in, Beacon Management Company, which manages third-party office
and commercial space, Beacon Design Company, which provided third-party and
joint venture tenant design services prior to ceasing such operations upon the
sale of its design service assets in 1998, and Beacon Construction Company,
which provides third-party construction services and is expected to cease such
operations upon completion of its existing contracts.

NOTE 5 -- DISPOSITIONS

In May 1997, Equity Office Predecessors sold 8383 Wilshire, an Office
Property located in Beverly Hills, California for approximately $59 million. The
gain for financial reporting purposes was approximately $6.7 million.

In January 1997, Equity Office Predecessors sold Barton Oaks Plaza II for
approximately $13.5 million. The gain for financial reporting purposes was
approximately $5.9 million.

Three Lakeway is a mixed-use property, that included 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 $14.8 million and
the gain realized was approximately $5.3 million.

NOTE 6 -- INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

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, and acquired a 50% limited partnership
interest in Civic Parking, L.L.C. in April 1997. On December 17, 1997, the
Company, through a Noncontrolled Subsidiary, acquired a 30% noncontrolling
interest in Wright Runstad

F-26
<PAGE> 149

Asset Limited Partnership ("WRALP") for $20.0 million and agreed to provide up
to $20.0 million in additional financing or credit support for future
development activities of WRALP. In connection with the Beacon Merger on
December 19, 1997, the Company acquired interests in four unconsolidated joint
ventures (the "Beacon Joint Ventures"). The Company's ownership in the Beacon
Joint Ventures is as follows:

<TABLE>
<CAPTION>
COMPANY'S OWNERSHIP
PROPERTY AS OF DECEMBER 31, 1997
-------- -----------------------
<S> <C>
Polk & Taylor(A).......................................... 10%
One Post Office(B)........................................ 50%
75-101 Federal Street(C).................................. 52%
Rowes Wharf(D)............................................ 50%
</TABLE>

- -------------------------
(A) The Company owns a 1% general partner interest and a 9% limited partner
interest.

(B) The Company is a general partner in the joint venture.

(D) The Company owns a 50% interest in the first mortgage.

These investments are accounted for utilizing the equity method of
accounting. Under this method of accounting the net equity investment of the
Company is reflected on the consolidated and combined balance sheets, and the
consolidated and combined statements of operations include the Company's share
of net income or loss from the unconsolidated joint ventures. As a result of
purchase method accounting for the Beacon Merger and the Consolidation, any
difference between the carrying amount of these investments on the balance sheet
of the Company and the underlying equity in net assets is amortized as an
adjustment to income from unconsolidated joint ventures over 40 years.

Combined summarized financial information of the unconsolidated joint
ventures is as follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEETS:
Real Estate, Net.......................................... $523,670 $26,555
Other assets.............................................. 73,450 1,017
-------- -------
Total Assets........................................... $597,120 $27,572
======== =======
Mortgage notes and loans payable.......................... $344,427 $ --
Other liabilities......................................... 15,271 662
Partners' and shareholders' equity........................ 237,422 26,910
-------- -------
Total Liabilities and Partners' and Shareholders'
Equity................................................ $597,120 $27,572
======== =======
Company's share of equity................................. $155,522 $26,910
Excess of cost of investments over the net book value of
underlying net assets, net of accumulated depreciation
of $99................................................. 231,810 --
-------- -------
Carrying value of investments in unconsolidated joint
ventures and corporation............................... $387,332 $26,910
======== =======
</TABLE>

F-27
<PAGE> 150

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------
1997 1996 1995
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS:
Revenues.................................................. $16,687 $4,775 $5,002
Operating expenses........................................ 4,638 1,852 1,995
Interest expense.......................................... 793 -- --
Depreciation and amortization............................. 2,752 830 702
------- ------ ------
Net income............................................. $ 8,504 $2,093 $2,305
======= ====== ======
Company's share of net income............................. $ 5,155 $2,093 $2,305
======= ====== ======
Company's share of depreciation and amortization (real
estate related)........................................ $ 1,524 $ 830 $ 702
======= ====== ======
</TABLE>

NOTE 7 -- MORTGAGE DEBT

The Company had outstanding mortgage indebtedness of approximately $2.1
billion and $1.8 billion as of December 31, 1997 and 1996, respectively. The
historical cost, net of accumulated depreciation, of encumbered properties at
December 31, 1997 and 1996 were approximately $4.3 billion and $2.0 billion,
respectively. During the years ended December 31, 1997 and 1996, the Company (a)
repaid approximately $885.8 million and $254.1 million, respectively, of
mortgage debt with proceeds from the IPO, the credit facilities and available
cash reserves; (b) assumed approximately $890.5 million and $92.1 million,
respectively, of mortgage debt in connection with the acquisition of certain
properties; and (c) obtained proceeds from the financing of certain properties
and draws on existing mortgages totaling approximately $238.6 million and $641.0
million, respectively.

A SUMMARY OF THE COMPANY'S FIXED AND VARIABLE RATE MORTGAGE DEBT IS AS FOLLOWS:

Fixed Rate Mortgage Debt

As of December 31, 1997 and 1996, the Company had outstanding fixed rate
mortgage indebtedness of approximately $2.0 billion and $1.3 billion,
respectively. Payments on fixed rate mortgage debt are generally due in monthly
installments of principal and interest or interest only. As of December 31, 1997
and 1996, fixed interest rates ranged from 6.67% to 8.63% and 6.88% to 10%,
respectively. The weighted average fixed interest rate was approximately 7.53%
and 7.89% as of December 31, 1997 and 1996, respectively.

Variable Rate Mortgage Debt

As of December 31, 1997 and 1996, the Company had outstanding variable rate
mortgage indebtedness of approximately $23.5 million and $533.7 million,
respectively. Payments on variable rate mortgage debt are generally due in
monthly installments of principal and interest or interest only. As of December
31, 1997 the variable interest rate was 6.94% (LIBOR + 1%). As of December 31,
1996, variable interest rates ranged from 6.56% (LIBOR + 1%) to 7.83% (LIBOR +
2.25%). The weighted average variable interest rate was approximately 6.94% and
7.35% as of December 31, 1997 and 1996, respectively.

Draw Facilities

As stated in the respective loan agreements, the Company 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 December 31,
1997 and 1996, amounts available to draw under these mortgage notes were
approximately $19.0 million and $92.6 million, respectively.

F-28
<PAGE> 151

Repayment Schedule

Scheduled payments of principal on mortgage debt for each of the next five
years and thereafter, as of December 31, 1997, are as follows:

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
1998........................................................ $83,792
1999........................................................ 52,908
2000........................................................ 151,236
2001........................................................ 432,962
2002........................................................ 69,584
Thereafter.................................................. 1,271,378
----------
Subtotal............................................... 2,061,860
Net premium (net of accumulated amortization of $2.1
million).................................................. 1,157
----------
Total.................................................. $2,063,017
==========
</TABLE>

NOTE 8 -- LINES OF CREDIT

A $200 million line of credit (the "$200 Million Line") was obtained in
October 1994 and canceled in September 1996. Interest was payable monthly based
on the LIBOR + .625%. The $200 Million Line was secured by the capital
commitments of certain investors and was used to finance acquisitions.

A $275 million acquisition and term loan facility (the "$275 Million Line")
was obtained in September 1996 with a maturity in September 1999 for the purpose
of providing financing for acquisitions. Interest only was payable monthly with
the interest based on various LIBOR options plus various spreads ranging from
1.375% to 1.625% or the prime rate. As of December 31, 1996, the Company had an
outstanding balance under the $275 Million Line of approximately $127.1 million.

In April 1997, the Company amended and restated the $275 Million Line to a
$475 million unsecured revolving credit facility (the "$475 Million Line").
Under the $475 Million Line, the Company could 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 Million Line had a maturity of October 21, 1997 but was
terminated on July 15, 1997. Interest only was payable monthly with the interest
based on various LIBOR options plus 1.625% or the prime rate. The Company chose
the LIBOR option.

On July 15, 1997, the Company obtained a $600 million credit facility (the
"$600 Million Credit Facility") to be used for acquisitions and other general
corporate purposes. Amounts were drawn on the $600 Million Credit Facility to
repay the balance outstanding on the $475 Million Line which was terminated when
the $600 Million Credit Facility was obtained. The $600 Million Credit Facility
matures on July 15, 2000. The Company paid a commitment fee of approximately
$1.0 million at the closing of the $600 Million Credit Facility. Prior to the
Company obtaining an investment grade credit rating on its unsecured debt of
BBB- or Baa3 or better from two or more credit rating agencies, the $600 Million
Credit Facility initially bore interest at LIBOR plus 110 basis points, and
required payment of a quarterly unused commitment fee between .15% and .25% of
the unused portion of the $600 Million Credit Facility, depending on the average
unfunded balance during the quarter. In November 1997, the $600 Million Credit
Facility was amended and the interest rate was reduced to LIBOR plus 100 basis
points. In December 1997, the Company received an investment grade credit rating
on its senior unsecured debt from Moody's (Baa1), Duff & Phelps (BBB+) and
Standard & Poor's (BBB). Pursuant to the terms of the $600 Million Credit
Facility, these credit ratings resulted in the interest rate being reduced from
LIBOR plus 100 basis points to LIBOR plus 60 basis points, and the unused
commitment fee was replaced with a facility fee equal to .20% per annum. In
addition, a competitive bid option, whereby the lenders participating in the
$600 Million Credit Facility bid on the interest rate to be charged, became
available for up to $250 million. As of December 31, 1997, the balance of the
$600 Million Credit Facility was approximately $559 million.

F-29
<PAGE> 152

The Company assumed $533 million in unsecured debt in connection with the
Beacon Merger. The Company repaid $95 million prior to December 31, 1997 and
repaid the remaining balance in February 1998 with the proceeds from the $1.25
Billion Notes Offering, the $250 Million MOPPRS Offering and the $300 Million
PIERS Offering as described in Note 25, at which time the lines were terminated.

TERM LOAN FACILITY

In October 1997, the Company obtained a $1.5 billion unsecured credit
facility (the "$1.5 Billion Credit Facility"). The $1.5 Billion Credit Facility
is available for the acquisition of properties and general corporate purposes.
The $1.5 Billion Credit Facility carries an interest rate equal to LIBOR plus
100 basis points and may be increased or decreased upon receipt of an investment
grade unsecured debt rating. As mentioned above, the Company received an
investment grade rating in December 1997 resulting in a reduction in the
interest rate to LIBOR plus 80 basis points. The $1.5 Billion Credit Facility
matures July 1, 1998, and may be extended to October 1, 1998. The Company paid
an underwriting fee on the $1.5 Billion Credit Facility at closing of
approximately $4.9 million. In addition, an unused commitment fee is payable
quarterly in arrears based upon the unused amount of the $1.5 Billion Credit
Facility as follows: .15% per annum if the unused amount is between 0% to 33%;
.20% per annum if the unused amount is more than 33% but less than 66%; .25% per
annum if the unused amount is greater than 66%. In October 1997, the Company
used approximately $236 million of proceeds from the $1.5 Billion Credit
Facility to repay the majority of the variable rate property mortgage
indebtedness outstanding as of September 30, 1997. The Company repaid $150
million on the $1.5 Billion Credit Facility with the proceeds from the $200
million private placement of Common Shares in October 1997. Under the terms of
the $1.5 Billion Credit Facility agreement, any amounts repaid cannot be
re-drawn. In addition, amounts were drawn from the $1.5 Billion Credit Facility
for property acquisitions and general corporate purposes. As of December 31,
1997, the outstanding balance on the $1.5 Billion Credit Facility was
approximately $1.044 billion. The amount available to draw under the $1.5
Billion Credit Facility was approximately $306 million as of December 31, 1997.

NOTE 9 -- UNSECURED NOTES

On September 3, 1997, the Company completed a private debt offering of $180
million (the "$180 Million Notes Offering") with an unaffiliated party. The $180
Million Notes consist of four tranches with maturities from seven to 10 years
which were priced at an interest rate spread over the corresponding U.S.
Treasury rate. The Company used the proceeds of the $180 Million Notes Offering
to repay a portion of the $600 Million Credit Facility. In addition, in
connection with the $180 Million Notes Offering, the Company terminated $150
million of hedge agreements at a cost of approximately $3.9 million (see Note
10). A summary of the terms of the $180 Million Notes follows:

<TABLE>
<CAPTION>
STATED EFFECTIVE
TRANCHE AMOUNT RATE RATE(A)
------- ------ ------ ---------
<S> <C> <C> <C>
7-Year Senior Notes due 2004................ $ 30,000,000 7.24% 7.24%
8-Year Senior Notes due 2005................ 50,000,000 7.36 7.67
9-Year Senior Notes due 2006................ 50,000,000 7.44 7.73
10-Year Senior Notes due 2007............... 50,000,000 7.42 7.69
------------ ---- ----
$180,000,000 7.38% 7.62%
============ ==== ====
</TABLE>

- -------------------------
(A) Includes the cost of the terminated interest rate protection agreements.

NOTE 10 -- INTEREST RATE PROTECTION AGREEMENTS

In order to limit the market risk associated with variable rate debt, the
Company entered into several interest rate protection agreements. These
agreements effectively convert floating rate debt to a fixed rate basis, as well
as hedge anticipated financing transactions. A summary of the various interest
rate hedge agreements as of December 31, 1997 is as follows: (1) On June 4,
1997, the Company entered into interest rate protection agreements with major
U.S. financial institutions for $700 million of indebtedness. As a result

F-30
<PAGE> 153

of this agreement, the Company essentially "locked into" U.S. Treasury rates in
effect as of June 4, 1997, for $700 million in indebtedness. In August 1997, the
Company terminated $150 million of the $700 million of hedge agreements at a
cost of approximately $3.9 million related to the $180 Million Notes Offering
(see Note 9). The portion of the $180 Million Notes Offering protected by these
agreements consisted of three tranches with maturities of eight, nine and ten
years, respectively. The cost of the terminated hedge agreements is amortized to
interest expense over the respective terms of each tranche; (2) On October 6,
1997, the Company entered into an additional $450 million of interest rate
protection agreements based on the U.S. Treasury rates in effect at that date.
The Company has terminated $700 million of hedge agreements in connection with
the February 1998 notes offering (see Note 25) at a cost of approximately $32.6
million. The cost of these terminated hedge agreements will be amortized to
interest expense over the terms of the respective notes offering. The Company
terminated the remaining $300 million of hedge agreements in 1998 at a cost of
approximately $7.4 million which will be reflected as an extraordinary loss; (3)
Equity Office Predecessors entered into an interest rate swap agreement on
October 1995, which effectively fixed the interest rate on a $93.6 million
mortgage loan at 6.94% through the maturity of the loan on June 30, 2000.

Equity Office Predecessors sold several interest rate protection agreements
(aggregating $173 million of LIBOR-based agreements) in June 1997 at a cost of
approximately $1.1 million.

NOTE 11 -- MINORITY INTERESTS IN PARTIALLY OWNED PROPERTIES

The following properties are controlled and partially owned by the Company
but have partners with minority interests. The Company has included 100% of the
financial condition and results of operations of these properties in the
consolidated financial statements of the Company and the combined financial
statements of Equity Office Predecessors. The equity interests of the
unaffiliated partners are reflected as minority interests.

<TABLE>
<CAPTION>
COMPANY'S OWNERSHIP AS OF
PROPERTY DECEMBER 31, 1997
- -------- -------------------------
<S> <C>
CIGNA Center................................................ 95%(1)
Plaza at La Jolla Village................................... 66.67%(1)
San Felipe Plaza............................................ 35%(2)
Capital Commons Garage...................................... 50%(3)
Acorn Properties............................................ 89%(4)
</TABLE>

- -------------------------
(1) The Company owns a controlling interest and is the managing general partner.

(2) The Company is the managing general partner and receives preferential
allocations which result in the Company receiving 100% of the economic
benefits. Prior to the IPO, an affiliate of the Company was the managing
general partner.

(3) The Company owns a controlling interest and receives preferential
allocations. The unaffiliated partner is entitled to receive 50% of the
remaining cash flow after the Company receives its preferential allocations.

(4) The Company has an 89% managing general partner interest in 11 properties
and receives preferential allocations which entitles it to 99% of the
economic benefits. The Company has the option of purchasing the remaining
interest in all 11 properties, exercisable for a designated period
commencing three (3) years after the respective closing dates on the initial
purchases, for additional consideration in the amount of approximately $2.1
million, all payable in Units valued at $28.775 per Unit.

The Company purchased the unaffiliated joint venture partner's 3% interest
in First Union Center for approximately $775,000 in 1997. The Company now owns
100% of First Union Center.

F-31
<PAGE> 154

NOTE 12 -- PARTNERS' CAPITAL/OWNERS' EQUITY

UNITS

In addition to the Units issued in connection with the formation
transactions described in Note 1 -- Business and Formation of Company, the
Company also issued Units in connection with the following transactions:

<TABLE>
<CAPTION>
TRANSACTION UNITS
- ----------- -----
<S> <C>
Outstanding upon completion of the Consolidation and the IPO
(see Note 1).............................................. 163,555,677
Units issued in exchange for Properties(1).................. 12,146,845
Restricted Units issued to Trust related to Restricted
Shares awarded to Officers (see Note 21).................. 298,000
Units issued to Trust related to Common Shares issued as
Trustee compensation...................................... 5,055
Issuance of Units to Trust in exchange for contribution of
net proceeds from the sale of Common Shares(2)............ 9,685,034
Issuance of Units for Beacon Merger (including 84,425,856
Units issued to the Trust of which 3,829,739 were for
Beacon options exercised) (see Note 4).................... 92,996,742
-----------
Total as of December 31, 1997............................... 278,687,353
===========
</TABLE>

- -------------------------
(1) In September 1997, the Company purchased two Office Properties and a Parking
Facility from an unaffiliated third party located in New Orleans, Louisiana
for a purchase price of approximately $140 million. Of this amount, the
Company issued 1,692,546 Units at a price of $29 per Unit for a total of
approximately $49.1 million.

In October 1997, the Company purchased four Office Properties from an
unaffiliated party located in Houston, Texas, Dallas, Texas and
Philadelphia, Pennsylvania for a purchase price of $289 million. Of this
amount, the Company issued 2,900,000 Units at a price of $24.50 per Unit for
a total of approximately $71.1 million.

In October 1997, the Company purchased from an unaffiliated party an
interest in nine Office Properties located in suburban Philadelphia for a
purchase price of approximately $127.5 million. Of this amount, the Company
issued 499,977 Units at a price of $28.775 per Unit for a total of
approximately $14.4 million. In November 1997, two additional properties
were purchased from the same party for a purchase price of approximately
$17.2 million. Of this amount, the Company issued 124,348 Units at a price
of $28.775 per Unit for a total of approximately $3.6 million.

Also, in October 1997, the Company purchased an Office Property from an
unaffiliated party located in Washington, D.C. for a purchase price of
approximately $81.7 million. Of this amount, the Company issued 741,159
Units at a price of $32.975 per Unit for a total of approximately $24.4
million.

In December 1997, the Company purchased 10 Office Properties from an
unaffiliated party located in Seattle and Bellevue, Washington, Portland,
Oregon and Anchorage, Alaska for a purchase price of $640 million. Of this
amount, the Company issued 6,051,388 Units at a price of $29.11 per Unit for
a total of approximately $176.1 million. In addition, the Company, though a
Noncontrolled Subsidiary, acquired a non-controlling interest in the
management company of the seller for approximately $20 million. Of this
amount, the Company issued 137,427 Units at a price of $29.11 per Unit for a
total of approximately $4.0 million.

(2) In October 1997, the Trust completed two private placements for a total of
9,685,034 restricted Common Shares for a total value of approximately $273.9
million, which was contributed to the Company in exchange for a
corresponding number of Units.

WARRANTS

In connection with the December 1997 purchase of 10 Office Properties, the
Trust issued warrants that expire in December 2002 to purchase an aggregate of
5,000,000 Common Shares at an exercise price of $39.375 per Common Share. The
warrants were valued at $3 per warrant utilizing the Black-Scholes valuation

F-32
<PAGE> 155

model at the time of issuance and are reflected as an increase to partners'
capital due to the fact that upon exercise, the Company will issue Units to the
Trust on a one-for-one basis.

OWNERSHIP OF COMPANY

The limited partners of the Company as of December 31, 1997 include various
individuals and entities that contributed their properties to the Company in
exchange for a partnership interest (the "Limited Partners") and are represented
by 29,159,690 Units which are exchangeable on a one-for-one basis into the
Trust's Common Shares. As of December 31, 1997, the Trust had an approximate
89.5% interest and the Limited Partners had an approximate 10.5% interest.

In regards to the Trust, net proceeds from the various offerings of the
Trust have been contributed by the Trust to the Company in return for an
increased ownership percentage. Due to the Limited Partners' ability to convert
their interest into an ownership interest in the Trust, the net offering
proceeds contributed to the Company are allocated between the Trust, as general
partner, and the Limited Partners (to the extent represented by Units) to
account for the change in their respective percentage ownership of the equity of
the Company.

PREFERRED UNITS

On December 19, 1997, the Trust issued 8,000,000 8.98% Series A Cumulative
Redeemable Preferred Shares, liquidation preference of $25.00 per share in
connection with the Beacon Merger (see Note 4). Holders of the shares are
entitled to receive, when and as authorized by the Trust, cumulative
preferential cash distributions at the rate of 8.98% of the $25.00 liquidation
preference per annum (equivalent to a fixed annual amount of $2.245 per share).
Such distributions are cumulative from December 19, 1997 and are payable
quarterly in arrears on or before March 15, June 15, September 15 and December
15 of each year. Holders of the shares have no other voting rights except as
provided by law and have no preemptive rights. The shares are not convertible,
redeemable or entitled to the benefit of any sinking fund. On and after June 15,
2002, the Trust, at its option and upon not less than 30 nor more the 60 days'
written notice, may redeem the shares, in whole or in part, at any time or from
time to time, for cash at a redemption price of $25.00 per share, plus all
accrued and unpaid distributions thereon to the date fixed for redemption. As a
result of this transaction, the Company issued Units to the Trust on a
one-for-one basis.

DISTRIBUTIONS

On September 26, 1997, the Company declared a distribution of $0.26 per
Unit outstanding representing a pro rata distribution since the closing of the
IPO on July 11, 1997, based upon a full quarterly distribution of $0.30 per Unit
and an annual distribution of $1.20 per Unit, totaling approximately $43.0
million. The distribution was paid on October 9, 1997 to unitholders of record
on September 29, 1997.

On November 14, 1997, the Company declared a distribution of $0.30 per Unit
outstanding, totaling approximately $53.8 million. The distribution was paid on
December 19, 1997 to the unitholders of record at the close of business on
December 10, 1997.

EQUITY OFFICE PREDECESSORS CAPITAL CONTRIBUTIONS/DISTRIBUTIONS

As of July 10, 1997, the capital partners of Equity Office Predecessors
previously committed to contribute approximately $2.114 billion, of which
approximately $2.031 billion had been cumulatively contributed by capital
partners and approximately $83 million of the commitment had been canceled.

As of July 10, 1997, the Equity Office Predecessors had cumulatively
distributed approximately $305.9 million to their capital partners.

As of December 31, 1996, the net book value of the 14 apartment buildings
and two shopping centers owned by the ZML Funds (the "Non-Office Properties"),
which were not included in the Equity Office Predecessors combined financial
statements, was approximately $285.9 million. All cash deficits incurred by the
Non-Office Properties were reflected as distributions and all excess cash flow
generated by the Non-Office
F-33
<PAGE> 156

Properties, including net proceeds from the sale of these properties, are
reflected as contributions to Equity Office Predecessors. The net contributions
for the period January 1, 1997 through July 10, 1997 and the years ended
December 31, 1996 and 1995 related to the Non-Office Properties were
approximately $98.7 million, $98.8 million and $0.9 million, respectively.

During 1997, 13 Non-Office Properties were sold to an affiliated party and
two Non-Office Properties were sold to unaffiliated parties which generated net
proceeds of approximately $100.7 million which is included in the $98.7 million
net contributions from the Non-Office Properties for the period from January 1,
1997 to July 10, 1997. The ZML Fund I distributed its interest in the remaining
Non-Office Property to its capital partners prior to the Consolidation.

During 1996, two Non-Office Properties were sold to unaffiliated parties
which generated net proceeds of approximately $96.7 million which was included
in the $98.8 million net contributions from Non-Office Properties for the year
ended December 31, 1996.

NOTE 13 -- FUTURE MINIMUM RENTS

Future minimum rental receipts due on noncancelable operating leases at the
Office Properties and Parking Facilities as of December 31, 1997 were as
follows:

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
1998........................................................ $1,049,857
1999........................................................ 990,423
2000........................................................ 865,410
2001........................................................ 731,171
2002........................................................ 587,791
Thereafter.................................................. 1,982,691
----------
$6,207,343
==========
</TABLE>

The Company is subject to the usual business risks associated with the
collection of the above scheduled rents. The future minimum rents from the
Company's investment in unconsolidated joint ventures which are accounted for
utilizing the equity method, have not been included in the above schedule.

NOTE 14 -- FUTURE MINIMUM LEASE PAYMENTS

As of December 31, 1997, the Company's ownership of 13 Office Properties
and one of its Parking Facilities are subject to ground leases. 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 19, the Company leases its office space from an
affiliate. In addition, the Company has assumed lease obligations of certain
tenants at their former locations. Future minimum lease obligations under these
noncancelable leases, net of sublease rental income, as of December 31, 1997
were as follows:

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
1998........................................................ $6,099
1999........................................................ 5,481
2000........................................................ 5,531
2001........................................................ 5,567
2002........................................................ 4,604
Thereafter.................................................. 456,289
--------
$483,571
========
</TABLE>

Rental expense for the years ended December 31, 1997, 1996 and 1995, was
approximately $7.2 million, $4.5 million and $2.4 million, respectively.

F-34
<PAGE> 157

NOTE 15 -- EXTRAORDINARY ITEMS AND PROVISIONS FOR VALUE IMPAIRMENT

As reflected in the consolidated statement of operations for the period
from July 11, 1997 through December 31, 1997, and the combined statement of
operations for the period from January 1, 1997 through July 10, 1997, the
Company and Equity Office Predecessors reported an extraordinary loss of
approximately $16.4 million and $0.3 million, respectively, related to
pre-payment penalties on debt retired prior to maturity during the respective
periods with net proceeds from the IPO and available cash reserves.

As reflected in the combined statement of operations for the year ended
December 31, 1995, Equity Office Predecessors reported an extraordinary gain of
approximately $31.3 million on the repurchase of debt, which is net of the $20.0
million minority partners' share, and a provision for value impairment of
approximately $20.2 million related to Equity Office Predecessors' investment in
San Felipe Plaza Ltd.

NOTE 16 -- EARNINGS PER UNIT

The following table sets forth the computation of basic and diluted
earnings per Unit:

<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JULY 11, 1997 THROUGH
DECEMBER 31, 1997
---------------------
<S> <C>
NUMERATOR:
Net income available to Units before extraordinary items
and gain on sales of real estate....................... $ 94,313,000
Gain on sales of real estate.............................. 126,000
Extraordinary items....................................... (16,366,000)
------------
Numerator for basic and diluted earnings per Unit --income
available to Units..................................... $ 78,073,000
============
Denominator:
Denominator for basic earnings per Unit -- weighted
average Units.......................................... 178,647,562
------------
Effect of dilutive securities:
Units issuable upon exercise of Trust stock options.... 1,366,465
------------
Denominator for diluted earnings per Unit -- weighted
average Units......................................... 180,014,027
============
BASIC EARNINGS AVAILABLE TO UNITS PER WEIGHTED AVERAGE UNIT:
Net income before extraordinary items and gain on sales of
real estate............................................ $ .53
Gain on sales of real estate.............................. --
Extraordinary Items....................................... (.09)
------------
Net income per Unit....................................... $ .44
============
DILUTED EARNINGS AVAILABLE TO UNITS PER WEIGHTED AVERAGE
UNIT:
Net income before extraordinary items and gain on sales of
real estate............................................ $ .52
Gain on sales of real estate.............................. --
Extraordinary items....................................... (.09)
------------
Net income per Unit....................................... $ .43
============
</TABLE>

For additional disclosures regarding the employee stock options and the
restricted shares see Note 21.

Options to purchase 726,500 Units at a weighted average exercise price of
$32.93 per Common Share and warrants to purchase 5,000,000 Common Shares at an
exercise price of $39.375 per Common Share were outstanding during 1997 but were
not included in the computation of diluted earnings per Unit because the
respective exercise prices were greater than the average market price of the
Common Shares and, therefore, the effect would be antidilutive.

On February 13, 1998, the Trust issued 6,000,000 Preferred Income Equity
Redeemable Shares ("PIERS") and the net proceeds of $290.3 million that were
contributed to the Company were used to repay debt (see Note 25). The PIERS are
convertible at any time, at the option of the holder, unless previously

F-35
<PAGE> 158

redeemed, into Common Shares at a conversion price of $35.70 per Common Share.
Upon conversion, the Company would issue a corresponding number of Units to the
Trust, on a one-for-one basis. In addition, on February 17, 1998, the Trust
issued 2 million Options at an exercise price of $29.50 per Common Share under
the Employee Plan.

NOTE 17 -- PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)

The pro forma data presented below is included to illustrate the effect on
the Company's operations as a result of the transactions described below.

The pro forma condensed combined statement of operations for the year ended
December 31, 1997 reflects the following transactions as if they had occurred on
January 1, 1997: (a) the acquisition of 46 Office Properties and seven Parking
Facilities, including an interest in four Parking Facilities, acquired between
January 1, 1997 and December 17, 1997, and the disposition of two Office
Properties; (b) the $180 Million Notes Offering; (c) the Consolidation and the
IPO, and the decrease in interest expense resulting from the use of the net
proceeds for the repayment of mortgage debt; (d) the net change in interest
expense from draws on the various credit facilities (see Note 8) used to
refinance existing mortgage debt; (e) interest income from an interest in a
mortgage note; (f) the Beacon Merger (see Note 4); (g) the $1.25 Billion Notes
Offering and the $250 Million MOPPRS Offering (see Note 25); (h) the $300
Million PIERS Offering (see Note 25); and (i) the financing of certain
properties.

The pro forma condensed combined statement of operations for the year ended
December 31, 1996 reflects the following transactions as if they had occurred on
January 1, 1996: (a) the acquisition of 57 Office Properties and 14 Parking
Facilities, including an interest in four Parking Facilities, acquired between
January 1, 1996 and December 17, 1997, and the disposition of two Office
Properties; (b) the $180 Million Notes Offering; (c) the Consolidation and the
IPO, and the decrease in interest expense resulting from the use of the net
proceeds for the repayment of mortgage debt; (d) the net change in interest
expense from draws on the various credit facilities (see Note 8) used to
refinance existing mortgage debt; (e) interest income from an interest in a
mortgage note; (f) the Beacon Merger (see Note 4); (g) the $1.25 Billion Notes
Offering and the $250 Million MOPPRS Offering (see Note 25); (g) the $300
Million PIERS Offering (see Note 25); and (h) the financing of certain
properties.

The accompanying pro forma combined statements of operations have been
prepared by management of the Company and do not purport to be indicative of the
results which would actually have been obtained had

F-36
<PAGE> 159

the transactions described above been completed on the dates indicated or which
may be obtained in the future.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1997 1996
---- ----
(DOLLARS IN THOUSANDS,
EXCEPT UNIT DATA)
<S> <C> <C>
REVENUES:
Rental...................................................... $1,126,729 $1,023,596
Tenant reimbursements..................................... 201,678 170,096
Parking................................................... 63,707 60,209
Other..................................................... 27,648 43,526
Fees from noncombined affiliates.......................... 8,210 8,125
Interest.................................................. 23,140 21,143
----------- -----------
Total revenues......................................... 1,451,112 1,326,695
----------- -----------
EXPENSES:
Property operating........................................ 516,555 484,882
Interest.................................................. 274,940 269,998
Depreciation.............................................. 252,631 251,723
Amortization.............................................. 12,214 8,782
General and administrative................................ 56,966 32,644
----------- -----------
Total expenses......................................... 1,113,306 1,048,029
----------- -----------
Income before allocation to minority interests, income from
investment in unconsolidated joint ventures, gain on sales
of real estate and extraordinary items.................... 337,806 278,666
DISCONTINUED OPERATIONS:
Loss from operations -- Construction Company.............. (2,263) (2,609)
Loss on sale -- Construction Company...................... -- (249)
MINORITY INTERESTS:
Partially owned properties................................ (1,757) (2,142)
Income from investment in unconsolidated joint ventures..... 12,920 9,850
Gain on sales of real estate................................ -- 21,843
Preferred dividends......................................... (33,710) (33,710)
----------- -----------
INCOME BEFORE EXTRAORDINARY ITEMS........................... 312,996 271,649
Extraordinary items......................................... (16,365) --
----------- -----------
Net income.................................................. $ 296,631 $ 271,649
=========== ===========
Basic earnings per weighted average Unit.................... $ 1.06 $ .98
=========== ===========
Weighted average Units outstanding -- Basic................. 278,687,353 278,687,353
=========== ===========
Diluted earnings per weighted average Unit.................. $ 1.05 $ .96
=========== ===========
Weighted average Units outstanding -- Diluted............... 282,872,353 282,872,353
=========== ===========
</TABLE>

F-37
<PAGE> 160

NOTE 18 -- QUARTERLY DATA (UNAUDITED)

The quarterly data is as follows:

<TABLE>
<CAPTION>
4Q 3Q 2Q 1Q
12/31/97 9/30/97(A) 6/30/97 3/31/97
-------- ---------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT UNIT DATA)
<S> <C> <C> <C> <C>
Total revenues................................. $248,400 $183,886 $165,219 $154,567
Income before allocation to minority
interests.................................... $ 46,704 $ 45,736 $ 23,331 $ 24,910
Net income..................................... $ 44,631 $ 33,877 $ 30,853 $ 30,769
Net income available to Units.................. $ 43,982 $ 33,877 $ 30,853 $ 30,769
----------- ----------- -------- --------
WEIGHTED AVERAGE UNITS OUTSTANDING............. 191,572,234 164,146,710 -- --
----------- ----------- -------- --------
Basic earnings per weighted average Units...... $0.23 $0.21 $-- $--
Diluted earnings per weighted average Units.... $0.22 $0.21 $-- $--
</TABLE>

<TABLE>
<CAPTION>
4Q 3Q 2Q 1Q
12/31/96 9/30/96 6/30/96 3/31/96
-------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Total revenues................................. $154,887 $126,117 $116,970 $110,150
Income before allocation to minority
interests.................................... $ 29,688 $ 11,015 $ 14,543 $ 12,834
Net income..................................... $ 30,383 $ 11,024 $ 14,040 $ 17,978
-------- -------- -------- --------
</TABLE>

- -------------------------
(A) This column includes the operations of Equity Office Predecessors from July
1, 1997 through July 10, 1997 and the operations of the Company from July
11, 1997 through September 30, 1997. The earnings per unit disclosures
pertain only to the operations of the Company from July 11, 1997 through
September 30, 1997.

NOTE 19 -- RELATED PARTY TRANSACTIONS

Affiliates provide various services to the Company. Fees and reimbursements
paid by the Company to affiliates for the years ended December 31, 1997, 1996
and 1995 were as follows:

<TABLE>
<CAPTION>
PAYABLE AS OF
PAID YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------- --------------
1997 1996 1995 1997 1996
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Acquisition fees(A)................................ $ 777 $ 3,068 $ 1,097 $ -- $ 587
Accounting and tax related services................ 68 797 554 -- 61
Legal fees and expenses(B)......................... 3,006 3,481 3,230 550 1,295
Office rent(C)..................................... 1,068 777 668 79 --
Disposition fees................................... -- 124 -- -- --
Development fees(D)................................ 434 702 438 -- --
Reimbursement of property insurance premiums....... 6,790 5,032 3,735 32 --
Organizational and offering expenses(E)............ 106 778 180 -- 106
Administrative services(F)......................... 473 822 609 71 20
Consulting......................................... 832 274 410 1 5
------- ------- ------- ---- ------
$13,554 $15,855 $10,921 $733 $2,074
======= ======= ======= ==== ======
</TABLE>

- -------------------------
(A) Represents amounts paid by Equity Office Predecessors to Merrill Lynch, a
limited partner of the general partner of the ZML Funds.

(B) Represents amounts primarily paid to Rosenberg & Liebentritt, P.C., a law
firm, for legal fees and expenses in connection with acquisition, corporate
and leasing activity. A trustee of the Company was a principal of this law
firm until September 1, 1997 and is now of counsel.

F-38
<PAGE> 161

(D) The renovation project at the 28 State Street Office Building was being
managed by an affiliate of the Equity Group. In consideration for their
services, the development managers were paid fees which management believes
are equal to or less than market for such services.

(E) Affiliates of the Equity Group 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 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 has an indirect minority interest in
Standard Parking Limited Partnership ("SPLP") which manages the parking
operations at certain Properties that are owned by the Company. Management
believes amounts paid to SPLP are equal to market for such services.

AMOUNTS RECEIVED AND DUE FROM AFFILIATES

Affiliates of the Company lease space in certain of the Office Properties
owned by the Company. 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 $3.0 million and
$3.5 million for the years ended December 31, 1997 and 1996, respectively.

The Company provides asset and property management services to certain
noncombined office and garage properties owned by affiliates of the Equity
Group. Amounts due for these services as of December 31, 1997 and 1996 were
approximately $0.2 million and $0.8 million, respectively.

The Company entered into various lease agreements with SPLP whereby SPLP
leased certain of the Company's stand-alone Parking Facilities. 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 years ended December
31, 1997 and 1996 under these lease agreements was approximately $11.0 million
and $3.2 million, respectively. 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.

NOTE 20 -- NON-CASH INVESTING AND FINANCING ACTIVITIES

Additional supplemental disclosures of non-cash investing and financing
activities are as follows:

<TABLE>
<CAPTION>
EOP OPERATING
LIMITED PARTNERSHIP
FOR THE PERIOD FROM
JULY 11, 1997
THROUGH
DECEMBER 31, 1997
-------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Mortgage loans and lines of credit assumed through Beacon
Merger.................................................... $1,160,451
Net liabilities assumed through Beacon Merger............... $ 72,034
Units issued through Beacon Merger (assuming exercise of
4,732,822 Options)........................................ $2,853,266
8.98% Series A Cumulative Redeemable Preferred Units issued
through Beacon Merger..................................... $ 200,000
Units issued through property acquisitions (including
warrants valued at $15.0 million)......................... $ 357,672
Mortgage loans assumed through property acquisitions........ $ 263,048
Mortgage loans and line of credit assumed in the
Consolidation............................................. $2,196,708
Net liabilities assumed in the Consolidation................ $ 62,706
Units issued in the Consolidation........................... $2,830,918
</TABLE>

In addition, Equity Office Predecessors assumed mortgage loans through
property acquisitions of approximately $92.1 million and $265.8 million for the
years ended December 31, 1996 and 1995, respectively.

F-39
<PAGE> 162

NOTE 21 -- SHARE OPTION AND SHARE AWARD PLAN

The following is a description of the Trust's 1997 Share Option and Share
Award Plan (the "Employee Plan") which is included in the financial statements
because any Common Shares issued pursuant to the Employee Plan will result in
the Company issuing Units to the Trust, on a one-for-one basis.

In July 1997, the Trust adopted the Employee Plan. The purpose of the
Employee Plan is to attract and retain highly qualified executive officers,
trustees, employees and consultants. Through the Employee Plan, certain
officers, trustees, key employees and consultants of the Company were offered
the opportunity to acquire Common Shares pursuant to grants of options to
purchase Common Shares ("Options"), and to receive dividend equivalent rights
with respect to Common Shares ("Dividend Equivalents") and to receive Restricted
Shares. The Compensation Committee of the Trust determines the vesting schedule,
if any, of each Option and the term, which term shall not exceed 10 years from
the date of grant. As to the Options that have been granted through December 31,
1997, generally, one-third are exercisable one year after the initial grant,
one-third are exercisable two years following the date such Options were granted
and the remaining one-third are exercisable three years following the date such
Options were granted. With respect to the Restricted Shares granted through
December 31, 1997, generally, one-half vest three years after the initial grant,
one-fourth vest four years following the date such Restricted Shares were
granted and the remaining one-fourth vest five years following the date such
Restricted Shares were granted. The Common Shares subject to Options under the
Employee Plan were limited to 11,121,786. In connection with the establishment
of the Employee Plan, the Trust granted Options to purchase Common Shares to
certain officers, trustees, employees and consultants of the Company at the IPO
price. In addition, the Employee Plan permits the Company to issue Restricted
Shares to executive or other key employees upon such terms and conditions as
shall be determined by the Compensation Committee in its sole discretion.

The exercise price for all Options granted during 1997 under the Employee
Plan was equal to not less than the fair market value of the underlying Common
Shares at the time the Option is granted. The Employee Plan will terminate at
such time as no further Common Shares are available for issuance upon the
exercise of Options and all outstanding Options have expired or been exercised.
The Board of Trustees of the Trust may at any time amend or terminate the
Employee Plan, but termination will not affect Options previously granted. Any
Options which had vested prior to such termination would remain exercisable by
the holder thereof.

The Employee Plan is administered by the Compensation Committee which is
appointed by the Board of Trustees of the Trust. The Compensation Committee
determines those officers, employees, trustees and consultants to whom, and the
time or times at which, grants of Options will be made. The Compensation
Committee interprets the Employee Plan, adopts rules relating thereto and
determines the terms and provisions of Options.

The Company has elected to apply the provisions of Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," ("APB No. 25")
in the computation of compensation expense. Under APB No. 25's intrinsic value
method, compensation expense is determined by computing the excess of the market
price of the Common Shares over the exercise price on the measurement date. For
the Trust's Options, the intrinsic value on the measurement date (or grant date)
is zero, and no compensation expense is recognized. Financial Accounting
Standards Board No. 123 ("FASB No. 123") requires the Company to disclose pro
forma net income and income per share as if a fair value based accounting method
had been used in the computation of compensation expense. The fair value of the
Options computed under FASB No. 123 would be recognized over the vesting period
of the Options. The fair value for the Company's Options granted in 1997 was
estimated at the time the Options were granted using the Black-Scholes option
pricing model with the following weighted average assumptions: risk-free
interest rate of 5.59%; dividend yields of 4%; volatility factors of the
expected market price of the Trust's Common Shares of .24; and a weighted
average expected life of the Options and the Restricted Shares of five years.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Trust's Options have characteristics significantly
different from those of traded options, and because changes
F-40
<PAGE> 163

in the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its Options.

For purposes of pro forma disclosures, the estimated fair value of the
Options is amortized to expense over the Options' vesting period. The following
is the unaudited pro forma information for the period from July 11, 1997 through
December 31, 1997:

<TABLE>
<CAPTION>
FOR THE PERIOD
FROM JULY 11, 1997
THROUGH DECEMBER 31, 1997
-------------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Pro forma net income before extraordinary items.......... $ 85,654
Extraordinary items...................................... (16,240)
--------
Pro forma net income available to Units.................. $ 69,414
========
</TABLE>

<TABLE>
<CAPTION>
BASIC DILUTED
EARNINGS EARNINGS
PER UNIT PER UNIT
-------- --------
<S> <C> <C>
Pro forma income before extraordinary items.............. $ .53 $ .51
Extraordinary Items...................................... (.10) (.09)
----- -----
Pro forma net income..................................... $ .43 $ .42
===== =====
</TABLE>

As of December 31, 1997, there were no Options issued under the Employee
Plan that were exercisable or Restricted Shares that were vested. Exercise
prices for the 4,911,500 Options outstanding as of December 31, 1997 ranged from
$21.00 to $33.00, with a weighted average exercise price of $22.80. Expiration
dates ranged from July 11, 2007 to December 19, 2007. The remaining weighted
average contractual life of Options was 9.65 years. The weighted average grant
date fair value of Options granted during 1997 was $4.44. In addition, there
were 298,000 Restricted Shares issued during 1997.

NOTE 22 -- EMPLOYEE SHARE PURCHASE PLAN

The following description of the Trust's 1997 Non-Qualified Employee Share
Purchase Plan (the "Purchase Plan") is included in these financial statements
because any Common Shares issued pursuant to the Purchase Plan will result in
the Company issuing Units to the Trust, on a one-for-one basis.

In July 1997, the Trust adopted the Purchase Plan for the purpose of
attracting highly qualified executive officers, trustees and employees. The
Trust has reserved 2 million Common Shares (subject to adjustment for share
splits, share distributions, recapitalizations, or other corporate
restructurings) for issuance pursuant to the Purchase Plan.

The Purchase Plan is administered by the Compensation Committee of the
Trust and allows eligible employees and trustees to acquire an interest in the
Trust through the purchase of Common Shares from the Trust at a price equal to
85% of the lesser of (i) the closing price of the Common Shares on the New York
Stock Exchange ("NYSE") on the day prior to the purchase or (ii) the average
closing price of Common Shares on the NYSE for the six-month period prior to the
purchase.

Common Shares will be offered under the Purchase Plan in semi-annual
offering periods. No such Common Shares were offered as of December 31, 1997.
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.

NOTE 23 -- 401(K) PLAN

The Trust has established 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.

F-41
<PAGE> 164

The 401(k) Plan permits eligible employees of the Company to defer up to
16% of their annual compensation, subject to certain limitations imposed by the
Internal Revenue Code. The employees' elective deferrals are immediately vested
and nonforfeitable upon contribution to the 401(k) Plan. The Company matches
dollar for dollar employee contributions to the 401(k) Plan up to 4% of the
employee's annual salary. In addition, the Company may elect to make a
discretionary profit sharing contribution.

NOTE 24 -- COMMITMENTS AND CONTINGENCIES

CONCENTRATION OF CREDIT RISK

The Company 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 the Company believes that the risk is not significant. In
addition, the Company has entered into certain interest rate protection
agreements (see Note 10) and 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

The Company, as an owner of real estate, is subject to various
environmental laws of federal and local governments. Compliance by the Company
with existing laws has not had a material adverse effect on the Company's
financial condition and results of operations, and management does not believe
it will have such an impact in the future. However, the Company 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

The Company has become a party to various legal actions resulting from the
operational activities transferred to the Operating Partnership in connection
with the Consolidation and the Beacon Merger. 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.

The Company is involved in continuing discussions with its joint venture
partner in One Post Office Square and Rowes Wharf, which was acquired in
connection with the Beacon Merger, with respect to the Company's control over
property management of such Properties. Such joint venture partner did not
consent to the transfer to the Company of Beacon's joint venture interest in
these Properties. Although the Company believes that such consent was not
required, unless the Company is able to reach an agreement with respect to
day-to-day management of such Properties, it is possible that the joint venture
partner could challenge the transfer of such Properties in the Beacon Merger, or
seek to trigger the buy-sell remedy found in the joint venture documents.

Except as described above, management of the Company does not believe there
is any litigation threatened against the Company other than routine litigation
arising out of the ordinary course of business, some of which is expected to be
covered by liability insurance, and none of which is expected to have a material
adverse effect on the consolidated and combined financial statements of the
Company.

GEOGRAPHICAL RISK

The Company carries earthquake insurance on all of the 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 1970s have
established construction standards for all new buildings. The current and
strictest construction standards were adopted in 1987. Of the 43 Properties
located in California, 12 have been built 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

F-42
<PAGE> 165

construction. No assurance can be given that material losses in excess of
insurance proceeds will not occur in the future.

NOTE 25 -- SUBSEQUENT EVENTS

The following significant transactions relating to the Company occurred
during the period from January 1, 1998 to March 18, 1998:

1) In January 1998, the Company acquired BP Garage, located in
Cleveland, Ohio, from an unaffiliated third party for a purchase price of
approximately $10.2 million in cash.

2) In February 1998, the Trust completed the private placement of
6,000,000 of its 5.25% Preferred Income Equity Redeemable Shares(SM)
(PIERS), $50 liquidation per share. This offering generated net proceeds of
approximately $290.3 million after offering costs of $9.7 million and was
priced with a 20% conversion premium. The PIERS are convertible at any time
by the holder into Common Shares at a conversion price of $35.70 per Common
Share, equivalent to a conversion ratio of 1.40056 Common Shares for each
PIERS. Proceeds from this sale were contributed to the Company in exchange
for a corresponding number of Series B Preferred Units and have been used
to pay down borrowings under the Company's credit facilities. The PIERS are
non-callable for five years with a mandatory call in year 10. The annual
dividend of $2.625 per PIERS will be paid quarterly.

3) In February 1998, the Company completed the private placement of
$1.25 billion of senior unsecured notes (the "$1.25 Billion Notes
Offering"). The notes consist of four tranches with maturities of five to
20 years which were priced at an interest rate spread over the
corresponding Treasury rate.

Additionally, the Company privately placed $250 million of 6.376%
Mandatory Par Put Remarketed Securities ("$250 Million MOPPRS Offering")
due February 15, 2012, which are subject to mandatory tender on February
15, 2002. The MOPPRS are senior unsecured obligations of the Company.

The proceeds to the Company from the issuance of the $1.25 Billion
Notes and $250 Million MOPPRS, net of offering costs, were approximately
$1.49 billion. The Company has terminated $700 million of hedge agreements
in connection with the $1.25 Billion Notes Offering and the $250 Million
Notes Offering at a cost of approximately $32.6 million which will be
amortized as an adjustment to interest expense. The Company terminated the
remaining $300 million of hedge agreements at a cost of approximately $7.4
million in connection with the PIERS which will be reflected as an
extraordinary loss in 1998 (see Note 10). The weighted average interest
cost of the notes and MOPPRS, including the amortization of the offering
and transaction costs and the costs incurred in connection with the
termination of hedge agreements is approximately 6.97%.

A summary of the terms of the $1.25 Billion Notes Offering and $250
Million MOPPRS Offering are as follows:

<TABLE>
<CAPTION>
STATED EFFECTIVE
TRANCHE AMOUNT RATE RATE(A)
------- ------ ------ ---------
<S> <C> <C> <C>
4 Year MOPPRS due 2002................................. $250,000,000 6.38% 6.42%
5 Year Notes due 2003.................................. 300,000,000 6.38 6.77
7 Year Notes due 2005.................................. 400,000,000 6.63 7.06
10 Year Notes due 2008................................. 300,000,000 6.75 7.03
20 Year Notes due 2018................................. 250,000,000 7.25 7.56
-------------- ---- ----
$1,500,000,000 6.66% 6.97%
============== ==== ====
</TABLE>

- -------------------------
(A) Includes the cost of the terminated interest rate protection agreements
and offering and transaction costs.

On March 5, 1998, the Company filed a registration statement relating
to an offer to exchange the $180 Million Notes, the $1.25 Billion Notes and
the $250 Million MOPPRS for registered securities of the Company with terms
identical in all material respects to the terms of the existing notes.
F-43
<PAGE> 166

4) In February 1998, the Company entered into a contract to purchase
the Rand Tower Garage in Minneapolis, Minnesota, upon completion of the
parking structure. The purchase price for Rand Tower Garage, which is
comprised of 589 parking spaces in Minneapolis' Central Business District,
will be approximately $19 million. Although the project is slated for
completion in January 1999, this transaction is contingent upon certain
terms and conditions as set forth in the purchase agreement. There can be
no assurance that this transaction will be consummated as described above.

5) In February 1998, the Trust issued 2.0 million Options at an
exercise price of $29.50 per Common Share under the Employee Plan.

6) In February 1998, the Company obtained financing of $60 million
collateralized by the St. Louis Parking Garages. The Company has a 50%
ownership interest in this Parking Facility and, accordingly, received $30
million of the financing proceeds. This loan has a 6.85% fixed interest
rate and a six year term.

7) In March 1998, the Trust's Board of Trustees declared a first
quarter dividend for the 8.98% Series A Cumulative Redeemable Preferred
Shares. A dividend of $0.56125 per share will be paid on March 15, 1998 to
shareholders of record as of March 9, 1998. In addition, the Trust's Board
of Trustees declared a first quarter dividend/distribution in the amount of
$0.32 per Common Share/Unit payable on April 10, 1998, to common
shareholders/unitholders of record at the close of business on March 31,
1998.

8) In March 1998, the Trust's Board of Trustees approved the purchase
of Prominence in Buckhead, an office building development in Atlanta,
Georgia. The property, which will consist of a 430,000 square foot building
and 1,350 parking spaces will be acquired upon its completion in mid 1999.
The purchase will also include an 11.88-acre site that may be used to
develop Phase II to Prominence. The purchase price for the described assets
will be approximately $70 million. This transaction is contingent upon
certain terms and conditions as set forth in the purchase agreement. There
can be no assurance that this transaction will be consummated as described
above.

9) In March 1998, the Company purchased from an unaffiliated party 100
Summer Street, which consists of approximately 1.0 million total square
feet and is located in Boston, Massachusetts. The purchase price was
approximately $222.0 million in cash.

F-44
<PAGE> 167

SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION AS OF DECEMBER 31,
1997(14)
<TABLE>
<CAPTION>
COSTS CAPITALIZED
SUBSEQUENT TO
INITIAL COST TO COMPANY ACQUISITION
------------------------------- ----
BUILDINGS
DECEMBER 31, 1997 AND
DESCRIPTION LOCATION ENCUMBRANCES LAND IMPROVEMENTS LAND
----------- -------- ----------------- ---- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
Office Properties:
1 60 Spear Street Building...... (3) San Francisco, CA $ 0 $ 2,125,200 $ 19,126,500 $0
2 San Felipe Plaza.............. (3) Houston, TX 53,087,500 13,471,300 117,984,100 0
3 Summit Office Park............ (3) Ft. Worth, TX 0 1,421,000 12,789,700 0
4 5100 Brookline................ (3) Oklahoma City, OK 0 570,700 4,236,500 0
5 Tampa Commons................. (3) Tampa, FL 0 2,783,900 25,054,600 0
6 Intercontinental Center....... (3) Houston, TX 0 1,750,700 14,406,300 0
7 First Union Center............ (3) Ft. Lauderdale, FL 0 3,954,000 35,585,900 0
8 Four Forest................... (3) Dallas, TX 0 4,767,900 42,911,400 0
9 Dominion Tower................ (3) Norfolk, VA 0 4,643,700 41,091,200 0
10 Northborough Tower............ (3) Houston, TX 0 1,704,000 12,185,800 0
11 500 Marquette Building........ (3) Albuquerque, NM 0 2,219,900 19,978,500 0
12 Atrium Towers................. (3) Oklahoma City, OK 0 749,000 6,741,600 0
13 One Clearlake Centre.......... (3) W. Palm Beach, FL 0 4,585,700 18,771,300 0
14 Community Corporate Center.... (3) Columbus, OH 16,719,900 3,018,900 27,169,800 0
15 Sarasota City Center.......... (3) Sarasota, FL 0 2,239,600 20,156,700 0
16 Denver Corporate Center II and
III........................... (3) Denver, CO 0 6,059,400 36,534,300 0
17 University Tower.............. (3) Durham, NC 0 2,085,100 18,766,200 0
18 Shelton Pointe................ (3) Shelton, CT 0 1,513,900 13,625,200 0
19 San Jacinto Center............ (3) Austin, TX 0 5,074,500 45,670,600 0
20 1111 19th Street.............. (3) Washington D.C. 0 5,024,000 45,216,000 0
21 Bank One Center/Tower......... (3) Indianapolis, IN 0 14,608,200 131,473,600 0
22 North Central Plaza Three..... (3) Dallas, TX 0 3,632,100 32,689,300 0
23 The Quadrant.................. (3) Englewood, CO 0 4,357,200 39,215,300 0
24 Canterbury Green.............. (3)(4) Stamford, CT 19,034,200 0 41,987,100 0
25 Three Stamford Plaza.......... (3) Stamford, CT 16,562,800 3,956,600 35,609,700 0
26 Union Square.................. (3) San Antonio, TX 0 2,368,500 14,236,000 0
27 One North Franklin............ (3) Chicago, IL 0 9,830,500 88,474,400 0
28 1620 L Street................. (3) Washington, DC 0 2,708,200 24,374,100 0
29 One & Two Stamford Plaza...... (3) Stamford, CT 0 8,267,700 74,409,300 0
30 300 Atlantic Street........... (3) Stamford, CT 0 4,632,300 41,690,900 0
31 Sterling Plaza................ (3) Dallas, TX 0 3,810,600 34,295,500 0
32 1700 Higgins.................. (3) Des Plaines, IL 3,379,700(5) 1,323,100 11,907,900 0
33 Franklin Plaza................ (3) Austin, TX 34,087,800(5) 6,502,400 58,521,300 0
34 Northwest Center.............. (3) San Antonio, TX 6,465,100(5) 1,947,900 17,531,900 0
35 One Columbus Building......... (3) Columbus, OH 29,386,100(5) 4,956,300 44,606,300 0
36 One Crosswoods Center......... (3) Columbus, OH 3,449,200(5) 1,058,900 9,529,700 0
37 One Lakeway................... (3) Metairie, LA 9,697,600(5) 2,803,900 25,235,400 0
38 Three Lakeway................. (3) Metairie, LA 17,018,700(5) 4,695,000 43,517,200 0
39 Two Lakeway................... (3) Metairie, LA 14,692,600(5) 4,643,500 41,791,800 0
40 Westshore Center.............. (3) Tampa, FL 7,052,600(5) 1,978,800 17,808,700 0

<CAPTION>
COSTS CAPITALIZED
SUBSEQUENT TO GROSS AMOUNT CARRIED AT CLOSE
ACQUISITION OF PERIOD 12/31/97
---------------- -------------------------------
BUILDINGS BUILDINGS
AND AND ACCUMULATED DATE DATE DEPRECIABLE
IMPROVEMENTS LAND IMPROVEMENTS TOTAL(1) DEPRECIATION CONSTRUCTED ACQUIRED LIVES(2)
------------ ---- ------------ -------- ------------ ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

1 $ 0 $ 2,125,200 $ 19,126,500 $ 21,251,700 $ (218,700) 1967 9/29/87 40
2 2,131,400 13,471,300 120,115,500 133,586,800 (1,487,800) 1984 9/29/87 40
3 311,400 1,421,000 13,101,100 14,522,100 (163,300) 1974 3/01/89 40
4 120,100 570,700 4,356,600 4,927,300 (53,100) 1974 3/01/89 40
5 19,200 2,783,900 25,073,800 27,857,700 (286,400) 1985 4/25/89 40
6 43,500 1,750,700 14,449,800 16,200,500 (165,500) 1983 6/28/89 40
7 74,400 3,954,000 35,660,300 39,614,300 (407,900) 1991 6/28/89 40
8 590,100 4,767,900 43,501,500 48,269,400 (523,900) 1985 6/29/89 40
9 238,800 4,643,700 41,330,000 45,973,700 (482,100) 1987 7/25/89 40
10 292,300 1,704,000 12,478,100 14,182,100 (149,600) 1983 8/03/89 40
11 370,200 2,219,900 20,348,700 22,568,600 (255,000) 1985 8/15/89 40
12 374,300 749,000 7,115,900 7,864,900 (94,600) 1980 12/15/89 40
13 562,000 4,585,700 19,333,300 23,919,000 (239,900) 1987 12/29/89 40
14 200,900 3,018,900 27,370,700 30,389,600 (327,100) 1987 6/14/90 40
15 72,500 2,239,600 20,229,200 22,468,800 (236,800) 1989 9/28/90 40
16 603,300 6,059,400 37,137,600 43,197,000 (427,200) 1981-82 12/20/90 40
17 146,800 2,085,100 18,913,000 20,998,100 (226,100) 1987 10/16/91 40
18 245,700 1,513,900 13,870,900 15,384,800 (160,300) 1985 11/26/91 40
19 877,900 5,074,500 46,548,500 51,623,000 (555,400) 1987 12/13/91 40
20 154,700 5,024,000 45,370,700 50,394,700 (527,900) 1979 12/18/91 40
21 1,206,700 14,608,200 132,680,300 147,288,500 (1,543,200) 1990 3/24/92 40
22 273,700 3,632,100 32,963,000 36,595,100 (472,100) 1986 4/21/92 40
23 634,100 4,357,200 39,849,400 44,206,600 (464,200) 1985 12/01/92 40
24 370,500 0 42,357,600 42,357,600 (482,800) 1987 12/15/92 40
25 163,100 3,956,600 35,772,800 39,729,400 (419,800) 1980 12/15/92 40
26 289,100 2,368,500 14,525,100 16,893,600 (179,100) 1986 12/23/92 40
27 378,800 9,830,500 88,853,200 98,683,700 (1,026,800) 1991 12/31/92 40
28 662,500 2,708,200 25,036,600 27,744,800 (329,400) 1989 2/05/93 40
29 796,400 8,267,700 75,205,700 83,473,400 (899,100) 1986 3/30/93 40
30 522,000 4,632,300 42,212,900 46,845,200 (501,200) 1987 3/30/93 40
31 367,800 3,810,600 34,663,300 38,473,900 (409,100) 1984 6/25/93 40
32 29,400 1,323,100 11,937,300 13,260,400 (138,900) 1986 11/12/93 40
33 1,269,800 6,502,400 59,791,100 66,293,500 (741,000) 1987 11/12/93 40
34 132,600 1,947,900 17,664,500 19,612,400 (206,300) 1984 11/12/93 40
35 316,200 4,956,300 44,922,500 49,878,800 (515,000) 1987 11/12/93 40
36 188,100 1,058,900 9,717,800 10,776,700 (119,100) 1984 11/12/93 40
37 327,000 2,803,900 25,562,400 28,366,300 (305,400) 1981 11/12/93 40
38 1,097,300 4,695,000 44,614,500 49,309,500 (557,500) 1987 11/12/93 40
39 523,700 4,643,500 42,315,500 46,959,000 (505,200) 1984 11/12/93 40
40 150,300 1,978,800 17,959,000 19,937,800 (217,200) 1984 11/12/93 40
</TABLE>

F-45
<PAGE> 168
<TABLE>
<CAPTION>
COSTS CAPITALIZED
SUBSEQUENT TO
INITIAL COST TO COMPANY ACQUISITION
------------------------------- ----
BUILDINGS
DECEMBER 31, 1997 AND
DESCRIPTION LOCATION ENCUMBRANCES LAND IMPROVEMENTS LAND
----------- -------- ----------------- ---- ------------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
41 NationsBank Plaza............. (3) Nashville, TN 0 3,049,200 27,443,100 0
42 The Plaza at La Jolla
Village....................... (3) San Diego, CA 57,943,100 11,839,400 98,247,900 0
43 Interco Corporate Tower....... (3) Clayton, MO 22,038,100 4,688,400 42,195,200 0
44 9400 NCX...................... (3) Dallas, TX 0 3,570,000 32,129,700 0
45 Four Stamford Plaza........... (3) Stamford, CT 15,825,200 4,470,900 40,237,900 0
46 1920 Main Plaza............... (3) Irvine, CA 0 5,480,700 47,525,800 0
47 Paces West.................... (3) Atlanta, GA 0 12,833,700 75,024,500 0
48 One Market.................... (3) San Francisco, CA 151,265,200 34,814,400 313,329,700 0
49 2010 Main Plaza............... (3) Irvine, CA 0 5,197,100 46,773,700 0
50 1100 Executive Tower.......... (3) Orange, CA 0 10,112,000 41,600,900 0
51 28 State Street............... (3)(6) Boston, MA 0 9,512,600 85,613,100 0
52 850 Third Avenue.............. (3) New York, NY 0 9,605,900 86,453,200 0
53 161 North Clark............... (3) Chicago, IL 111,883,100 15,881,700 142,936,100 0
54 Wachovia Center............... (3) Charlotte, NC 26,307,200 5,061,000 45,548,900 0
55 Central Park.................. (3) Atlanta, GA 55,033,500 9,162,600 82,463,100 0
56 One American Center........... (3) Austin, TX 0 0 70,811,500 0
57 Pasadena Towers............... (3) Pasadena, CA 47,474,100 7,087,500 63,787,500 0
58 580 California................ (3) San Francisco, CA 29,884,400 7,489,000 67,401,300 0
59 1601 Market Street............ (3) Philadelphia, PA 0 5,780,800 52,027,500 0
60 Promenade II.................. (3) Atlanta, GA 95,906,900 14,850,000 133,650,200 0
61 Two California Plaza.......... (3) Los Angeles, CA 0 0 156,197,000 0
62 BP Tower...................... (3) Cleveland, OH 84,587,300 16,450,700 148,056,200 0
63 Sun Trust Center.............. (3) Orlando, FL 0 11,023,600 99,212,300 0
64 Reston Town Center............ (3) Reston, VA 91,361,300 23,425,200 154,576,300 0
65 49 East Thomas Road........... (3) Phoenix, AZ 0 65,300 587,800 0
66 Colonnade I................... (3) San Antonio, TX 0 1,413,700 12,722,800 0
67 One Phoenix Plaza............. (3) Phoenix, AZ 0 6,191,900 55,726,900 0
68 177 Broad Street.............. (3)(7) Stamford, CT 0 3,941,200 35,470,900 0
69 Preston Commons............... (3) Dallas, TX 0 5,737,200 51,589,100 0
70 Oakbrook Terrace Tower........ (3) Oakbrook Terrace, IL 0 11,950,100 107,550,900 0
71 One Maritime Plaza............ (3) San Francisco, CA 0 11,532,700 103,793,800 0
72 Smith Barney Tower............ (3) San Diego, CA 0 2,657,700 23,919,400 0
73 201 Mission Street............ (3) San Francisco, CA 0 8,870,800 79,836,600 0
74 30 N. LaSalle Street.......... (3) Chicago, IL 0 12,489,000 112,400,700 0
75 LL&E Tower.................... New Orleans, LA 37,500,000(8) 6,185,800 55,672,200 0
76 Texaco Center................. New Orleans, LA 42,500,000(8) 6,686,300 60,177,000 0
77 Prudential Portfolio.......... (9) Various 0 28,456,300 256,106,600 0
78 550 South Hope Street......... Los Angeles, CA 0 10,017,500 90,157,600 0
79 10 & 30 South Wacker.......... Chicago, IL 0 48,502,500 436,522,400 0
80 Four Falls Corporate Center... Conshohocken, PA 0 4,929,500 44,365,700 0
81 Four and Five Valley Square... Blue Bell, PA 0 864,500 7,781,200 0
82 Oak Hill Plaza................ King of Prussia, PA 0 2,205,200 19,847,100 0
83 One Devon Square.............. Wayne, PA 0 1,023,500 9,211,000 0
84 Three Devon Square............ Wayne, PA 0 411,400 3,702,800 0

<CAPTION>
COSTS CAPITALIZED
SUBSEQUENT TO GROSS AMOUNT CARRIED AT
ACQUISITION CLOSE OF PERIOD 12/31/97
---------------- -------------------------------
BUILDINGS BUILDINGS
AND AND ACCUMULATED DATE DATE DEPRECIABLE
IMPROVEMENTS LAND IMPROVEMENTS TOTAL(1) DEPRECIATION CONSTRUCTED ACQUIRED LIVES(2)
------------ ---- ------------ -------- ------------ ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
41 229,900 3,049,200 27,673,000 30,722,200 (317,800) 1977 12/01/93 40
42 351,200 11,839,400 98,599,100 110,438,500 (1,134,200) 1987-1990 3/10/94 40
43 338,100 4,688,400 42,533,300 47,221,700 (486,200) 1986 5/27/94 40
44 1,895,200 3,570,000 34,024,900 37,594,900 (454,700) 1981 6/24/94 40
45 94,300 4,470,900 40,332,200 44,803,100 (460,400) 1979 8/31/94 40
46 690,100 5,480,700 48,215,900 53,696,600 (654,600) 1988 9/29/94 40
47 1,425,000 12,833,700 76,449,500 89,283,200 (948,800) 1987 10/31/94 40
48 18,864,800 34,814,400 332,194,500 367,008,900 (4,391,600) 1976 11/22/94 40
49 259,700 5,197,100 47,033,400 52,230,500 (559,400) 1988 12/13/94 40
50 377,500 10,112,000 41,978,400 52,090,400 (503,200) 1987 12/15/94 40
51 27,919,400 9,512,600 113,532,500 123,045,100 (387,300) 1968 1/23/95 40
52 2,243,100 9,605,900 88,696,300 98,302,200 (1,075,900) 1960 3/20/95 40
53 11,149,300 15,881,700 154,085,400 169,967,100 (1,864,800) 1992 7/26/95 40
54 481,600 5,061,000 46,030,500 51,091,500 (524,900) 1972 9/01/95 40
55 556,000 9,162,600 83,019,100 92,181,700 (975,500) 1986 10/17/95 40
56 552,200 0 71,363,700 71,363,700 (815,200) 1984 11/01/95 40
57 1,383,200 7,087,500 65,170,700 72,258,200 (768,000) 1990-1991 12/14/95 40
58 1,741,600 7,489,000 69,142,900 76,631,900 (888,700) 1984 12/21/95 40
59 760,500 5,780,800 52,788,000 58,568,800 (661,700) 1970 1/18/96 40
60 3,482,500 14,850,000 137,132,700 151,982,700 (1,632,200) 1990 6/14/96 40
61 14,041,300 0 170,238,300 170,238,300 (2,954,000) 1992 8/23/96 40
62 312,300 16,450,700 148,368,500 164,819,200 (1,702,200) 1985 9/04/96 40
63 1,065,600 11,023,600 100,277,900 111,301,500 (1,172,300) 1988 9/18/96 40
64 428,000 23,425,200 155,004,300 178,429,500 (1,779,500) 1990 10/22/96 40
65 0 65,300 587,800 653,100 (6,600) 1974 12/11/96 40
66 360,900 1,413,700 13,083,700 14,497,400 (170,200) 1983 12/04/96 40
67 0 6,191,900 55,726,900 61,918,800 (636,400) 1989 12/04/96 40
68 375,200 3,941,200 35,846,100 39,787,300 (413,900) 1989 1/29/97 40
69 956,100 5,737,200 52,545,200 58,282,400 (631,400) 1986 3/21/97 40
70 392,200 11,950,100 107,943,100 119,893,200 (1,237,600) 1988 4/16/97 40
71 1,682,200 11,532,700 105,476,000 117,008,700 (1,209,000) 1967 4/21/97 40
72 1,179,100 2,657,700 25,098,500 27,756,200 (379,000) 1987 4/28/97 40
73 258,000 8,870,800 80,094,600 88,965,400 (915,000) 1981 4/30/97 40
74 569,600 12,489,000 112,970,300 125,459,300 (1,293,600) 1974 6/13/97 40
75 127,300 6,185,800 55,799,500 61,985,300 (411,300) 1987 9/3/97 40
76 393,000 6,686,300 60,570,000 67,256,300 (454,100) 1984 9/3/97 40
77 5,343,900 28,456,300 261,450,500 289,906,800 (1,443,400) Various 10/1/97 40
78 0 10,017,500 90,157,600 100,175,100 (469,400) 1991 10/6/97 40
79 54,100 48,502,500 436,576,500 485,079,000 (2,277,300) 1983 10/7/97 40
80 132,000 4,929,500 44,497,700 49,427,200 (238,900) 1988 10/7/97 40
81 15,000 864,500 7,796,200 8,660,700 (40,500) 1988 10/7/97 40
82 2,800 2,205,200 19,849,900 22,055,100 (103,300) 1982 10/7/97 40
83 1,200 1,023,500 9,212,200 10,235,700 (47,900) 1984 10/7/97 40
84 0 411,400 3,702,800 4,114,200 (19,300) 1985 10/7/97 40
</TABLE>

F-46
<PAGE> 169
<TABLE>
<CAPTION>
COSTS CAPITALIZED
SUBSEQUENT TO
INITIAL COST TO COMPANY ACQUISITION
------------------------------- ----
BUILDINGS
DECEMBER 31, 1997 AND
DESCRIPTION LOCATION ENCUMBRANCES LAND IMPROVEMENTS LAND
----------- -------- ----------------- ---- ------------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
85 Two Devon Square.............. Wayne, PA 0 658,500 5,926,800 0
86 Two Valley Square............. Blue Bell, PA 0 878,000 7,901,400 0
87 Walnut Hill Plaza............. King of Prussia, PA 14,713,700 2,046,300 18,416,800 0
88 One Lafayette Centre.......... Washington, D.C. 0 8,257,000 74,312,800 0
89 One Valley Square............. Blue Bell, PA 0 717,600 6,457,600 0
90 Three Valley Square........... Blue Bell, PA 0 1,012,400 9,111,600 0
91 1600 Duke Street.............. Alexandria, VA 0 1,105,300 9,948,500 0
92 Fair Oaks Plaza............... Fairfax, VA 0 2,411,600 21,704,200 0
93 Lakeside Square............... Dallas, TX 0 8,261,000 47,349,300 0
94 LaSalle Plaza................. Minneapolis, MN 0 9,679,000 87,111,400 0
95 1001 Fifth Avenue............. Portland, OR 20,691,500(10) 5,381,200 48,615,200 0
96 1111 Third Avenue............. Seattle, WA 30,830,400(10) 9,895,500 89,530,100 0
97 Calais Office Center.......... Anchorage, AK 8,587,000(10) 0 16,625,800 0
98 First Interstate.............. Seattle, WA 83,800,700(10) 21,352,000 193,449,600 0
99 Nordstrom Medical Tower....... Seattle, WA 10,035,400(10) 1,762,500 16,016,400 0
100 One Bellevue Center........... Bellevue, WA 23,691,800(10) 0 56,199,700 0
101 Rainer Plaza.................. Bellevue, WA 29,795,800(10) 0 79,896,000 0
102 Second and Seneca............. Seattle, WA 40,865,800(10) 10,917,900 98,885,800 0
103 101 N. Wacker................. Chicago, IL 0 10,067,600 90,608,800 0
104 10880 Wilshire Boulevard...... Los Angeles, CA 0 0 149,841,200 0
105 10960 Wilshire Boulevard...... Los Angeles, CA 0 16,841,300 151,573,900 0
106 1300 N. 17th Street........... Rosslyn, VA 0 9,810,600 88,295,900 0
107 1333 H Street................. Washington D.C. 0 6,715,400 60,438,200 0
108 150 California................ (11) San Francisco, CA 0 12,566,800 0 0
109 150 Federal Street............ Boston, MA 56,270,200 14,131,300 127,182,200 0
110 1616 N. Fort Myer Drive....... Rosslyn, VA 0 6,960,700 62,646,400 0
111 175 Federal Street............ Boston, MA 12,729,300 4,893,900 44,045,200 0
112 175 Wyman Street.............. (11) Walthan, MA 0 24,000,000 0 0
113 2 Oliver Street-147 Milk
Street........................ Boston, MA 0 5,017,400 45,157,000 0
114 200 West Adams................ Chicago, IL 0 11,723,300 105,509,500 0
115 225 Franklin Street........... Boston, MA 0 34,607,900 311,470,600 0
116 AT&T Plaza.................... Oak Brook, IL 0 4,834,200 43,507,900 0
117 Center Plaza.................. Boston, MA 59,898,000 18,942,300 170,480,400 0
118 Center Pointe III............. (11) Fairfax, VA 0 9,600,000 0 0
119 Centerpointe I and II......... Fairfax, VA 30,146,000 8,837,800 79,540,200 0
120 Civic Opera House............. Chicago, IL 31,785,400 12,771,400 114,941,900 0
121 Crosby Corporate Center....... Bedford, MA 0 5,957,800 53,620,400 0
122 Crosby Corporate Center II.... (11) Bedford, MA 0 9,384,600 0 0
123 EJ Randolph................... McLean, VA 16,057,000 3,936,500 35,429,100 0
124 EJ Randolph II................ (11) McLean, Va 0 3,324,000 0 0
125 John Marshall I and II........ McLean, VA 21,182,900 5,216,400 46,947,600 0
126 John Marshall III............. (11) McLean, VA 0 8,700,000 0 0
127 Lake Marriott Business Park... Santa Clara, CA 0 6,952,100 62,568,900 0
128 Lakeside Office Park.......... Atlanta, GA 0 4,792,500 43,132,300 0

<CAPTION>
COSTS CAPITALIZED
SUBSEQUENT TO GROSS AMOUNT CARRIED AT
ACQUISITION CLOSE OF PERIOD 12/31/97
---------------- -------------------------------
BUILDINGS BUILDINGS
AND AND ACCUMULATED DATE DATE DEPRECIABLE
IMPROVEMENTS LAND IMPROVEMENTS TOTAL(1) DEPRECIATION CONSTRUCTED ACQUIRED LIVES(2)
------------ ---- ------------ -------- ------------ ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
85 104,700 658,500 6,031,500 6,690,000 (34,500) 1985 10/7/97 40
86 1,200 878,000 7,902,600 8,780,600 (41,100) 1990 10/7/97 40
87 2,600 2,046,300 18,419,400 20,465,700 (95,900) 1985 10/7/97 40
88 1,400 8,257,000 74,314,200 82,571,200 (386,900) 1980 10/17/97 40
89 1,200 717,600 6,458,800 7,176,400 (20,200) 1982 11/21/97 40
90 1,400 1,012,400 9,113,000 10,125,400 (28,500) 1984 11/21/97 40
91 0 1,105,300 9,948,500 11,053,800 (31,000) 1985 11/24/97 40
92 0 2,411,600 21,704,200 24,115,800 (67,700) 1986 11/24/97 40
93 587,900 8,261,000 47,937,200 56,198,200 (149,800) 1987 11/24/97 40
94 32,300 9,679,000 87,143,700 96,822,700 (275,200) 1991 11/25/97 40
95 700 5,381,200 48,615,900 53,997,100 (49,900) 1980 12/17/97 40
96 305,700 9,895,500 89,835,800 99,731,300 (103,700) 1980 12/17/97 40
97 444,300 0 17,070,100 17,070,100 (18,900) 1975 12/17/97 40
98 20,400 21,352,000 193,470,000 214,822,000 (198,600) 1983 12/17/97 40
99 300 1,762,500 16,016,700 17,779,200 (16,300) 1986 12/17/97 40
100 392,900 0 56,592,600 56,592,600 (60,900) 1983 12/17/97 40
101 3,200 0 79,899,200 79,899,200 (82,100) 1986 12/17/97 40
102 111,800 10,917,900 98,997,600 109,915,500 (101,600) 1991 12/17/97 40
103 0 10,067,600 90,608,800 100,676,400 (94,400) 1980 12/19/97 40
104 0 0 149,841,200 149,841,200 (156,100) 1970 12/19/97 40
105 0 16,841,300 151,573,900 168,415,200 (157,900) 1971 12/19/97 40
106 0 9,810,600 88,295,900 98,106,500 (92,000) 1980 12/19/97 40
107 0 6,715,400 60,438,200 67,153,600 (63,000) 1982 12/19/97 40
108 0 12,566,800 0 12,566,800 0 12/19/97
109 0 14,131,300 127,182,200 141,313,500 (132,500) 1988 12/19/97 40
110 0 6,960,700 62,646,400 69,607,100 (65,300) 1974 12/19/97 40
111 0 4,893,900 44,045,200 48,939,100 (45,900) 1977 12/19/97 40
112 0 24,000,000 0 24,000,000 0 12/19/97
113 0 5,017,400 45,157,000 50,174,400 (47,000) 1988 12/19/97 40
114 0 11,723,300 105,509,500 117,232,800 (109,900) 1985 12/19/97 40
115 0 34,607,900 311,470,600 346,078,500 (324,500) 1966 12/19/97 40
116 0 4,834,200 43,507,900 48,342,100 (45,300) 1984 12/19/97 40
117 0 18,942,300 170,480,400 189,422,700 (177,600) 1969 12/19/97 40
118 0 9,600,000 0 9,600,000 0 12/19/97
119 0 8,837,800 79,540,200 88,378,000 (82,900) 1988/1990 12/19/97 40
120 0 12,771,400 114,941,900 127,713,300 (119,700) 1929 12/19/97 40
121 0 5,957,800 53,620,400 59,578,200 (55,900) 1996 12/19/97 40
122 22,447,300 9,384,600 22,447,300 31,831,900 0 12/19/97
123 0 3,936,500 35,429,100 39,365,600 (36,900) 1983 12/19/97 40
124 0 3,324,000 0 3,324,000 0 12/19/97
125 0 5,216,400 46,947,600 52,164,000 (48,900) 1981 12/19/97 40
126 0 8,700,000 0 8,700,000 0 12/19/97
127 0 6,952,100 62,568,900 69,521,000 (65,200) 1981 12/19/97 40
128 0 4,792,500 43,132,300 47,924,800 (44,900) 1972 12/19/97 40
</TABLE>

F-47
<PAGE> 170
<TABLE>
<CAPTION>
COSTS CAPITALIZED
SUBSEQUENT TO
INITIAL COST TO COMPANY ACQUISITION
------------------------------- ----
BUILDINGS
DECEMBER 31, 1997 AND
DESCRIPTION LOCATION ENCUMBRANCES LAND IMPROVEMENTS LAND
----------- -------- ----------------- ---- ------------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
129 Media Center.................. (11) Burbank, CA 0 20,000,000 0 0
130 New England Executive Park.... Burlington, MA 0 13,106,000 117,953,900 0
131 Northridge I.................. Herndon, VA 14,558,000 3,224,900 29,024,400 0
132 One Canal Park................ Cambridge, MA 0 2,006,000 18,054,000 0
133 Perimeter Center.............. Atlanta, GA 217,871,000 68,306,100 429,131,900 0
134 Presidents Plaza.............. Chicago, IL 0 13,435,500 120,919,200 0
135 Riverside Center.............. (11) Newton, MA 0 30,000,000 0 0
136 Riverview I and II............ Cambridge, MA 0 5,937,600 53,438,100 0
137 Russia Wharf.................. Boston, MA 0 5,918,200 53,263,400 0
138 Shoreline Technology Park..... Mountain View, CA 0 30,194,800 178,471,200 0
139 South Station................. Boston, MA 0 0 31,073,800 0
140 Sunnyvale Business Center..... Sunnyvale, CA 0 4,890,000 44,010,000 0
141 Ten Canal Park................ Cambridge, MA 0 2,383,100 21,447,900 0
142 Tri-State International....... Lincolnshire, IL 0 10,925,300 98,327,300 0
143 Wellesley Office Park......... Wellesley, MA 55,256,000 16,492,700 148,434,200 0
144 Westbrook Corporate Center.... Westchester, IL 111,497,800 24,896,800 224,071,100 0
145 Westwood Business Center...... Wellesley, MA 0 2,719,600 24,476,300 0
-------------- -------------- -------------- ---
Subtotal Office Properties.... $1,990,406,900 $1,162,720,800 $9,493,786,000 $ 0
-------------- -------------- -------------- ---
Parking Facilities:
1 North Loop Transportation
Center........................ (3) Chicago, IL $ 32,864,000(12) $ 3,784,600 $ 34,061,500 $ 0
2 Theatre District Garage....... (3) Chicago, IL 0 3,372,300 30,350,700 0
3 Capitol Commons Garage........ (3)(5) Indianapolis, IN 4,400,700 0 14,449,700 0
4 Boston Harbor Garage.......... (3) Boston, MA 35,345,500 6,087,000 54,783,300 0
5 Milwaukee Center.............. (3) Milwaukee, WI 0 0 7,798,500 0
6 1111 Sansom Street Garage..... (3) Philadelphia, PA 0 1,476,500 0 0
7 15th & Sansom Streets
Garage........................ (3) Philadelphia, PA 0 726,400 6,537,600 0
8 1602-34 Chancellor Garage..... (3) Philadelphia, PA 0 735,900 6,622,700 0
9 1616 Sansom Street Garage..... (3) Philadelphia, PA 0 432,900 3,896,200 0
10 Juniper/Locust Streets
Garage........................ (3) Philadelphia, PA 0 574,400 5,169,900 0
11 Adams-Wabash Garage........... Chicago, IL 0 2,525,000 22,725,300 0
12 601 Tchoupitoulas Garage...... New Orleans, LA 0(8) 1,180,000 10,619,800 0
13 Stanwix Garage................ Pittsburgh, PA 0 1,794,900 16,154,700 0
-------------- -------------- -------------- ---
Subtotal Parking Facilities... 72,610,200 22,689,900 213,169,900 0
-------------- -------------- -------------- ---
Management Business........... (13) 0 0 0 0
-------------- -------------- -------------- ---
Investment in Real Estate..... $2,063,017,100 $1,185,410,700 $9,706,955,900 $--
============== ============== ============== ===

1 $ 450,000 $ 3,784,600 $ 34,511,500 $ 38,296,100 $ (396,500) 1985 6/9/95 40
2 56,800 3,372,300 30,407,500 33,779,800 (348,200) 1987 6/9/95 40
3 9,100 0 14,458,800 14,458,800 (165,200) 1987 6/29/95 40
4 277,700 6,087,000 55,061,000 61,148,000 (635,000) 1972 12/10/96 40
5 219,900 0 8,018,400 8,018,400 (98,700) 1988 12/18/96 40
6 6,800 1,476,500 6,800 1,483,300 0 N/A 12/27/96 N/A

7 11,300 726,400 6,548,900 7,275,300 (73,400) 1950/1954 12/27/96 40
8 9,200 735,900 6,631,900 7,367,800 (73,800) 1945/1955 12/27/96 40
9 0 432,900 3,896,200 4,329,100 (43,200) 1950 12/27/96 40

10 11,000 574,400 5,180,900 5,755,300 (58,300) 1949/1952 12/27/96 40
11 76,200 2,525,000 22,801,500 25,326,500 (212,900) 1990 8/11/97 40
12 0 1,180,000 10,619,800 11,799,800 (77,200) 1982 9/3/97 40
13 0 1,794,900 16,154,700 17,949,600 (50,400) 1969 11/25/97 40
-------------- -------------- -------------- --------------- ------------
1,128,000 22,689,900 214,297,900 236,987,800 (2,232,800)
-------------- -------------- -------------- --------------- ------------
3,446,600 0 3,446,600 3,446,600 (167,300)
-------------- -------------- -------------- --------------- ------------
$ 148,647,500 $1,185,410,700 $9,855,603,400 $11,041,014,100 $(64,695,100)
============== ============== ============== =============== ============
</TABLE>

- -------------------------
(1) The aggregate cost for Federal Income Tax purposes as of December 31, 1997
was approximately $7.5 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) The date acquired represents the date these Properties were acquired by
Equity Office Predecessors. The acquisition of the Properties, or the
interest therein, by the Company from Equity Office Predecessors in
connection with the Consolidation on July 11, 1997, was accounted for using
the purchase method in accordance with Accounting Principles Board Opinion
No. 16. Accordingly, the assets were recorded by the Company at their fair
values.

F-48
<PAGE> 171

(4) This Property contains 106 residential units.

(5) These loans are subject to cross default and collateralization provisions.

(6) This building underwent a major renovation to re-tenant the entire
Property. The building is currently in a lease-up period and is expected to
be fully occupied in 1998. During the renovation period, operating costs,
real estate taxes, and interest incurred will be capitalized. As of
December 31, 1997, approximately $21.4 million of operating costs and
interest have been capitalized.

(7) This Property contains 161 residential units.

(8) These loans are subject to cross default and collateralization provisions.

(9) The Prudential Portfolio consists of six Office Buildings located in
Philadelphia, PA; Dallas, TX; and Houston, TX. These Office Buildings were
constructed between 1969 and 1984.

(10) These loans are subject to cross default and collateralization provisions.

(11) These properties are in various development stages. During the development
period all operating costs, including real estate taxes together with
interest incurred during the development stages will be capitalized.

(12) The encumbrance on the North Loop Transportation Center is also secured by
a first lien on the Theatre District Garage.

(13) This asset consists of furniture, fixtures, and equipment owned by the
Management Business.
(14) Summary of activity of investment in real estate and accumulated
depreciation is as follows:

The changes in investment in real estate for the period from July 11, 1997
to December 31, 1997, the period from January 1, 1997 to July 10, 1997, and
for the years ended December 31, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
JULY 11, 1997 TO JANUARY 1, 1997
DECEMBER 31, 1997 TO JULY 10, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Balance, beginning of period.................... $ 0 $3,549,707,600 $2,571,851,300 $1,931,002,400
Acquisitions.................................... 10,941,428,100 531,968,000 860,995,000 583,485,200
Improvements.................................... 99,586,000 59,511,000 129,485,300 76,985,400
Properties disposed of.......................... 0 (67,193,400) (9,633,600) 0
Write down for value impairment................. 0 0 0 (17,512,000)
Write-off of fully depreciated assets which are
no longer in service........................... 0 0 (2,990,400) (2,109,700)
--------------- -------------- -------------- --------------
Balance, end of period.......................... $11,041,014,100 $4,073,993,200 $3,549,707,600 $2,571,851,300
=============== ============== ============== ==============
</TABLE>

The changes in accumulated depreciation for the period from July 11, 1997 to
December 31, 1997, the period from January 1, 1997 to July 10, 1997, and for
the years ended December 31, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
JULY 11, 1997 TO JANUARY 1, 1997
DECEMBER 31, 1997 TO JULY 10, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Balance, beginning of period................ $ 0 $(257,893,300) $(178,448,600) $(115,842,500)
Depreciation................................ (64,695,100) (57,379,300) (82,905,300) (64,715,800)
Properties disposed of...................... 0 8,517,200 470,200 0
Write-off of fully depreciated assets which
are no longer in service................... 0 0 2,990,400 2,109,700
------------ ------------- ------------- -------------
Balance, end of period...................... $(64,695,100) $(306,755,400) $(257,893,300) $(178,448,600)
============ ============= ============= =============
</TABLE>

F-49
<PAGE> 172

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) 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.

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

F-50
<PAGE> 173

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-51
<PAGE> 174

177 BROAD STREET

NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES

1. BUSINESS

The accompanying Statement of Revenue and Certain Expenses relate 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 registration statement, 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 a registration statement on Form S-4 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-52
<PAGE> 175

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 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.

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 a registration statement on Form S-4 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.

ERNST & YOUNG LLP

Chicago, Illinois
April 16, 1997

F-53
<PAGE> 176

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
Garage and 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-54
<PAGE> 177

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 registration statement, from an
unrelated entity.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

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-55
<PAGE> 178

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.

ERNST & YOUNG LLP

Chicago, Illinois
May 30, 1997

F-56
<PAGE> 179

OAKBROOK TERRACE TOWER

STATEMENTS OF REVENUE AND CERTAIN EXPENSES

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
1996 1997
------------ ---------------
(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-57
<PAGE> 180

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 registration statement,
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 a registration statement on Form S-4 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

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-58
<PAGE> 181

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.

ERNST & YOUNG LLP

Chicago, Illinois
June 6, 1997

F-59
<PAGE> 182

ONE MARITIME PLAZA

STATEMENTS OF REVENUE AND CERTAIN EXPENSES

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
(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 & 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-60
<PAGE> 183

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 registration statement, from an
unrelated entity.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

Unaudited Interim Statement

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> 184

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.

ERNST & YOUNG LLP

Chicago, Illinois
April 30, 1997

F-62
<PAGE> 185

201 MISSION STREET

STATEMENTS OF REVENUE AND CERTAIN EXPENSES

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
1996 1997
----------------- ---------------
(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-63
<PAGE> 186

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 registration statement, from an
unrelated entity.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

Unaudited Interim Statement

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-64
<PAGE> 187

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.

ERNST & YOUNG LLP

Chicago, Illinois
June 13, 1997

F-65
<PAGE> 188

30 N. LASALLE

STATEMENTS OF REVENUE AND CERTAIN EXPENSES

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1996 1997
------------ ------------
(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 & 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-66
<PAGE> 189

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 registration statement, from an unrelated entity.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

Unaudited Interim Statement

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-67
<PAGE> 190

REPORT OF INDEPENDENT AUDITORS

The Board of Trustees of
Equity Office Properties Trust

We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the Columbus America Properties (the Properties) as described in
Note 2 for the year ended December 31, 1996. The combined Statement of Revenue
and Certain Expenses is the responsibility of the Properties' management. Our
responsibility is to express an opinion on the combined Statement of Revenue and
Certain Expenses based on our audit.

The accompanying combined 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 a registration statement on
Form S-4 of Equity Office Properties Trust as described in Note 1, and is not
intended to be a complete presentation of the Properties' revenue and expenses.

In our opinion, the combined Statement of Revenue and Certain Expenses
referred to above presents fairly, in all material respects, the combined
revenue and certain expenses of the Properties described in Note 2 for the year
ended December 31, 1996, in conformity with generally accepted accounting
principles.

ERNST & YOUNG LLP

Chicago, Illinois
September 3, 1997

F-68
<PAGE> 191

COLUMBUS AMERICA PROPERTIES

COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED JANUARY 1, 1997
DECEMBER 31, THROUGH
1996 JULY 31, 1997
------------ ---------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents................................................ $15,620 $ 8,814
Tenant reimbursements..................................... 654 176
Parking income............................................ 2,356 1,460
Other income.............................................. 165 111
------- -------
Total revenue..................................... 18,795 10,561
------- -------
EXPENSES
Property operating and maintenance........................ 4,888 2,770
Real estate taxes......................................... 1,318 769
Management fee............................................ 786 403
Insurance................................................. 191 127
------- -------
Total expenses.................................... 7,183 4,069
------- -------
Revenue in excess of certain expenses....................... $11,612 $ 6,492
======= =======
</TABLE>

See accompanying notes.

F-69
<PAGE> 192

COLUMBUS AMERICA PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying combined 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 a registration statement on
Form S-4 of Equity Office Properties Trust. The accompanying financial
statements are not representative of the actual operations of the Properties, as
defined in Note 2, 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 Properties, 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 combined 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 the
combined revenue and expenses during the reporting periods. Actual results could
differ from these estimates.

Unaudited Interim Statement

In the opinion of management, the interim 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.

2. DESCRIPTION OF PROPERTIES

The accompanying combined Statements of Revenue and Certain Expenses relate
to the combined operations of the Columbus America Properties (the
"Properties"), which are all located in New Orleans, Louisiana. The Properties
have been presented on a combined basis because the Properties are under common
ownership and management. The Properties listed below were acquired on September
3, 1997 for $140 million by Equity Office Properties Trust from an unrelated
party.

<TABLE>
<CAPTION>
PROPERTY NAME TYPE OF FACILITY RENTABLE SQUARE FEET
------------- ---------------- --------------------
<S> <C> <C>
LL & E Tower...................................... office building 545,157
Texaco Center..................................... office building 619,714
601 Tchoupitoulas................................. parking facility 759(A)
</TABLE>

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

(A) Represents number of parking spaces.

The accompanying combined Statements of Revenue and Certain Expenses
include the operations of the 601 Tchoupitoulas parking facility.

3. RENTALS

LL&E Tower and Texaco Center have 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> 193
COLUMBUS AMERICA PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUE
AND CERTAIN EXPENSES -- (CONTINUED)

4. RELATED PARTY TRANSACTIONS

The office buildings were managed by an affiliated party to the seller. The
management agreements provided for a fee based on a percentage of gross
receipts, as defined by each of the office buildings' individual management
agreements, excluding any receipts from the parking garage.

During the year ended December 31, 1996, the parking facility was also
managed by an affiliated party to the seller. The management agreement provided
for a flat fee of $12,500 per month.

During the year ended December 31, 1996, LL&E Tower leased space to parties
affiliated with the seller. Rental income from those leases was approximately
$240,000 in 1996.

F-71
<PAGE> 194

REPORT OF INDEPENDENT AUDITORS

The Board of Trustees of
Equity Office Properties Trust

We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the Prudential Properties (the Properties) as described in Note 2
for the year ended December 31, 1996. The combined Statement of Revenue and
Certain Expenses is the responsibility of the Properties' management. Our
responsibility is to express an opinion on the combined Statement of Revenue and
Certain Expenses based on our audit.

The accompanying combined 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 a registration statement on
Form S-4 of Equity Office Properties Trust as described in Note 1, and is not
intended to be a complete presentation of the Properties' combined revenue and
expenses.

ERNST & YOUNG LLP

Chicago, Illinois
September 3, 1997

F-72
<PAGE> 195

PRUDENTIAL PROPERTIES

COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 1, 1997
YEAR ENDED THROUGH
DECEMBER 31, AUGUST 31,
1996 1997
------------ ---------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents................................................ $29,743 $21,626
Tenant reimbursements..................................... 2,367 1,645
Parking income............................................ 2,013 1,561
Other income.............................................. 529 778
------- -------
Total revenue..................................... 34,652 25,610
------- -------
EXPENSES
Property operating and maintenance........................ 13,239 8,687
Real estate taxes......................................... 4,414 3,112
Management fees........................................... 719 514
Insurance................................................. 446 361
------- -------
Total expenses............................................ 18,818 12,674
------- -------
Revenue in excess of certain expenses....................... $15,834 $12,936
======= =======
</TABLE>

See accompanying notes.

F-73
<PAGE> 196

PRUDENTIAL PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

Unaudited Interim Statement

2. DESCRIPTION OF PROPERTIES

The accompanying combined Statements of Revenue and Certain Expenses relate
to the combined operations of the Prudential Properties (the "Properties").
Equity Office Properties Trust expects to acquire the Properties for
approximately $289 million from an unrelated party. The Properties have been
presented on a combined basis because all of the Properties are under common
control and management. The following Properties are included in the combined
financial statements:

<TABLE>
<CAPTION>
APPROXIMATE
RENTABLE
PROPERTY NAME LOCATION SQUARE FOOTAGE
------------- -------- --------------
<S> <C> <C>
Brookhollow Central I, II and III..................... Houston, TX 800,688
Destec Tower.......................................... Houston, TX 574,216
8080 Central.......................................... Dallas, TX 283,707
1700 Market........................................... Philadelphia, PA 825,547
---------
2,484,158
=========
</TABLE>

3. RENTALS

The Properties have 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

The Properties were managed by an affiliated party to the seller. The
management agreements provided for fees of 1.5% to 3.0% of gross receipts, as
defined.

Insurance premiums are paid to and coverage is provided by an affiliated
party to the seller.

F-74
<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 550 South Hope Street (the Property) as described in Note 2 for the year
ended March 31, 1997. The Statement of Revenue and Certain Expenses are 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.

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 a registration statement on Form S-4 of
Equity Office Properties Trust as described in Note 1, 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 March 31, 1997,
in conformity with generally accepted accounting principles.

ERNST & YOUNG LLP

Chicago, Illinois
September 24, 1997

F-75
<PAGE> 198

550 SOUTH HOPE STREET

STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED APRIL 1, 1997
MARCH 31, THROUGH JULY 31,
1997 1997
---------- ----------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents................................................ $7,602 $2,972
Tenant reimbursements..................................... 3,840 1,398
Parking income............................................ 1,273 423
Other income.............................................. 19 7
------ ------
Total revenue..................................... 12,734 4,800
====== ======
EXPENSES
Property operating and maintenance........................ 3,992 1,302
Real estate taxes......................................... 801 251
Management fee............................................ 140 58
Insurance................................................. 605 152
------ ------
Total expenses.................................... 5,538 1,763
------ ------
Revenue in excess of certain expenses....................... $7,196 $3,037
====== ======
</TABLE>

See accompanying notes.

F-76
<PAGE> 199

550 SOUTH HOPE STREET

NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES

1. 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 a registration statement on Form S-4 of
Equity Office Properties Trust. The accompanying statements are not
representative of the actual operations of the Property, as defined in Note 2,
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 the revenue
and expenses during the reporting periods. Actual results could differ from
these estimates.

Unaudited Interim Statement

2. DESCRIPTION OF PROPERTY

The accompanying Statements of Revenue and Certain Expenses relate to the
operations of 550 South Hope Street, an office building with approximately
566,434 rentable square feet, located in Los Angeles, California (the
"Property"). It is anticipated that Equity Office Properties Trust will acquire
the Property for $99.5 million from an unrelated party.

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-77
<PAGE> 200

REPORT OF INDEPENDENT AUDITORS

The Board of Trustees of
Equity Office Properties Trust

We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the Acorn Properties (the Properties) as described in Note 2 for the
year ended December 31, 1996. The combined Statement of Revenue and Certain
Expenses is the responsibility of the Properties' management. Our responsibility
is to express an opinion on the combined Statement of Revenue and Certain
Expenses based on our audit.

The accompanying combined 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 a registration statement on
Form S-4 of Equity Office Properties Trust as described in Note 1, and is not
intended to be a complete presentation of the Properties' combined revenue and
expenses.

ERNST & YOUNG LLP

Chicago, Illinois
September 9, 1997

F-78
<PAGE> 201

ACORN PROPERTIES

COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED JANUARY 1, 1997
DECEMBER 31, THROUGH JULY 31,
1996 1997
----------------- ----------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents................................................ $16,999 $11,592
Tenant reimbursements..................................... 2,055 1,327
Other income.............................................. 202 181
------- -------
Total revenue..................................... 19,256 13,100
------- -------
EXPENSES
Property operating and maintenance........................ 4,526 2,665
Real estate taxes......................................... 1,378 853
Management fees........................................... 649 428
Insurance................................................. 160 92
------- -------
Total expenses.................................... 6,713 4,038
------- -------
Revenue in excess of certain expenses....................... $12,543 $ 9,062
======= =======
</TABLE>

See accompanying notes.

F-79
<PAGE> 202

ACORN PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

Unaudited Interim Statement

2. DESCRIPTION OF PROPERTIES

The accompanying combined Statements of Revenue and Certain Expenses relate
to the combined operations of the Acorn Properties (the "Properties"). Equity
Office Properties Trust expects to acquire an 89% managing general partnership
interest in each of the partnerships that hold title to the Properties for
approximately $144.7 million, including the assumption of debt. The Acorn
Properties have been presented on a combined basis because all of the Properties
are under common control and management. The following Properties are included
in the combined financial statements:

<TABLE>
<CAPTION>
APPROXIMATE
RENTABLE
PROPERTY NAME LOCATION SQUARE FOOTAGE
------------- -------- --------------
<S> <C> <C>
One Valley Square................ Plymouth Meeting, PA 70,289
Two Valley Square................ Plymouth Meeting, PA 70,622
Three Valley Square.............. Plymouth Meeting, PA 84,605
Four Valley Square............... Plymouth Meeting, PA 49,757
Five Valley Square............... Plymouth Meeting, PA 18,564
Oak Hill Plaza................... King of Prussia, PA 164,360
Walnut Hill Plaza................ King of Prussia, PA 149,716
One Devon Square................. Wayne, PA 77,267
Two Devon Square................. Wayne, PA 63,226
Three Devon Square (a)........... Wayne, PA 6,000
Four Falls Corporate Center...... Conshohocken, PA 254,355
---------
1,008,761
=========
</TABLE>

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

(a) In addition, this property includes land leased to a third party.

F-80
<PAGE> 203
ACORN PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUE
AND CERTAIN EXPENSES -- (CONTINUED)

3. RENTALS

The Properties have 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

The Properties were managed by an affiliated party to the sellers. The
management agreements provided for a fee of 4% of gross receipts, as defined.

Janitorial services were provided by an affiliated party to the sellers.
During the year ended December 31, 1996, the Properties incurred approximately
$714,000 in janitorial fees.

F-81
<PAGE> 204

REPORT OF INDEPENDENT AUDITORS
The Board of Trustees of
Equity Office Properties Trust

We have audited the accompanying combined Statement of Revenue and Certain
Expenses of 10 & 30 South Wacker Drive (the Properties) as described in Note 2
for the year ended December 31, 1996. The combined Statement of Revenue and
Certain Expenses is the responsibility of the Properties' management. Our
responsibility is to express an opinion on the combined Statement of Revenue and
Certain Expenses based on our audit.

ERNST & YOUNG LLP
Chicago, Illinois
September 5, 1997

F-82
<PAGE> 205

10 & 30 SOUTH WACKER DRIVE

COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED JANUARY 1, 1997
DECEMBER 31, THROUGH JULY 31,
1996 1997
----------------- ----------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents................................................ $38,739 $23,388
Tenant reimbursements..................................... 23,518 14,604
Parking income............................................ 1,188 786
Other income.............................................. 2,232 643
------- -------
Total revenue..................................... 65,677 39,421
------- -------
EXPENSES
Property operating and maintenance........................ 9,891 5,370
Real estate taxes......................................... 16,600 9,683
Management fee............................................ 1,233 754
Insurance................................................. 403 160
------- -------
Total expenses.................................... 28,127 15,967
------- -------
Revenue in excess of certain expenses....................... $37,550 $23,454
======= =======
</TABLE>

See accompanying notes.

F-83
<PAGE> 206

10 & 30 SOUTH WACKER DRIVE

NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying combined 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 a registration statement on
Form S-4 of Equity Office Properties Trust. The accompanying combined statements
are not representative of the actual operations of the Properties, as defined in
Note 2, 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 Properties, 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

Unaudited Interim Statement

2. DESCRIPTION OF PROPERTIES

The accompanying combined Statements of Revenue and Certain Expenses relate
to the combined operations of 10 & 30 South Wacker Drive, two office buildings
with approximately 2,016,023 million rentable square feet, located in Chicago,
Illinois (the "Properties"). The Properties have been presented on a combined
basis because the Properties were under common ownership and management. It is
anticipated that the Properties will be acquired for $481 million by Equity
Office Properties Trust from an unrelated party.

F-84
<PAGE> 207

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 Lafayette Centre (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.

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 a registration statement on Form S-4 of
Equity Office Properties Trust as described in Note 1, 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
September 5, 1997

F-85
<PAGE> 208

ONE LAFAYETTE CENTRE

STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED JANUARY 1, 1997
DECEMBER 31, THROUGH JULY 31,
1996 1997
----------------- ----------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents................................................ $8,509 $5,409
Tenant reimbursements..................................... 855 582
Parking income............................................ 446 260
Other income.............................................. 158 46
------ ------
Total revenue..................................... 9,968 6,297
------ ------
EXPENSES
Property operating and maintenance........................ 2,238 1,360
Real estate taxes......................................... 1,154 625
Management fee............................................ 300 186
Insurance................................................. 57 34
------ ------
Total expenses.................................... 3,749 2,205
------ ------
Revenue in excess of certain expenses....................... $6,219 $4,092
====== ======
</TABLE>

See accompanying notes.

F-86
<PAGE> 209

ONE LAFAYETTE CENTRE

NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES

1. 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 a registration statement on Form S-4 of
Equity Office Properties Trust. The accompanying 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 the revenue
and expenses during the reporting periods. Actual results could differ from
these estimates.

Unaudited Interim Statement

2. DESCRIPTION OF PROPERTY

The accompanying Statements of Revenue and Certain Expenses relate to the
operations of One Lafayette Centre, an office building with approximately
315,000 rentable square feet, located in Washington, D.C. (the "Property"). It
is expected that the Property will be acquired for $81.7 million by Equity
Office Properties Trust from an unrelated party.

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-87
<PAGE> 210

REPORT OF INDEPENDENT AUDITORS

The Board of Trustees of
Equity Office Properties Trust

We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the PPM Properties (the Properties) as described in Note 2 for the
year ended December 31, 1996. The combined Statement of Revenue and Certain
Expenses is the responsibility of the Properties' management. Our responsibility
is to express an opinion on the combined Statement of Revenue and Certain
Expenses based on our audit.

The accompanying combined 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 a registration statement on
Form S-4 of Equity Office Properties Trust as described in Note 1, and is not
intended to be a complete presentation of the Properties' combined revenue and
expenses.

ERNST & YOUNG LLP

Chicago, Illinois
January 22, 1997

F-88
<PAGE> 211

PPM PROPERTIES

COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 1, 1997
YEAR ENDED THROUGH
DECEMBER 31, AUGUST 31,
1996 1997
------------ ---------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents................................................ $ 9,784 $7,038
Tenant reimbursements..................................... 344 262
Parking income............................................ 152 119
Other income.............................................. 144 56
------- ------
Total revenue..................................... 10,424 7,475
------- ------
EXPENSES
Property operating and maintenance........................ 3,062 2,122
Real estate taxes......................................... 1,170 824
Management fees........................................... 228 168
Insurance................................................. 92 76
------- ------
Total expenses.................................... 4,552 3,190
------- ------
Revenue in excess of certain expenses....................... $ 5,872 $4,285
======= ======
</TABLE>

See accompanying notes.

F-89
<PAGE> 212

PPM PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying combined 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 a registration statement on
Form S-4 of Equity Office Properties Trust. The accompanying financial
statements are not representative of the actual operations of the Properties 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 Properties, 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

Unaudited Interim Statement

2. DESCRIPTION OF PROPERTIES

The accompanying combined Statements of Revenue and Certain Expenses relate
to the combined operations of the PPM Properties which are to be acquired by
Equity Office Properties Trust for approximately $92 million from an unrelated
party. The PPM Properties have been presented on a combined basis because all of
the Properties are under common control and management. The following properties
are included in the combined financial statements:

<TABLE>
<CAPTION>
APPROXIMATE
RENTABLE
PROPERTY NAME SQUARE FOOTAGE
------------- --------------
<S> <C>
Lakeside Square............................................. 392,500
1600 Duke Street............................................ 68,800
Fair Oaks Plaza............................................. 177,900
-------
639,200
=======
</TABLE>

3. RENTALS

The Properties have 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

The Properties were managed by an affiliated party to the seller. The
management agreements provided for fees of 2.25% of gross receipts, as defined.

F-90
<PAGE> 213

REPORT OF INDEPENDENT AUDITORS

The Board of Trustees of
Equity Office Properties Trust

We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the Wright Runstad Properties (the Properties) as described in Note
2 for the year ended September 30, 1996. The combined Statement of Revenue and
Certain Expenses is the responsibility of the Properties' management. Our
responsibility is to express an opinion on the combined 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 combined 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 a Current Report on Form 8-K of Equity
Office Properties Trust as described in Note 1 and is not intended to be a
complete presentation of the Properties' combined revenue and expenses.

In our opinion, the combined Statement of Revenue and Certain Expenses referred
to above presents fairly, in all material respects, the combined revenue and
certain expenses of the Properties described in Note 2 for the year ended
September 30, 1996, in conformity with generally accepted accounting principles.

ERNST & YOUNG LLP

Chicago, Illinois
September 26, 1997

F-91
<PAGE> 214
WRIGHT RUNSTAD PROPERTIES

COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
OCTOBER 1, 1996
YEAR ENDED THROUGH
SEPTEMBER 30, 1996 AUGUST 31, 1997
------------------ ---------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents................................................ $57,191 $54,796
Tenant reimbursements..................................... 3,294 3,293
Parking income............................................ 5,838 5,780
Other income.............................................. 1,052 446
------- -------
Total revenue............................................. 67,375 64,315
------- -------
EXPENSES
Property operating and maintenance........................ 15,427 14,890
Real estate taxes......................................... 4,881 4,616
Management fee............................................ 1,855 1,793
Insurance................................................. 468 427
Ground rent and air rights................................ 1,577 1,440
------- -------
Total expenses............................................ 24,208 23,166
------- -------
Revenue in excess of certain expenses....................... $43,167 $41,149
======= =======
</TABLE>

See accompanying notes.

F-92
<PAGE> 215

WRIGHT RUNSTAD PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying combined 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 a Current Report on Form 8-K
of Equity Office Properties Trust. The accompanying financial statements are not
representative of the actual operations of the Wright Runstad Properties (the
"Properties") 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 Properties, 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

Unaudited Interim Statement

2. DESCRIPTION OF PROPERTIES

The accompanying combined Statements of Revenue and Certain Expenses relate
to the combined operations of the Properties which are to be acquired by Equity
Office Properties Trust for approximately $640 million from an unrelated party.
The Properties have been presented on a combined basis because all of the
Properties are under common ownership and management. The following office
properties are included in the combined financial statements:

<TABLE>
<CAPTION>
APPROXIMATE
RENTABLE
SQUARE
PROPERTY NAME LOCATION FOOTAGE
------------- -------- -----------
<S> <C> <C>
1111 Third Avenue............................ Seattle, Washington 528,282
First Interstate Center...................... Seattle, Washington 915,883
Second & Seneca Building..................... Seattle, Washington 480,272
Nordstrom Medical Tower...................... Seattle, Washington 101,431
One Bellevue Center.......................... Bellevue, Washington 344,715
Rainier Plaza................................ Bellevue, Washington 410,855
1001 Fifth Avenue............................ Portland, Oregon 368,018
Calais Office Center......................... Anchorage, Alaska 190,599
---------
3,340,055
=========
</TABLE>

F-93
<PAGE> 216
WRIGHT RUNSTAD PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES -- (CONTINUED)

3. RENTALS

The Properties have 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

The Properties were managed by an affiliated party to the seller, except
for Nordstrom Medical Tower, which is managed by a third party. The management
agreements provided for a fee of 3.0% of gross receipts and reimbursements for
on-site personnel.

The Partnership owning the Properties is a member of the J. Nordstrom
Medical Tower Condominium Association (the Association), which provides
administrative services relating to building operations of the Nordstrom Medical
Tower. The Association is managed by an affiliate. The Association pays all
operating expenses associated with the building and is reimbursed annually by
condominium unit owners, including Nordstrom Medical Tower. The Properties
incurred $510,000 under this agreement during 1996.

The Properties lease each of their parking garages to an affiliate of the
seller in exchange for a percentage of the parking revenue, net of expenses.

5. COMMITMENTS

The land underlying Rainier Plaza is leased under a 55-year lease agreement
expiring in 2040, plus an option for an additional 35 years. The minimum annual
rent is $566,800 at September 30, 1996. The lease also provides for contingent
rent based upon the gross income of the property, as defined in the lease. No
contingent rentals were due for 1996.

The land underlying One Bellevue Center is leased under a 70-year lease
expiring on June 30, 2052 with an option to extend for an additional 20 years.
The basic rent under the ground lease agreement is $39,055 per month at
September 30, 1996, plus all taxes, utility charges, and other assessments on
the property. In July of each year, the basic rent increases 2%. Additional rent
may be due based on adjusted gross revenue, as defined in the lease agreement.
No additional rent was due in 1996.

The parking garage facilities located adjacent to the 1001 Fifth Avenue are
leased through May 31, 1998, with renewal options for ten and five years. The
lease provides for minimum payments of $175,000 per year, plus 50% of the
adjusted gross annual revenues in excess of $300,000 from the garage operations.
Rent expense under this lease was $637,000 in 1996.

The land underlying the Calais I & II are leased under a ground lease,
expiring in 2029, with four ten-year options to extend. Monthly rental payments
are $8,000 per month until December 31, 1999, at which time monthly payments
will increase to approximately $9,000. Beginning in 2005, monthly payments are
subject to annual adjustments based on office rentals and changes in the
consumer price index.

There is an agreement with a bank through 2037, whereby the bank agreed to
certain building restrictions that limit the height and bulk of current and
future improvements, if any, to be placed on the bank's land, which is adjacent
to 1111 Third Avenue. There are options to extend this agreement for at least an
additional 39 years. In return for these restrictions, 1111 Third Avenue is
obligated to pay the bank $75,000 per year, plus 4% of annual net proceeds from
the property (prior to debt service) in excess of $4,847,000 on an annual basis.
Total amounts paid or accrued under this agreement were $75,000 for the year
ended September 30, 1996.

F-94
<PAGE> 217

BEACON PROPERTIES, L.P.

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE PARTNERS OF
BEACON PROPERTIES, L.P.:

We have audited the consolidated balance sheets of Beacon Properties, L.P.
as of December 31, 1996 and 1995, and the related consolidated statements of
operations, partners' capital and cash flows for the years ended December 31,
1996 and 1995 and the period May 26, 1994 to December 31, 1994. We have also
audited the combined statement of operations, owners' equity and cash flows of
the Predecessor, more fully described in Note 1, for the period January 1, 1994
to May 25, 1994. These consolidated financial statements are the responsibility
of the Operating Partnership's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Beacon Properties, L.P. as of December 31, 1996 and 1995 and the consolidated
results of its operations and its cash flows for the years ended December 31,
1996 and 1995 and the period May 26, 1994 to December 31, 1994, and the combined
results of operations and cash flows of the Predecessor for the period January
1, 1994 to May 25, 1994 in conformity with generally accepted accounting
principles.

/s/ Coopers & Lybrand L.L.P.

Boston, Massachusetts
January 21, 1997

F-95
<PAGE> 218

BEACON PROPERTIES, L.P.

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---- ----
<S> <C> <C>
ASSETS
Real estate:
Land...................................................... $ 213,858 $ 43,077
Buildings, improvements and equipment..................... 1,477,672 428,065
---------- --------
1,691,530 471,142
Less accumulated depreciation............................. 97,535 66,571
---------- --------
1,593,995 404,571
Deferred financing and leasing costs, net of accumulated
amortization of $16,334 and $14,487....................... 17,287 9,438
Cash and cash equivalents................................... 35,896 4,481
Restricted cash............................................. 2,599 2,764
Accounts receivable......................................... 11,596 6,111
Accrued rent................................................ 13,065 6,493
Prepaid expenses and other assets........................... 808 8,060
Mortgage notes receivable................................... 51,491 34,778
Investments in and advance to joint ventures and
corporations.............................................. 52,176 58,027
---------- --------
Total assets........................................... $1,778,913 $534,723
========== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable.................................... $ 452,212 $ 70,536
Note payable, Credit Facility............................. 153,000 130,500
Accounts payable, accrued expenses and other
liabilities............................................ 41,336 14,018
Investment in joint venture............................... 24,735 23,955
---------- --------
Total liabilities...................................... 671,283 239,009
Commitments and contingencies............................... -- --
Limited partners' capital interest, 6,273,928 and 3,788,549
units outstanding, at redemption value.................... 229,783 87,137
---------- --------
Partners' capital:
Operating units issued and outstanding, 48,116,480 and
20,215,822
General partner--outstanding 543,904 and 240,044....... 10,530 2,926
Limited partner--outstanding 47,572,576 and
19,975,788............................................ 867,317 205,651
---------- --------
Total partners' capital................................ 877,847 208,577
---------- --------
Total liabilities and partners' capital................ $1,778,913 $534,723
========== ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-96
<PAGE> 219

BEACON PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

<TABLE>
<CAPTION>
PREDECESSOR
---------------
FOR THE FOR THE FOR THE PERIOD FOR THE PERIOD
YEAR ENDED YEAR ENDED MAY 26, 1994 TO JANUARY 1, 1994
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994 TO MAY 25, 1994
----------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Rental income.................. $ 147,825 $ 69,781 $ 23,702 $5,776
Management fees................ 3,005 2,203 -- 1,521
Recoveries from tenants........ 16,719 9,524 4,395 1,040
Mortgage interest income....... 4,970 2,546 -- --
Other income................... 11,249 5,985 2,671 675
---------- ---------- ---------- ------
183,768 90,039 30,768 9,012
---------- ---------- ---------- ------
Expenses:
Property expenses.............. 37,210 17,698 6,497 2,086
Real estate taxes.............. 18,124 9,950 3,015 595
General and administrative..... 19,218 9,444 2,943 1,399
Mortgage interest expense...... 30,300 15,220 4,970 2,798
Interest -- amortization of
financing costs............. 2,084 1,370 617 373
Depreciation and
amortization................ 33,170 17,233 6,727 2,385
---------- ---------- ---------- ------
140,106 70,915 24,769 9,636
---------- ---------- ---------- ------
Income (loss) from operations.... 43,662 19,124 5,999 (624)
Equity in net income of joint
ventures and corporations...... 4,899 3,103 858 198
---------- ---------- ---------- ------
Income (loss) from continuing
operations before minority
interest....................... 48,561 22,227 6,857 (426)
Minority interest in partnerships
and corporations............... (15) (36) (8) 931
---------- ---------- ---------- ------
Income from continuing
operations..................... 48,546 22,191 6,849 505
Discontinued operations --
construction company:
Income (loss) from
operations.................. (2,609) (12) 477 102
Loss on sale................... (249) -- -- --
---------- ---------- ---------- ------
Income before extraordinary
items.......................... 45,688 22,179 7,326 607
Extraordinary items.............. (3,876) -- -- 8,898
---------- ---------- ---------- ------
Net income....................... $ 41,812 $ 22,179 $ 7,326 $9,505
========== ========== ========== ======
Income before extraordinary items
per unit....................... $ 1.32 $ 1.09 $ 0.48
========== ========== ==========
Extraordinary items per unit..... $ (0.11) -- --
========== ========== ==========
Net income per unit.............. $ 1.21 $ 1.09 $ 0.48
========== ========== ==========
Weighted average units
outstanding.................... 34,446,907 20,323,327 15,270,899
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-97
<PAGE> 220

BEACON PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
FOR THE PERIOD JANUARY 1, 1994 TO DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

<TABLE>
<CAPTION>
LIMITED
GENERAL LIMITED TOTAL PARTNERS'
PARTNER'S PARTNER'S PARTNER'S CAPITAL
CAPITAL CAPITAL CAPITAL INTEREST
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Owner's equity (Predecessor), at January 1, 1994... $(57,954)
Contributions and other, net of distributions from
January 1, 1994 to May 25, 1994.................. 1,083
Net income from January 1, 1994 through May 25,
1994............................................. 9,505
------- --------- --------- --------
Balance, at May 25, 1994........................... (47,366)
Capital contributions, net, May 26 - December 31,
1994............................................. $ 2,373 $ 182,884 $ 185,257 9,200
Net income, May 26 - December 31, 1994............. 73 5,582 5,655 1,671
Distributions, May 26 - December 31, 1994 ($0.96
per unit)........................................ (147) (11,197) (11,344) (3,382)
Adjustment to reflect limited partners' equity
interest at redemption value..................... (1,123) (111,128) (112,251) 112,251
------- --------- --------- --------
Partners' capital, at December 31, 1994............ 1,176 66,141 67,317 72,374
Capital contributions, net -- 1995................. 1,940 157,781 159,721 307
Net income -- 1995................................. 222 17,838 18,060 4,119
Distributions -- 1995 ($1.24 per unit)............. (262) (21,216) (21,478) (4,706)
Adjustment to reflect limited partners' equity
interest at redemption value..................... (150) (14,893) (15,043) 15,043
------- --------- --------- --------
Partners' capital, at December 31, 1995............ 2,926 205,651 208,577 87,137
Capital contributions, net -- 1996................. 8,466 744,792 753,258 75,143
Net income -- 1996................................. 418 35,914 36,332 5,480
Distributions -- 1996 ($1.765 per unit)............ (583) (50,083) (50,666) (7,631)
Adjustment to reflect limited partners' equity
interest at redemption value..................... (697) (68,957) (69,654) 69,654
------- --------- --------- --------
Partners' capital, at December 31, 1996............ $10,530 $ 867,317 $ 877,847 $229,783
======= ========= ========= ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-98
<PAGE> 221

BEACON PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
PREDECESSOR
---------------
FOR THE FOR THE FOR THE PERIOD FOR THE PERIOD
YEAR ENDED YEAR ENDED MAY 26, 1994 TO JANUARY 1, 1994
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994 TO MAY 25, 1994
----------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income........................ $ 41,812 $ 22,179 $ 7,326 $ 9,505
----------- --------- --------- -------
Adjustments to reconcile net
income to net cash provided by
operating activities:
Increase in accrued rent........ (6,572) (3,741) (915) (1,181)
Depreciation, amortization and
interest amortization of
financing costs............... 35,254 18,603 7,344 2,848
Equity in net income of joint
ventures and corporations..... (2,026) (3,055) (1,327) (201)
Loss from minority interest in
combined partnerships......... -- -- -- (1,519)
Extraordinary items............. 3,876 -- -- (8,898)
Deferred interest............... -- -- -- 367
Increase in accounts
receivable.................... (5,485) (1,746) (3,075) (376)
Decrease (increase) in prepaid
expenses and other assets..... (48) (58) 2,541 (1,940)
Increase (decrease) in accounts
payable, accrued expenses and
other liabilities............. 25,421 781 (739) 1,636
----------- --------- --------- -------
Total adjustments.......... 50,420 10,784 3,829 (9,264)
----------- --------- --------- -------
Net cash provided by
operating activities..... 92,232 32,963 11,155 241
----------- --------- --------- -------
Cash flows from investing
activities:
Property additions................ (1,088,775) (67,610) (190,015) (978)
Loans receivable--affiliate....... -- -- (14,594) --
Payment of deferred leasing
costs........................... (6,157) (2,646) (1,010) (124)
Decrease (increase) in prepaid
expenses and other assets....... 5,000 (5,000) -- --
Purchase of minority interests.... -- -- (11,688) --
Investments in joint ventures..... -- -- (15,802) --
Capital distributions from joint
ventures........................ 8,610 3,518 2,508 --
Investments in and advance to
corporations.................... -- (41,471) (5,800) --
Cash from contributed assets...... -- -- 6,978 --
Restricted cash from contributed
assets.......................... -- -- 420 --
Purchase of mortgage notes
receivable...................... (16,713) (34,778) -- --
Decrease (increase) in restricted
cash............................ 165 2,063 (4,827) --
----------- --------- --------- -------
Net cash used by investing
activities............... (1,097,870) (145,924) (233,830) (1,102)
----------- --------- --------- -------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-99
<PAGE> 222

BEACON PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS -- CONTINUED
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
PREDECESSOR
---------------
FOR THE FOR THE FOR THE PERIOD FOR THE PERIOD
YEAR ENDED YEAR ENDED MAY 26, 1994 TO JANUARY 1, 1994
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994 TO MAY 25, 1994
----------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Cash flows from financing
activities:
Capital contributions............. $ 754,175 $ 160,028 $173,452 $ 412
Borrowings on Credit Facility..... 468,000 124,700 130,300 --
Borrowings on mortgage notes...... 608,000 -- -- 874
Payments on Credit Facility....... (445,500) (124,500) -- --
Repayments on mortgage notes...... (281,814) (20,400) (49,677) (460)
Advances (repayments) of amounts
due to affiliates............... -- -- (5,355) 2,800
Payment of deferred financing
costs............................. (9,811) (2,457) (2,764) (13)
Decrease (increase) in prepaid
expenses and other assets......... 2,300 (2,300) -- --
Distributions....................... (58,297) (32,435) (8,475) (4,329)
---------- --------- -------- -------
Net cash provided by (used
by) financing
activities............... 1,037,053 102,636 237,481 (716)
---------- --------- -------- -------
Net increase (decrease) in cash and
cash equivalents.................. 31,415 (10,325) 14,806 (1,577)
Cash and cash equivalents, beginning
of period......................... 4,481 14,806 -- 6,150
---------- --------- -------- -------
Cash and cash equivalents, end of
period............................ $ 35,896 $ 4,481 $ 14,806 $ 4,573
========== ========= ======== =======
Supplemental disclosures:
Cash paid during the period for
interest (net of capitalized
interest)....................... $ 28,777 $ 14,738 $ 5,278 $ 2,811
========== ========= ======== =======
Noncash activities:
Acquisition of interests in
properties...................... -- -- $ 22,721
========== ========= ========
Increase in partners' capital as a
result of acquisition of
interests in properties......... $ 74,226 -- $ 9,200
========== ========= ========
Liabilities assumed in connection
with contributions and
acquisition of properties....... $ 55,529 $ 861 $ 93,518
========== ========= ========
Distributions payable to unit
holders......................... -- -- $ 6,251
========== ========= ========
Receivable from equity
investment...................... $ 769 $ 1,040
========== =========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-100
<PAGE> 223

BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

1. ORGANIZATION, OFFERINGS AND ACQUISITIONS:

Beacon Properties, L.P. (the "Operating Partnership") was organized as a
Delaware limited partnership in April 1994 and commenced operations effective on
May 26, 1994. The Operating Partnership was formed to continue and expand the
commercial real estate development, construction, acquisition, leasing, design
and management business of The Beacon Group (the "Predecessor").

Simultaneously with the closing of the initial public offering (the "IPO")
of Beacon Properties Corporation (the "Company"), which is the sole general
partner and a limited partner of the Operating Partnership, the Company
contributed its interests in two properties and approximately $173.4 million,
the net proceeds of the IPO, to the Operating Partnership in exchange for
partnership interests ("Units").

The following schedule summarizes the Operating Partnership's interest in
the properties as a result of the initial and subsequent capital contributions
of the Company, and the related acquisition of properties and partnership
interests. All properties have been consolidated unless otherwise indicated in
the notes:

<TABLE>
<CAPTION>
RENTABLE OWNERSHIP
DATE AREA IN INTEREST AT ACCOUNTING
ACQUIRED SQUARE FEET 12/31/96 METHOD NOTES
-------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
PROPERTIES:
Wellesley Office Park -- Buildings 1-8, Wellesley,
MA................................................... (A) 622,862 100% (E)
Crosby Corporate Center, Bedford, MA................... (B) 336,000 100%
South Station, Boston, MA.............................. (B) 148,591 100%
175 Federal Street, Boston, MA......................... (B) 203,349 100% (E)
One Post Office Square, Boston, MA..................... (B) 764,129 50% (D)
Center Plaza, Boston, MA............................... (B) 649,359 100%
Rowes Wharf, Boston, MA................................ (B) 344,326 45% (F)
150 Federal Street, Boston, MA......................... (B) 530,279 100%
Polk and Taylor Buildings, Arlington, VA............... (B) 890,000 9% (G)
One Canal Park, Cambridge, MA.......................... 6/10/94 100,300 100%
Westwood Business Centre, Westwood, MA................. 6/10/94 160,400 100%
Russia Wharf, Boston, MA............................... 8/10/94 314,596 100%
Westlakes Office Park -- Buildings 1-3 and 5, Berwyn,
PA................................................... (C) 443,592 100%
75-101 Federal Street, Boston, MA...................... 9/29/95 812,000 51% (H)
2 Oliver Street--147 Milk Street, Boston, MA........... 10/6/95 271,000 100%
Ten Canal Park, Cambridge, MA.......................... 12/21/95 110,000 100%
New England Executive Park, Burlington, MA............. 11/15/96 817,013 100%
245 First Street, Cambridge, MA........................ 11/21/96 263,227 100%
Perimeter Center, Atlanta, GA.......................... 2/15/96 3,302,136 100%
1300 North 17th Street, Rosslyn, VA.................... 10/18/96 372,865 100%
1616 North Fort Myer Drive, Rosslyn, VA................ 10/18/96 292,826 100%
John Marshall I, McLean, VA............................ 9/5/96 261,364 100%
E.J. Randolph, McLean, VA.............................. 9/5/96 164,677 100%
Northridge I, Reston/Herndon, VA....................... 9/5/96 124,319 100%
1333 H Street, N.W., Washington, D.C................... 8/16/96 238,694 100%
AT&T Plaza, Oak Brook, IL.............................. 8/16/96 225,318 100%
Tri-State International, Lincolnshire, IL.............. 8/16/96 548,000 100%
10960 Wilshire Boulevard, Westwood, CA................. 11/21/96 543,804 100%
Shoreline Technology Park, Mountain View, CA........... 12/20/96 727,000 100%
Lake Marriott Business Park, Santa Clara, CA........... 12/20/96 400,000 100%
Presidents Plaza, Chicago, IL.......................... 12/27/96 791,000 100%
----------
15,773,026
==========
</TABLE>

F-101
<PAGE> 224
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
RENTABLE OWNERSHIP
DATE AREA IN INTEREST AT ACCOUNTING
ACQUIRED SQUARE FEET 12/31/96 METHOD NOTES
-------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
SERVICE ENTITIES:
Beacon Construction Company, Inc....................... (B) 99% (I)
Beacon Property Management, L.P........................ (B) 100%
Beacon Property Management Corporation................. (B) 99% (I)
Beacon Design Corporation.............................. (B) 99% (I)
Beacon Design L.P...................................... (B) 100%
</TABLE>

- -------------------------
(A) Wellesley Building 8 was acquired May 4, 1995. Interests in the remaining
Wellesley Buildings were contributed as part of the initial public offering.

(B) Interests in this property or company were contributed or acquired as part
of the initial public offering.

(D) The Operating Partnership is a general partner in the joint venture which
owns the property and utilizes the equity method of accounting for its
investment.

(E) On October 28, 1994, the Operating Partnership acquired the remaining
interest in the 175 Federal Street and Wellesley 6 Joint Venture which
owned these properties. Prior to the acquisition of the remaining interest,
the Operating Partnership used the equity method of accounting for its
investments.

(F) The Operating Partnership owns an indirect limited partner interest and
utilizes the equity method of accounting for its investment. (See Note 2.)

(G) The Operating Partnership owns a 9% limited partner interest and utilizes
the equity method of accounting for its investment.

(H)The Operating Partnership is a shareholder in the corporation (private real
estate investment trust) which owns the property, and utilizes the equity
method of accounting for its investment.

(I) The Operating Partnership used the cost method of accounting for its
investments in these subsidiaries prior to 1995. The Operating Partnership
currently uses the equity method of accounting for its investments. (See
Note 2.)

F-102
<PAGE> 225
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BUSINESS

The Operating Partnership currently has interests in a portfolio of 104
Class A office properties and other commercial properties containing
approximately 15.8 million rentable square feet located in Boston, Atlanta,
Chicago, Los Angeles, San Francisco and Washington, D.C.

The Operating Partnership also owns and operates commercial real estate
development, acquisition, leasing, design and management businesses. The
Operating Partnership currently manages approximately 2.9 million square feet of
commercial and office space owned by third parties in various locations,
including Boston, Waltham, and Springfield, Massachusetts and Chicago, Illinois.

PRINCIPLES OF CONSOLIDATION

The accompanying financial statements of the Operating Partnership have
been prepared on a consolidated basis which include all the accounts of the
Operating Partnership and its subsidiaries. All significant intercompany
balances and transactions have been eliminated. The Operating Partnership's
consolidated financial statements reflect the properties acquired at their
historical basis of accounting to the extent of the acquisition of interests
from the Predecessors' owners who continued on as investors. The remaining
interests acquired from the Predecessors' owners have been accounted for as a
purchase and the excess of the purchase price over the related historical cost
basis was allocated to real estate.

The accompanying financial statements of the Predecessor have been
presented on a combined basis which include all the contributed properties and
the management, leasing and design entities.

REAL ESTATE

Buildings and improvements are recorded at cost and are depreciated on the
straight-line and declining balance methods over their estimated useful lives of
nineteen to forty years and fifteen to twenty years, respectively. The cost of
buildings and improvements includes the purchase price of the property or
interests in property, legal fees, acquisition costs and interest, property
taxes, capitalized interest, and other costs incurred during the period of
construction. The Operating Partnership capitalized interest costs of $1.0
million in 1996, $0.1 million in 1995, and $0 in 1994. In accordance with
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, the
Operating Partnership periodically reviews its properties to determine if its
carrying costs will be recovered from future operating cash flows. In cases
where the Operating Partnership does not expect to recover its carrying costs,
the Operating Partnership recognizes an impairment loss. No such losses have
been recognized to date.

Tenant improvements are depreciated over the terms of the related leases.
Furniture, fixtures and equipment are depreciated using the straight-line and
declining balance methods over their expected useful lives of five to seven
years.

Expenditures for maintenance and repairs are charged to operations as
incurred. Significant renovations or betterments which extend the economic
useful life of the assets are capitalized.

DEFERRED FINANCING AND LEASING COSTS

Deferred financing costs include fees and costs incurred to obtain
long-term financings, and are amortized over the terms of the respective loans
on a basis which approximates the interest method. Deferred leasing costs
incurred in the successful negotiation of leases, including brokerage, legal and
other costs, have been deferred and are being amortized on a straight-line basis
over the terms of the respective leases.

F-103
<PAGE> 226
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of highly liquid assets with original
maturities of three months or less from the date of purchase. The majority of
the Operating Partnership's cash and cash equivalents are held at major
commercial banks. The Operating Partnership has not experienced any losses to
date on its invested cash. The carrying value of the cash and cash equivalents
approximates market.

RESTRICTED CASH

Restricted cash consists of cash held in escrow as required by lenders to
satisfy real estate taxes and tenant improvement costs.

INVESTMENTS IN AND ADVANCE TO JOINT VENTURES AND CORPORATIONS

The Operating Partnership uses the equity method of accounting for its
earnings in property joint ventures and corporations which it does not control.
Losses in excess of investments are not recorded where the Operating Partnership
is a limited partner and has not guaranteed nor intends to provide any future
financial support to the respective properties.

MORTGAGE NOTES RECEIVABLE

Discounts from the principal balance on mortgage loans receivable, net of
acquisition costs, are amortized as interest income over the due date of the
related loans using the effective yield method, based on management's evaluation
of the current facts and circumstances and the ultimate ability to collect the
principal balances of such loans.

REVENUE RECOGNITION

Base rental income is reported on a straight-line basis over the terms of
the respective leases. The impact of the straight-line rent adjustment increased
revenues for the Operating Partnership by $6.6 million, $3.7 million and $1.9
million and increased its proportionate share of equity in net income of
property joint ventures and corporations by $0.1 million, $0.2 million and $0.3
million for the years ended December 31, 1996 and 1995 and the period May 26,
1994 to December 31, 1994, respectively. Management fees are recognized as
revenue as they are earned.

INCOME TAXES

Income taxes are not considered in the accompanying financial statements
since such taxes, if any, are the responsibility of the partners.

INTEREST RATE PROTECTION AGREEMENTS

The Operating Partnership has entered into interest rate protection
agreements to reduce the impact of certain changes in interest rates. These
agreements are held for purposes other than trading. Amounts paid for the
agreements are amortized over the lives of the agreements on a basis which
approximates the interest method. Payments under interest rate swap agreements
are recognized as adjustments to interest expense when incurred. The Operating
Partnership's policy is to write off unamortized amounts paid under interest
rate protection agreements, when the related debt is paid off or there is a
termination prior to the maturity of the agreements. The Operating Partnership
is exposed to credit loss in the event of nonperformance by the other parties to
the interest rate protection agreements. However, the Operating Partnership does
not anticipate nonperformance by the counterparties.

F-104
<PAGE> 227
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)

RISKS AND UNCERTAINTIES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities. Actual results could differ
from those estimates.

RECLASSIFICATIONS

Certain prior year balances have been reclassed to conform with current
year presentation.

3. ACCOUNTS RECEIVABLE:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1995
---- ----
<S> <C> <C>
Tenants..................................................... $ 5,072 $2,137
Other....................................................... 4,228 1,006
Affiliates.................................................. 3,670 3,305
Allowance for uncollectible amounts......................... (1,374) (337)
------- ------
$11,596 $6,111
======= ======
</TABLE>

4. MORTGAGE NOTES RECEIVABLE:

The Operating Partnership acquired a fifty percent interest in certain
mortgages collateralized by property owned by a joint venture in which the
Operating Partnership has an indirect interest. The terms of the notes require
interest-only payments at 8.71% quarterly on a principal balance of
approximately $63.0 million and are due on April 1, 1999. The term may be
extended for up to three years under certain conditions. The Operating
Partnership also has an option to purchase from an affiliate other mortgage
interests collateralized by the same property.

F-105
<PAGE> 228
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)

5. INVESTMENTS IN AND ADVANCE TO JOINT VENTURES AND CORPORATIONS:

The following is summarized financial information for the property joint
ventures and corporation:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Balance sheet:
Real estate, net.......................................... $410,207 $419,096
Other assets.............................................. 51,669 55,714
-------- --------
$461,876 $474,810
======== ========
Mortgage notes payable.................................... $377,754 $380,827
Loans and notes payable................................... 72,136 68,606
Other liabilities......................................... 13,040 14,072
Partners' and shareholders' equity (deficiency)........... (1,054) 11,305
-------- --------
$461,876 $474,810
======== ========
</TABLE>

<TABLE>
<CAPTION>
PREDECESSOR
----------------
FOR THE YEAR FOR THE YEAR FOR THE PERIOD FOR THE PERIOD
ENDED ENDED MAY 26, 1994 TO JANUARY 1, 1994
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994 TO MAY 25, 1994
----------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Summary of operations:
Rentals........................ $117,283 $91,048 $59,983 $38,386
Other income................... 3,453 3,861 5,717 2,941
Operating expenses............. 61,086 49,472 34,688 22,632
Mortgage interest expense...... 28,712 23,232 16,261 13,432
Depreciation and
amortization................ 18,592 14,537 11,427 8,228
-------- ------- ------- -------
Net income (loss).............. $ 12,346 $ 7,668 $ 3,324 $(2,965)
======== ======= ======= =======
</TABLE>

A reconciliation of interests in property joint ventures and corporation to
the underlying net assets is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Partners' and shareholders' (deficiency) capital, as
above..................................................... $(1,054) $11,305 $(51,742)
Deficits of other partners and shareholders................. 23,555 13,270 38,459
------- ------- --------
Operating Partnership's share of equity (deficiency)........ 22,501 24,575 (13,283)
Excess of cost of investments over the net book value of
underlying net assets, net of amortization and accumulated
amortization of $122, $75 and $28, respectively........... 1,310 1,357
------- ------- --------
Carrying value of property investments in joint ventures and
corporation............................................... $23,811 $25,932 $(11,899)
======= ======= ========
</TABLE>

F-106
<PAGE> 229
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)

The following is summarized financial information for the service
corporations:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1995
---- ----
<S> <C> <C>
Balance sheet:
Equipment, net............................................ $ 1,806 $ 715
Other assets.............................................. 34,155 29,560
------- -------
$35,961 $30,275
======= =======
Other liabilities......................................... 37,360 27,124
Shareholders' equity (deficiency)......................... (1,399) 3,151
------- -------
$35,961 $30,275
======= =======
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED ENDED MAY 26, 1994 TO
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
Summary of operations:
Construction income........................... $140,903 $108,913 $52,429
Consulting and management fees................ 2,537 7,576 4,848
Interest and other income..................... 266 383 184
Construction, consulting and management fee
costs...................................... 141,167 110,835 52,388
General and administrative expense............ 5,121 4,880 3,564
Depreciation and amortization................. 584 336 186
Minority interest in net income of joint
venture.................................... 52 130 90
Interest expense to stockholder............... -- 650 --
-------- -------- -------
Net income (loss)............................... $ (3,218) $ 41 $ 1,233
======== ======== =======
</TABLE>

A reconciliation of the underlying net assets to the Operating
Partnership's carrying value of investments in and advance to service
corporations is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Shareholders' equity, as above.............................. $ (1,399) $ 3,151
(Deficit) equity of other shareholders...................... (29) 11
-------- --------
Operating Partnership's share of equity..................... (1,370) 3,140
Advance..................................................... 5,000 5,000
-------- --------
Carrying value of investments in and advance to service
corporations.............................................. 3,630 8,140
Carrying value of property investments in joint ventures and
corporation per above..................................... 23,811 25,932
-------- --------
$ 27,441 $ 34,072
======== ========
Per consolidated balance sheet:
Investments in and advance to joint ventures and
corporations........................................... $ 52,176 $ 58,027
Investment in joint venture............................... (24,735) (23,955)
-------- --------
$ 27,441 $ 34,072
======== ========
</TABLE>

F-107
<PAGE> 230
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)

6. MORTGAGE NOTES PAYABLE:

The mortgage notes payable collateralized by the certain properties and
assignment of leases, are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Mortgage notes with fixed interest at:
8.00% maturing July 1, 1998............................... $ 12,970 $13,236
6.67% maturing November 1, 1998........................... 56,920 57,300
7.23% maturing February 1, 2003........................... 55,000 --
7.23% maturing March 1, 2003.............................. 60,000 --
7.08% maturing March 31, 2006............................. 218,000 --
8.19% maturing January 1, 2007............................ 15,000 --
8.19% maturing January 1, 2007............................ 13,600 --
8.38% maturing December 1, 2008........................... 20,722 --
-------- -------
Total mortgage notes payable........................... $452,212 $70,536
======== =======
</TABLE>

The Operating Partnership's restricted cash consists of cash required by
these mortgages to be held in escrow for capital expenditures and/or real estate
taxes.

Scheduled maturities of mortgage notes payable are as follows:

<TABLE>
<S> <C>
1997........................................................ $ 2,127
1998........................................................ 72,611
1999........................................................ 6,602
2000........................................................ 7,608
2001........................................................ 8,171
Thereafter.................................................. 355,093
--------
Total..................................................... $452,212
========
</TABLE>

The Operating Partnership determines the fair value of its mortgage notes
payable based upon the discounted cash flows at a discount rate that
approximates the Operating Partnership's effective borrowing rate. Based on its
evaluation, the Operating Partnership has determined that the fair value of its
mortgage notes approximates their carrying value.

In March 1996, the Operating Partnership repaid a debt and recorded an
extraordinary item of $2.2 million in connection with the write-off of fees and
costs to acquire the debt. The extraordinary item during the period January 1,
1994 through May 25, 1994 represents the gains resulting from the settlement of
certain mortgage notes payable. As the prepayments were a condition to transfer
the assets to the Operating Partnership, these items were recorded by the
Predecessor entity.

7. NOTE PAYABLE -- CREDIT FACILITY:

The Operating Partnership presently has a three-year, $300 million
revolving credit facility (the "Credit Facility"). The Credit Facility matures
in June 1999 and is collateralized by cross-collateralized mortgages and
assignment of rents on certain properties.

Outstanding balances under the Credit Facility bear interest, at the
Company's option, at either (i) the higher of (x) Bank of Boston's base interest
rate and (y) one-half of one percent (1/2%) above the overnight

F-108
<PAGE> 231
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)

federal funds effective rate or (ii) the Eurodollar rate plus 175 basis points
(1.75%). The Company has an interest rate protection agreement through May 1997
with respect to $135 million of the Credit Facility, which provides for
offsetting payments to the Company in the event that 90-day LIBOR exceeds 9.47%
per annum. Effective May 1997 through May 1999, the Company has an interest rate
protection agreement with respect to $137.5 million of the Credit Facility,
which provides for offsetting payments to the Company in the event that 90-day
LIBOR exceeds 8.75% per annum. This interest rate protection arrangement may be
applied during four quarters of the period May 1997 to May 1999.

The outstanding balance of the Credit Facility at December 31, 1996 was
$153.0 million. The weighted average amount outstanding during the years ended
December 31, 1996 and 1995 and the period May 26, 1994 to December 31, 1994 was
$42.3 million, $99.7 million and $50.4 million, respectively. The weighted
average interest rate on amounts outstanding during the years ended December 31,
1996 and 1995 and the period May 26, 1994 to December 31, 1994 was approximately
7.78%, 8.25% and 7.57%, respectively. The applicable interest rate under the
Credit Facility at December 31, 1996 was 8.25%.

Based upon the Credit Facility's variable interest rate, the Operating
Partnership has determined that the fair value of the Credit Facility
approximates its carrying value. The Operating Partnership determines the fair
value of its interest rate agreement based upon the quoted market prices of
similar instruments. Based on this analysis, the Operating Partnership has
determined that the fair value of this instrument approximates its carrying
value.

As a result of the substantial modification of the terms of the Credit
Facility, the Company recorded an extraordinary item of $1.7 million in
connection with the write-off of fees and costs relating to the prior Credit
Facility.

8. ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
---- ----
<S> <C> <C>
Accounts payable and accrued expenses....................... $29,139 $ 8,088
Deferred revenue and other.................................. 4,912 1,164
Affiliates.................................................. 1,595 2,952
Other liabilities........................................... 504 647
Security deposits........................................... 5,186 1,167
------- -------
$41,336 $14,018
======= =======
</TABLE>

9. TRANSACTIONS WITH AFFILIATES:

In 1995, the Operating Partnership entered into an agreement to lease its
home office from a joint venture in which the Operating Partnership has an
indirect interest. It previously subleased home office space from

F-109
<PAGE> 232
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)

another affiliate. Rental expense related to these arrangements was $1.3
million, $0.3 million and $0.1 million for the years ended December 31, 1996 and
1995 and the period May 26, 1994 to December 31, 1994, respectively.

Future minimum rental payments at December 31, 1996 for the Operating
Partnership's home office are $1.3 million for 1997, $1.4 million for 1998
through 2001, and $1.0 million for 2002.

10. LIMITED PARTNERS' CAPITAL INTEREST

Pursuant to the Operating Partnership Agreement, certain limited partners
in the Operating Partnership have the right to redeem all or any portion of
their Units for cash from the Operating Partnership or, at the election of the
Company, for shares of common stock or cash as selected by the Company. The
amount of cash to be paid to the limited partner if the redemption right is
exercised and the cash option is selected will be based on the trading price of
the Company's common stock at that time.

Such limited partners' redemption rights are not included in partners'
capital. Accordingly, the accompanying consolidated balance sheets have been
retroactively reclassified to reflect the limited partners' capital interest in
the Operating Partnership, measured at redemption value. This reclassification
results in a reduction of partners' equity of $69.7 million and $15.0 million as
of December 31, 1996 and 1995, respectively as a result of the increase in the
redemption value.

11. COMMITMENTS AND CONTINGENCIES:

PENSION PLAN

The Operating Partnership participates in a multiemployer defined-benefit
pension plan with some of its affiliates. This plan covered substantially all
full-time nonunion employees. The Operating Partnership's portion of pension
expense for the years ended December 31, 1996 and 1995 and the period May 26,
1994 to December 31, 1994, was $0.2 million, $0.1 million, and $0.1 million,
respectively. The Predecessor's comparable allocated portion of pension expense
amounted to $0.1 million for the period January 1, 1994 to May 25, 1994.

401(K) PLAN

The eligible employees of the Operating Partnership participate in a
contributory savings plan with some of its affiliates. Under the plan, the
Operating Partnership may match contributions made by eligible employees based
on a percentage of the employee's salary. Currently, the Operating Partnership
matches 25% of contributions up to 3% of such employee's salary (up to $30). The
matching amount may be changed from time to time by the Board of Directors of
the Company. Expenses under this plan for 1996, 1995 and 1994 were not material.

CONTINGENCIES

The Operating Partnership is subject to various legal proceedings and
claims that arise in the ordinary course of business. These matters are
generally covered by insurance. Management believes that the final outcome of
such matters will not have a material adverse effect on the financial position,
results of operations or liquidity of the Operating Partnership.

LEASE

The South Station property is subject to a ground lease expiring in 2024.
The lease provides two 15-year extension options. Under certain conditions, the
lessor reserves the right to terminate the lease at the end of

F-110
<PAGE> 233
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)

the initial term or at the end of the first extension period and pay the lessee
an amount based on a formula payment of fair value. The minimum rents in
connection with the lease are substantially based on percentage rent until 1997.
The Operating Partnership is obligated to provide loans to the lessor under
certain conditions subject to a maximum of $0.9 million. As of December 31,
1996, no loans were outstanding.

ENVIRONMENTAL

A former tenant of Crosby Corporate Center has agreed to perform the
necessary investigation and cleanup actions regarding remediation of possible
contamination, bear all costs associated with such cleanup activities and
indemnify the Operating Partnership for any costs or damages it incurs in
connection with such contamination. As the owner of the property, however, the
Operating Partnership could be held liable for the costs of such activities if
the former tenant fails to undertake such actions.

As a lessee of certain property, the Operating Partnership has received an
indemnity from the owner to the extent the Operating Partnership is assessed
costs relating to environmental cleanup.

Site assessments at the New England Executive Park have identified
contamination in the groundwater at a monitoring well which flows into an
aquifer, which supplies drinking water to the Town of Burlington. The Town of
Burlington has allocated funds for, and is in the process of constructing, a
groundwater treatment facility at its drinking water supply that draws from the
subject aquifer. The Operating Partnership has been advised that such treatment
facility has the capacity to treat any contaminants which may be derived from
the groundwater passing beneath the New England Executive Park. Although the
Town's water treatment facility does not relieve the Operating Partnership of
potential liability for the presence of the contaminants, the Operating
Partnership does not believe that any such liability would have a material
adverse effect on the Operating Partnership.

Based on site assessments performed at 245 First Street which have
identified the presence of oil that slightly exceeds the concentration that
requires reporting to the Massachusetts Department of Environmental Protection,
an environmental consultant has advised the Operating Partnership that
applicable regulatory requirements can be satisfied without the need to perform
any remediation at the property. The Operating Partnership could be held liable
for costs associated with the contamination that has been identified, although
the Operating Partnership does not believe that such costs would have a material
adverse effect on the Operating Partnership.

In connection with the acquisition of the John Marshall land, the sellers
have reported the findings of contamination to the Virginia Department of
Environmental Quality and have retained an environmental consultant to prepare a
remediation plan. Units valued at approximately $1.0 million were escrowed from
the purchase price to be released to the seller upon performance of remediation
pursuant to a remediation plan approved by the Operating Partnership. The escrow
further provides that the Operating Partnership may receive some or all of the
remaining escrowed Units upon certain conditions.

Management does not believe that any costs, if incurred, would have a
material adverse effect on the financial condition, annual results of
operations, or liquidity of the Operating Partnership.

OTHER

The Operating Partnership has an obligation to pay $17.0 million in
connection with the acquisition of real estate upon the achievement of
conditions regarding occupancy or rental income levels.

In connection with the acquisition of the John Marshall I, E.J. Randolph
and Northridge I properties, the Operating Partnership has agreed to maintain
the non-recourse financing assumed from the sellers for a five year period and
not to dispose of the property for a seven year period. If the Operating
Partnership should

F-111
<PAGE> 234
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS EXCEPT PER UNIT AMOUNTS)

choose not to maintain the non-recourse provisions of the existing or new debt,
or sell the properties, within these respective time periods it shall be
required to make payments to the sellers of approximately $6.0 million in 1997,
reducing ratably to zero through 2003.

12. FUTURE MINIMUM RENTS:

Future minimum rentals to be received under noncancelable tenant leases for
all fully consolidated properties at December 31, 1996 are due for years ended
December 31 as follows:

<TABLE>
<CAPTION>
<S> <C>
1997........................................................ $ 188,032
1998........................................................ 175,732
1999........................................................ 170,086
2000........................................................ 143,288
2001........................................................ 113,718
Thereafter.................................................. 370,698
----------
Total future minimum rents............................. $1,161,554
==========
</TABLE>

13. GEOGRAPHIC CONCENTRATION:

The Operating Partnership owns properties with a total cost at December 31,
1996 as follows:

<TABLE>
<CAPTION>
<S> <C>
Downtown Boston............................................. $ 284,574
Suburban Boston............................................. 279,987
Suburban Atlanta............................................ 343,014
Suburban Philadelphia....................................... 59,018
Suburban Virginia........................................... 178,166
Downtown Los Angeles........................................ 133,307
Suburban San Francisco...................................... 184,207
Suburban Chicago............................................ 175,819
Downtown Washington......................................... 53,438
----------
$1,691,530
==========
</TABLE>

14. PRO FORMA RESULTS (UNAUDITED):

The following unaudited pro forma operating results for the Operating
Partnership have been prepared as if capital contributions and property
acquisitions during 1995 and 1996 had occurred on January 1, 1995. Unaudited pro
forma financial information is presented for informational purposes only and may
not be indicative of what the actual results of operations of the Operating
Partnership would have been had the events occurred as of January 1, 1995, nor
does it purport to represent the results of operations for future periods. Pro
forma results have not been presented for 1994 as the Operating Partnership's
operations did not commence until May 26, 1994.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Revenues................................................. $299,124 $265,878
Income before extraordinary items........................ 84,619 79,007
Net income............................................... 80,728 79,007
Net income per unit...................................... 1.48 1.45
</TABLE>

F-112
<PAGE> 235
BEACON PROPERTIES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)

15. DISCONTINUED OPERATIONS:

On December 31, 1996, certain assets of the construction company were sold.
These assets included fixed assets, general construction contracts in progress,
and the receivables and payables related to these contracts. All employees were
transferred to the buyer who is expected to complete all outstanding
construction work for projects not purchased as part of the sale.

16. SUBSEQUENT EVENTS:

DECLARATION OF DISTRIBUTION

On January 28, 1997, the Operating Partnership declared a quarterly
distribution of $25.2 million, payable on February 28, 1997 to partners of
record on February 10, 1997.

F-113
<PAGE> 236

REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES

To the Partners of Beacon Properties L.P.:

Our report on the consolidated financial statements of Beacon Properties
L.P. is included on page F-1 of this Form 10. In connection with our audits of
such financial statements, we have also audited the related financial statement
schedules listed in the Item 15(a) of this Form 10.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.

/s/ Coopers & Lybrand L.L.P.

Boston, Massachusetts
January 21, 1997

F-114
<PAGE> 237

SCHEDULE III
BEACON PROPERTIES, L.P.

REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
INITIAL COST
------------------------
BUILDINGS AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS
----------- ------------ ---- -------------
<S> <C> <C> <C>
Commercial Property:
Wellesley Office Park -- Buildings 1-8 -- Wellesley, MA... $ 55,000 $ 9,110 $ 75,829
Crosby Corporate Center -- Bedford, MA.................... --(1) 978 10,478
South Station -- Boston, MA............................... -- -- 21,487
175 Federal St. -- Boston, MA............................. 12,970 1,404 24,505
Center Plaza -- Boston, MA................................ 60,000 7,301 65,712
150 Federal St. -- Boston, MA............................. 56,920(2) 11,265 101,280
One Canal Park -- Cambridge, MA........................... --(1) 931 8,444
Ten Canal Park -- Cambridge, MA........................... --(1) 1,179 10,609
2 Oliver Street -- Boston, MA............................. --(1) 1,796 16,166
Westwood Business Centre -- Westwood, MA.................. --(1) 1,159 10,498
Russia Wharf -- Boston, MA................................ --(1) 1,442 12,974
Westlakes Office Park -- Buildings 1, 2, 3 and 5 --
Berwyn, PA.............................................. --(1) 6,335 46,267
Perimeter Center -- Atlanta, GA........................... 218,000 46,438 292,305
AT&T Plaza -- Oak Brook, IL............................... --(1) 3,510 31,587
Tri-State International -- Lincolnshire, IL............... --(1) 6,222 55,999
1333H Street, N.W. -- Washington, D.C..................... --(1) 5,337 48,033
E.J. Randolph -- McLean, VA............................... 15,000 3,590 19,520
John Marshall I -- McLean, VA............................. 20,722 5,996 27,991
Northridge I -- Herndon, VA............................... 13,600 1,911 19,264
1300 North 17th Street -- Rosslyn, VA..................... --(1) 8,007 46,758
1616 North Fort Myer Drive -- Rosslyn, VA................. --(1) 6,156 38,651
New England Executive Park -- Burlington, MA.............. --(1) 7,067 68,259
10960 Wilshire Boulevard -- Westwood, CA.................. -- 11,200 122,039
245 First Street -- Cambridge, MA......................... -- 4,513 40,616
Shoreline Technology Park -- Mountain View, CA............ -- 39,547 101,444
Lake Marriott Business Park -- Santa Clara, CA............ -- 12,032 31,128
Presidents Plaza -- Chicago, IL........................... -- 7,750 69,752
-------- -------- ----------
$452,212 $212,176 $1,417,595
======== ======== ==========
</TABLE>

F-115
<PAGE> 238
SCHEDULE III
BEACON PROPERTIES, L.P.

REAL ESTATE AND ACCUMULATED DEPRECIATION -- CONTINUED
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SUBSEQUENT GROSS AMOUNT AT WHICH
TO ACQUISITION CARRIED AT CLOSE OF PERIOD
---------------------- --------------------------------------
BUILDINGS BUILDINGS
COST CAPITALIZED AND AND
DESCRIPTION LAND IMPROVEMENTS LAND IMPROVEMENTS TOTAL
----------- ---- ------------ ---- ------------ -----
<S> <C> <C> <C> <C> <C>
Commercial Property:
Wellesley Office Park -- Buildings 1-8 --
Wellesley, MA.......................... -- $12,866 $ 9,110 $ 88,695 $ 97,805
Crosby Corporate Center -- Bedford, MA... $1,505 14,880 2,483 25,358 27,841
South Station -- Boston, MA.............. -- 861 -- 22,348 22,348
175 Federal St. -- Boston, MA............ -- 3,196 1,404 27,701 29,105
Center Plaza -- Boston, MA............... -- 8,810 7,301 74,522 81,823
150 Federal St. -- Boston, MA............ -- 1,326 11,265 102,606 113,871
One Canal Park -- Cambridge, MA.......... -- 139 931 8,583 9,514
Ten Canal Park -- Cambridge, MA.......... -- 135 1,179 10,744 11,923
2 Oliver Street -- Boston, MA............ -- 1,376 1,796 17,542 19,338
Westwood Business Centre -- Westwood,
MA..................................... -- 674 1,159 11,172 12,331
Russia Wharf -- Boston, MA............... 177 3,496 1,619 16,470 18,089
Westlakes Office Park -- Buildings 1, 2,
3 and 5 -- Berwyn, PA.................. -- 6,416 6,335 52,683 59,018
Perimeter Center -- Atlanta, GA.......... -- 4,271 46,438 296,576 343,014
AT&T Plaza -- Oak Brook, IL.............. -- 18 3,510 31,605 35,115
Tri-State International -- Lincolnshire,
IL..................................... -- 950 6,222 56,949 63,171
1333H Street, N.W. -- Washington, D.C.... -- 68 5,337 48,101 53,438
E.J. Randolph -- McLean, VA.............. -- 36 3,590 19,556 23,146
John Marshall I -- McLean, VA............ -- 147 5,996 28,138 34,134
Northridge I --Herndon, VA............... -- 41 1,911 19,305 21,216
1300 North 17th Street -- Rosslyn, VA.... -- 11 8,007 46,769 54,776
1616 North Fort Myer Drive -- Rosslyn,
VA..................................... -- 87 6,156 38,738 44,894
New England Executive Park -- Burlington,
MA..................................... -- 64 7,067 68,323 75,390
10960 Wilshire Boulevard -- Westwood,
CA..................................... -- 68 11,200 122,107 133,307
245 First Street -- Cambridge, MA........ -- 54 4,513 40,670 45,183
Shoreline Technology Park -- Mountain
View, CA............................... -- 49 39,547 101,493 141,040
Lake Marriott Business Park -- Santa
Clara, CA.............................. -- 7 12,032 31,135 43,167
Presidents Plaza -- Chicago, IL.......... -- 31 7,750 69,783 77,533
------ ------- -------- ---------- ----------
$1,682 $60,077 $213,858 $1,477,672 $1,691,530
====== ======= ======== ========== ==========
</TABLE>

F-116
<PAGE> 239
SCHEDULE III
BEACON PROPERTIES, L.P.

REAL ESTATE AND ACCUMULATED DEPRECIATION -- CONTINUED
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
DATE OF INCOME
ACCUMULATED CONSTRUCTION/ DATE STATEMENTS
DESCRIPTION DEPRECIATION RENOVATION ACQUIRED IS COMPUTED
----------- ------------ ------------- -------- -------------
<S> <C> <C> <C> <C>
Commercial Property:
Wellesley Office Park -- Buildings 1-8 --
Wellesley, MA.............................. $33,913 1963-1984 1994/1995 (3)
Crosby Corporate Center -- Bedford, MA....... 6,702 1981 5/26/94 (3)
South Station -- Boston, MA.................. 13,434 1988 5/26/94 (3)
175 Federal St. -- Boston, MA................ 7,258 1977 10/28/94 (3)
Center Plaza -- Boston, MA................... 5,884 1966-1969 12/01/94 (3)
150 Federal St. -- Boston, MA................ 8,961 1988 5/26/94 (3)
One Canal Park -- Cambridge, MA.............. 770 1987 6/10/94 (3)
Ten Canal Park -- Cambridge, MA.............. 386 1987 12/20/95 (3)
2 Oliver Street -- Boston, MA................ 783 1982-1988 10/06/95 (3)
Westwood Business Centre -- Westwood, MA .... 1,083 1985 6/10/94 (3)
Russia Wharf -- Boston, MA................... 1,453 1978-1982 8/10/94 (3)
Westlakes Office Park -- Buildings 1, 2, 3
and 5 -- Berwyn, PA........................ 3,931 1988-1990 7/95 & 10/94 (3)
Perimeter Center -- Atlanta, GA.............. 8,822 1970-1989 2/15/96 (3)
AT&T Plaza -- Oak Brook, IL.................. 395 1984 8/16/96 (3)
Tri-State International -- Lincolnshire,
IL......................................... 710 1986 8/16/96 (3)
1333H Street, N.W. -- Washington, D.C........ 601 1984 8/16/96 (3)
E.J. Randolph -- McLean, VA.................. 217 1983 9/05/96 (3)
John Marshall I -- McLean, VA................ 306 1981 9/05/96 (3)
Northridge I -- Herndon, VA.................. 214 1988 9/05/96 (3)
1300 North 17th Street -- Rosslyn, VA........ 325 1980 10/18/96 (3)
1616 North Fort Myer Drive -- Rosslyn, VA.... 271 1974 10/18/96 (3)
New England Executive Park -- Burlington,
MA......................................... 291 1970-1985 11/15/96 (3)
10960 Wilshire Boulevard -- Westwood, CA..... 439 1971-1992 11/21/96 (3)
245 First Street -- Cambridge, MA............ 170 1985-1986 11/21/96 (3)
Shoreline Technology Park -- Mountain View,
CA......................................... 141 1985-1991 12/20/96 (3)
Lake Marriott Business Park -- Santa Clara,
CA......................................... 43 1981 12/20/96 (3)
Presidents Plaza -- Chicago, IL.............. 32 1980-1982 12/27/96 (3)
-------
$97,535
=======
</TABLE>

- -------------------------
(1) These properties are collateral for a Note Payable under the Credit
Facility. The outstanding balance under the Note at December 31, 1996 is
$153,000.

(2) This property is comprised of two Units. Unit A is collateral for a Note
Payable under the Credit Facility. Unit B is collateral for a Mortgage Note
Payable in the amount of $56,920.

(3) Buildings and improvements -- 19 to 40 years; Personal property -- 5 to 10
years; tenant improvements -- over the terms of the related leases.

F-117
<PAGE> 240
SCHEDULE III
BEACON PROPERTIES, L.P.

REAL ESTATE AND ACCUMULATED DEPRECIATION -- CONTINUED
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)

Depreciation of building and improvements and personal property is
calculated over the following estimated useful lives, using straight line and
declining balance methods:

Buildings and improvements -- 19 to 40 years

Tenant Improvements -- over the terms of the related leases

Personal property -- 5 to 10 years

The aggregate cost for federal income tax purposes was approximately
$1,390.3 million at December 31, 1996.

The changes in total real estate assets for the years ended December 31,
1996 and 1995, the period May 26, 1994 to December 31, 1994 and the period
January 1, 1994 to May 25, 1994 are as follows:

<TABLE>
<CAPTION>
COMPANY PREDECESSOR
------------------------------------- ------------
MAY 26, 1994 JAN. 1, 1994
TO TO
1996 1995 DEC. 31, 1994 MAY 25, 1994
---- ---- ------------- ------------
<S> <C> <C> <C> <C>
Balance, beginning of period................... $ 471,142 $400,419 $207,013* $81,220
Acquisitions, Construction Costs and
Improvements................................. 1,220,388 70,723 193,406 978
---------- -------- -------- -------
Balance, end of period......................... $1,691,530 $471,142 $400,419 $82,198
========== ======== ======== =======
</TABLE>

- -------------------------
* Represents initial acquisition cost of properties in the formation of the
Company.

The changes in accumulated depreciation for the years ended December 31,
1996 and 1995, the period May 26, 1994 to December 31, 1994 and the period
January 1, 1994 to May 25, 1994 are as follows:

<TABLE>
<CAPTION>
COMPANY PREDECESSOR
------------------------------------ ------------
MAY 26, 1994 JAN. 1, 1994
TO TO
1996 1995 DEC. 31, 1994 MAY 25, 1994
---- ---- ------------- ------------
<S> <C> <C> <C> <C>
Balance, beginning of period...................... $66,571 $51,115 $45,044** $37,167
Depreciation for period........................... 30,964 15,456 6,071 2,055
------- ------- ------- -------
Balance, end of period............................ $97,535 $66,571 $51,115 $39,222
======= ======= ======= =======
</TABLE>

- -------------------------
** Balance reflects prior accumulated depreciation carried over due to
accounting for formation acquisitions as poolings of interests.

F-118
<PAGE> 241

SCHEDULE IV
BEACON PROPERTIES, L.P.

MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
FACE LOANS SUBJECT TO
FINAL PERIODIC AMOUNT CARRYING DELINQUENT
INTEREST MATURITY PAYMENT PRIOR OF AMOUNT OF PRINCIPAL
COMMERCIAL PROPERTY RATE DATE TERM LIENS MORTGAGES MORTGAGES(1) OR INTEREST
------------------- -------- -------- -------- ----- --------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rowes Wharf...................... 8.71% 4/1/99 Interest-only -- $63,000 $51,491 --
Boston, MA
</TABLE>

- -------------------------
(1) The aggregate cost of the Company's mortgage loans for federal income tax
purposes $51,491 at December 31, 1996.

Reconciliation of Mortgage Loans on real estate for the year ended December
31:

<TABLE>
<CAPTION>
1996
----
<S> <C>
Balance at beginning of year................................ $34,778
Additions during period:
Acquisition of mortgage loans.......................... 16,713
Deductions during period:
Principal collections.................................. --
-------
Balance at end of year...................................... $51,491
=======
</TABLE>

F-119
<PAGE> 242

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

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. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE EXCHANGE NOTES 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.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary................................ 2
Risk Factors........................... 18
The Company............................ 26
Business and Growth Strategies......... 27
No Cash Proceeds to the Company........ 28
Ratios of Earnings to Fixed Charges.... 29
Capitalization......................... 29
Selected Combined Financial
Information.......................... 30
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 33
The Properties......................... 49
Management............................. 60
Certain Relationships and Related
Transactions......................... 70
Policies with Respect to Certain
Activities........................... 73
Principal Shareholders of the Trust.... 76
The Exchange Offer..................... 78
Description of the Exchange Notes...... 87
Plan of Distribution................... 106
Experts................................ 107
Legal Matters.......................... 107
Available Information.................. 107
Glossary............................... 108
Index to Financial Statements.......... F-1
</TABLE>

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

EOP OPERATING
LIMITED PARTNERSHIP

OFFER TO EXCHANGE

6.375% NOTES DUE 2003 FOR ANY AND ALL
OUTSTANDING 6.375% NOTES DUE 2003

6.625% NOTES DUE 2005 FOR ANY AND ALL
OUTSTANDING 6.625% NOTES DUE 2005

6.750% NOTES DUE 2008 FOR ANY AND ALL
OUTSTANDING 6.750% NOTES DUE 2008

7.250% NOTES DUE 2018 FOR ANY AND ALL
OUTSTANDING 7.250% NOTES DUE 2018

6.376% MANDATORY PAR PUT REMARKETED
SECURITIES(SM) DUE 2012 FOR ANY AND ALL
OUTSTANDING 6.376% MANDATORY PAR
PUT REMARKETED SECURITIES(SM) DUE 2012

7.24% SENIOR NOTES DUE 2004 FOR ANY AND ALL
OUTSTANDING 7.24% SENIOR NOTES DUE 2004

7.36% SENIOR NOTES DUE 2005 FOR ANY AND ALL
OUTSTANDING 7.36% SENIOR NOTES DUE 2005

7.44% SENIOR NOTES DUE 2006 FOR ANY AND ALL
OUTSTANDING 7.44% SENIOR NOTES DUE 2006

7.41% SENIOR NOTES DUE 2007 FOR ANY AND ALL
OUTSTANDING 7.41% SENIOR NOTES DUE 2007
------------------------

PROSPECTUS
------------------------
, 1998

======================================================
<PAGE> 243

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF TRUSTEES AND OFFICERS

Pursuant to its Agreement of Limited Partnership, the Company is obligated
to indemnify, to the fullest extent provided by law, any person or entity made a
party to a proceeding by reason of its status as a general partner, a limited
partner or a trustee, director or officer of the Company or any general partner
and such other persons or entities as the Trust may designate from time to time
in its sole discretion (an "Indemnitee") from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including without
limitation, attorneys fees and other legal fees and expenses), judgments, fines,
settlements and other amounts arising from or in connection with any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, incurred by the Indemnitee and relating to the Company or the
general partners or the operation of, or the ownership of property by, any of
them as set forth in the Partnership Agreement in which any such Indemnitee may
be involved, or is threatened to be involved, as a party or otherwise, unless it
is established by a final determination of a court of competent jurisdiction
that: (i) the act or omission of the Indemnitee 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 Indemnitee actually
received an improper personal benefit in money, property or services or (iii) in
the case of any criminal proceeding, the Indemnitee had reasonable cause to
believe that the act or omission was unlawful. Any indemnification shall be made
only out of the assets of the Company, and any insurance proceeds from the
liability policy covering the general partners and any Indemnitee, and neither a
general partner nor any limited partner shall have any obligation to contribute
to the capital of the Company or otherwise provide funds to enable the Company
to fund its indemnity obligations. The Company is obligated to advance amounts
to an Indemnitee for expenses upon receipt of (i) a written affirmation of the
Indemnitee that it believes it has met the standard of conduct necessary to
entitle it to indemnification and (ii) a written undertaking of the Indemnitee
that it will repay any such advances if it shall be ultimately determined that
it did not meet such standard of conduct. The foregoing indemnification rights
are in addition to any other rights afforded to an Indemnitee under any other
agreement, by vote of the partners, under applicable law or otherwise, and shall
continue as to an Indemnitee who has ceased to serve in such capacity unless
otherwise provided in a written agreement pursuant to which such Indemnitees are
indemnified. The Company is authorized to purchase and maintain insurance on
behalf of the Indemnitees with respect to the foregoing matters. The Company
shall be deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to the
Company also imposes duties on, or otherwise involves services by, it to the
plan or participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines; and actions taken or omitted by the Indemnitee with
respect to an employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Company. An Indemnitee shall not be denied
indemnification in whole or in part because the Indemnitee had an interest in
the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of the Partnership Agreement.

II-1
<PAGE> 244

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<S> <C> <C>
4.1* -- Indenture, dated as of September 2, 1997, between the
Registrant and State Street Bank and Trust Company, as
supplemented.
4.2* -- First Supplemental Indenture, dated as of February 2, 1998,
between the Company and State Street Bank and Trust Company
4.3* -- $200,000,000 6.375% Note due 2003. A $100,000,000 6.375%
Note due 2003, identical in all material respects other than
principal amount to the Note filed as Exhibit 4.3, has not
been filed.
4.4* -- $200,000,000 6.625% Note due 2005. Another $200,000,000
6.625% Note due 2005, identical in all material respects to
the Note filed as Exhibit 4.4, has not been filed.
4.5* -- $200,000,000 6.750% Note due 2008. A $100,000,000 6.750%
Note due 2008, identical in all material respects other than
principal amount to the Note filed as Exhibit 4.5, has not
been filed.
4.6* -- $200,000,000 7.250% Note due 2018. A $50,000,000 7.250% Note
due 2018, identical in all material respects other than
principal amount to the Note filed as Exhibit 4.6, has not
been filed.
4.7* -- $200,000,000 6.376% MandatOry Par Put Remarketed
Securities(SM) due 2012. A $50,000,000 6.376% MandatOry Par
Put Remarketed Securities(SM) due 2012, identical in all
material respects to the note filed as Exhibit 4.7, has not
been filed.
4.8* -- $30,000,000 7.24% Senior Note due 2004
4.9* -- $50,000,000 7.36% Senior Note due 2005
4.10* -- $50,000,000 7.44% Senior Note due 2006
4.11* -- $50,000,000 7.41% Senior Note due 2007
4.12* -- Registration Rights Agreement, dated as of February 12,
1998, among the Company, and (i) in the case of the 6.375%
Notes due 2003, the 6.625% Notes due 2005 and the 7.250%
Notes due 2018, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Lehman Brothers Inc.
("Lehman"), J.P. Morgan Securities Inc. ("J.P. Morgan"),
Salomon Brothers Inc ("Salomon") and UBS Securities LLC,
(ii) in the case of the 6.750% Notes due 2008, Merrill
Lynch, Lehman, J.P. Morgan and BancAmerica Robertson
Stephens and (iii) in the case of the 6.376% MandatOry Par
Put Remarketed Securities(SM) due February 15, 2012, Merrill
Lynch
5.1** -- Opinion of Hogan & Hartson L.L.P. regarding the validity of
the securities being registered.
8.1** -- Opinion of Hogan & Hartson L.L.P. regarding certain tax
matters.
10.1* -- Agreement of Limited Partnership of the Registrant.
10.2 -- Contribution Agreement, dated as of April 30, 1997, among
the Company and the persons named therein (incorporated
herein by reference to Exhibit 10.4 to the Trust's Annual
Report on Form 10-K, as amended, for the fiscal year ended
December 31, 1997).
10.3 -- Agreement and Plan of Merger, dated September 15, 1997, as
amended among the Registrant, the Trust, Beacon and Beacon
Partnership (incorporated herein by reference to Exhibit 2.1
to the Trust's Current Report or Form 8-K dated September
15, 1997.)
12.1** -- Statement of Computation of Ratios.
23.1** -- Consent of Hogan & Hartson L.L.P. (included as part of
Exhibit 5.1).
23.2** -- Consent of Hogan & Hartson L.L.P. (included as part of
Exhibit 8.1).
23.3 -- Consent of Ernst & Young LLP.
23.4 -- Consent of Coopers & Lybrand L.L.P.
24.1 -- Power of Attorney (included in the Signature Page of initial
filing).
25.1*** -- Statement of Eligibility of the Trustee on Form T-1.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
</TABLE>

II-2
<PAGE> 245

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

* Incorporated herein by reference to the same-numbered exhibit to the Trust's
Annual Report on Form 10-K, as amended, for the fiscal year ended December 31,
1997.

** To be filed by amendment.

*** Previously filed.

ITEM 22. UNDERTAKINGS

The Registrant hereby undertakes:

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

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

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

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

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

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

(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.

(5) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.

II-3
<PAGE> 246

(6) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.

(7) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.

(8) That every prospectus: (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to the initial bona fide offering thereof.

II-4
<PAGE> 247

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois, on this first day
of May, 1998.

EOP Operating Limited Partnership
By: 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
Registration Statement has been signed by the following persons in the
capacities indicated as of the first day of May, 1998.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ TIMOTHY H. CALLAHAN President, Chief Executive Officer and
- -------------------------------------------------------- Trustee (principal executive officer)
Timothy H. Callahan

/s/ * Chief Financial Officer (principal
- -------------------------------------------------------- financial officer and principal
Richard D. Kincaid accounting officer)

/s/ * Chairman of the Board of Trustees
- --------------------------------------------------------
Samuel Zell

/s/ * Trustee
- --------------------------------------------------------
Sheli Z. Rosenberg

/s/ * Trustee
- --------------------------------------------------------
Thomas E. Dobrowski

/s/ * Trustee
- --------------------------------------------------------
James D. Harper, Jr.

/s/ * Trustee
- --------------------------------------------------------
Peter Linneman

/s/ * Trustee
- --------------------------------------------------------
Jerry M. Reinsdorf

/s/ * Trustee
- --------------------------------------------------------
William M. Goodyear

Trustee
- --------------------------------------------------------
David K. McKown

/s/ * Trustee
- --------------------------------------------------------
H. Jon Runstad
</TABLE>

II-5
<PAGE> 248

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ * Trustee
- --------------------------------------------------------
Edwin N. Sidman

* Pursuant to Power of Attorney

By: /s/ TIMOTHY H. CALLAHAN
- --------------------------------------------------------
Timothy H. Callahan
Attorney-in-Fact
</TABLE>

II-6
<PAGE> 249

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION OF EXHIBIT NO.
- ------- ---------------------- ----
<S> <C> <C>
4.1* -- Indenture, dated as of September 2, 1997, between the
Registrant and State Street Bank and Trust Company.
4.2* -- First Supplemental Indenture, dated as of February 2, 1998,
between the Company and State Street Bank and Trust Company
4.3* -- $200,000,000 6.375% Note due 2003. A $100,000,000 6.375%
Note due 2003, identical in all material respects other than
principal amount to the Note filed as Exhibit 4.3, has not
been filed.
4.4* -- $200,000,000 6.625% Note due 2005. Another $200,000,000
6.625% Note due 2005, identical in all material respects to
the Note filed as Exhibit 4.4, has not been filed.
4.5* -- $200,000,000 6.750% Note due 2008. A $100,000,000 6.750%
Note due 2008, identical in all material respects other than
principal amount to the Note filed as Exhibit 4.5, has not
been filed.
4.6* -- $200,000,000 7.250% Note due 2018. A $50,000,000 7.250% Note
due 2018, identical in all material respects other than
principal amount to the Note filed as Exhibit 4.6, has not
been filed.
4.7* -- $200,000,000 6.376% MandatOry Par Put Remarketed
Securities(SM) due 2012. A $50,000,000 6.376% MandatOry Par
Put Remarketed Securities(SM) due 2012, identical in all
material respects to the note filed as Exhibit 4.7, has not
been filed.
4.8* -- $30,000,000 7.24% Senior Note due 2004
4.9* -- $50,000,000 7.36% Senior Note due 2005
4.10* -- $50,000,000 7.44% Senior Note due 2006
4.11* -- $50,000,000 7.41% Senior Note due 2007
4.12* -- Registration Rights Agreement, dated as of February 12,
1998, among the Company, and (i) in the case of the 6.375%
Notes due 2003, the 6.625% Notes due 2005 and the 7.250%
Notes due 2018, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Lehman Brothers Inc.
("Lehman"), J.P. Morgan Securities Inc. ("J.P. Morgan"),
Salomon Brothers Inc ("Salomon") and UBS Securities LLC,
(ii) in the case of the 6.750% Notes due 2008, Merrill
Lynch, Lehman, J.P. Morgan and BancAmerica Robertson
Stephens and (iii) in the case of the 6.376% Mandatory Par
Put Remarketed Securities(SM) due February 15, 2012, Merrill
Lynch
5.1** -- Opinion of Hogan & Hartson L.L.P. regarding the validity of
the securities being registered.
8.1** -- Opinion of Hogan & Hartson L.L.P. regarding certain tax
matters.
10.1* -- Agreement of Limited Partnership of the Registrant.
10.2 -- Contribution Agreement, dated as of April 30, 1997, among
the Company and the persons named therein (incorporated
herein by reference to Exhibit 10.4 to the Trust's Annual
Report on Form 10-K, as amended, for the fiscal year ended
December 31, 1997).
10.3 -- Agreement and Plan of Merger, dated September 15, 1997, as
amended, among the Registrant, the Trust, Beacon and Beacon
Partnership (incorporated herein by reference to Exhibit 2.1
to the Trust's Current Report on Form 8-K dated September
15, 1997).
</TABLE>

II-7
<PAGE> 250

<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION OF EXHIBIT NO.
- ------- ---------------------- ----
<S> <C> <C>
12.1** -- Statement of Computation of Ratios.
23.1** -- Consent of Hogan & Hartson L.L.P. (included as part of
Exhibit 5.1).
23.2** -- Consent of Hogan & Hartson L.L.P. (included as part of
Exhibit 8.1)
23.3 -- Consent of Ernst & Young L.L.P.
23.4 -- Consent of Coopers & Lybrand L.L.P.
24.1 -- Power of Attorney (included in the Signature Page of initial
filing).
25.1*** -- Statement of Eligibility of the Trustee on Form T-1.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
</TABLE>

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

* Incorporated herein by reference to the same-numbered exhibit to the Trust's
Annual Report on Form 10-K, as amended, for the fiscal year ended December
31, 1997.

** To be filed by amendment.

*** Previously filed.

II-8

<PAGE> 1

EXHIBIT 23.3

Consent of Independent Auditors

We consent to the reference to our firm under the captions "Experts", "Summary
Selected Financial Information", and "Selected Financial Information" and to
the use of our reports indicated below in this Amendment to registration
statement on Form S-4 of EOP Operating Limited Partnership.

DATE OF AUDITORS'
FINANCIAL STATEMENTS REPORT
- -----------------------------------------------------------------------------------------
<S> <C>
Consolidated financial statements and financial statement February 23, 1998,
schedule III, Real Estate and Accumulated Depreciation of except for Note 25, as
EOP Operating Limited Partnership as of December 31, 1997 to which the date is March
and for the period from July 11, 1997 to December 31, 1997, 18, 1998
and the combined financial statements of the Equity Office
Predecessors as of December 31, 1996 and for the period
from January 1, 1997 to July 10, 1997 and for the years ended
December 31, 1996 and 1995

Statement of Revenue and Certain Expenses of 177 Broad March 28, 1997
Street for the year ended December 31, 1996

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

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

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

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

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

Combined Statement of Revenue and Certain Expenses of the September 3, 1997
Columbus America Properties for the year ended December
31, 1996

</TABLE>

<PAGE> 2

DATE OF AUDITORS'
FINANCIAL STATEMENTS REPORT
- --------------------------------------------------------------------------------

Combined Statement of Revenue and Certain Expenses of the September 3, 1997
Prudential Properties for the year ended December 31, 1996

Combined Statement of Revenue and Certain Expenses of September 24, 1997
550 South Hope Street for the year ended March 31, 1997

Combined Statement of Revenue and Certain Expenses of the September 9, 1997
Acorn Properties for the year ended December 31, 1996

Combined Statement of Revenue and Certain Expenses of 10 September 5, 1997
& 30 South Wacker Drive for the year ended December 31,
1996

Statement of Revenue and Certain Expenses of One Lafayette September 5, 1997
Centre for the year ended December 31, 1996

Combined Statement of Revenue and Certain Expenses of the January 22, 1997
PPM Properties for the year ended December 31, 1996

Combined Statement of Revenue and Certain Expenses of the September 26, 1997
Wright Runstad Properties for the year ended September 30,
1996

/s/ Ernst & Young LLP
ERNST & YOUNG LLP

Chicago, Illinois
April 29, 1998

<PAGE> 1

EXHIBIT 23.4

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Registration Statement on Form S-4 of our
report dated January 21, 1997, on our audits of the consolidated balance sheets
of Beacon Properties, L.P. (the "Operating Partnership") as of December 31,
1996 and 1995, and the related consolidated statements of operations, partners'
capital and cash flows for the years ended December 31, 1996 and 1995 and for
the period May 26, 1994 to December 31, 1994, the combined statements of
operations, owners' equity and cash flows of The Beacon Group, predecessor to
the Operating Partnership, for the period January 1, 1994 to May 25, 1994, and
the related financial statement schedules of the Operating Partnership as of
December 31, 1996.

We also consent to the reference to our firm under the caption "Experts".

/s/ COOPERS & LYBRAND L.L.P.

Boston, Massachusetts

April 29, 1998

<PAGE> 1

EXHIBIT 99.1

LETTER OF TRANSMITTAL

EOP OPERATING LIMITED PARTNERSHIP

OFFER TO EXCHANGE

6.375% NOTES DUE 2003 FOR ANY AND ALL OUTSTANDING 6.375% NOTES DUE 2003
6.625% NOTES DUE 2005 FOR ANY AND ALL OUTSTANDING 6.625% NOTES DUE 2005
6.750% NOTES DUE 2008 FOR ANY AND ALL OUTSTANDING 6.750% NOTES DUE 2008
7.250% NOTES DUE 2018 FOR ANY AND ALL OUTSTANDING 7.250% NOTES DUE 2018
6.376% MANDATORY PAR PUT REMARKETED SECURITIES(SM) DUE 2012 FOR ANY AND
ALL OUTSTANDING 6.376% MANDATORY PAR PUT REMARKETED SECURITIES(SM) DUE 2012
7.24% SENIOR NOTES DUE 2004 FOR ANY AND ALL OUTSTANDING 7.24% SENIOR NOTES DUE
2004
7.36% SENIOR NOTES DUE 2005 FOR ANY AND ALL OUTSTANDING 7.36% SENIOR NOTES DUE
2005
7.44% SENIOR NOTES DUE 2006 FOR ANY AND ALL OUTSTANDING 7.44% SENIOR NOTES DUE
2006
7.41% SENIOR NOTES DUE 2007 FOR ANY AND ALL OUTSTANDING 7.41% SENIOR NOTES DUE
2007

PURSUANT TO THE PROSPECTUS DATED , 1998

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1998 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER
IS EXTENDED BY EOP OPERATING LIMITED PARTNERSHIP.

The Exchange Agent for the Exchange Offer is:

STATE STREET BANK AND TRUST COMPANY

<TABLE>
<CAPTION>
By Mail: By Facsimile Transmission: By Overnight Delivery or Hand:
-------- -------------------------- ------------------------------
<S> <C> <C>
State Street Bank and (For Eligible Institutions State Street Bank and
Trust Company Only) Trust Company
P.O. Box 778 (617) 664-5232 Two International Place
Boston 4th Floor
Massachusetts 02102-0778 Confirm by Telephone: Boston Massachusetts 02110
Attention: Corporate Trust (617) 664-5590 Attention: Corporate Trust
Window Window
</TABLE>

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE
INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED. CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL
HAVE THE SAME MEANING GIVEN THEM IN THE PROSPECTUS (AS DEFINED BELOW).

Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand or by overnight delivery service.
Facsimile transmission is available to a member firm of a registered national
securities exchange, a member firm of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (an "Eligible Institution").

This Letter of Transmittal is to be completed by holders of Private Notes
(as defined below) either if Private Notes are to be forwarded herewith or if
tenders of Private Notes are to be made by book-entry transfer to an account
maintained by State Street Bank and Trust Company (the "Exchange Agent") at The
<PAGE> 2

Depository Trust Company ("DTC") pursuant to the procedures set forth in "The
Exchange Offer -- Procedures for Tendering" in the Prospectus.

DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

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

The undersigned hereby acknowledges receipt and review of the Prospectus
dated , 1998 (the "Prospectus") of EOP Operating Limited
Partnership, a Delaware limited partnership (the "Company"), and this Letter of
Transmittal (the "Letter of Transmittal"), which together describe the Company's
offer (the "Exchange Offer") to provide Holders (as defined below) of its
outstanding 6.375% Notes due 2003 (the "2003 Notes"), 6.625% Notes due 2005 (the
"2005 Notes"), 6.750% Notes due 2008 (the "2008 Notes"), 7.250% Notes due 2018
(the "2018 Notes" and, together with the 2003 Notes, the 2005 Notes and the 2008
Notes, the "$1.25 Billion Notes"), 6.376% MandatOry Par Put Remarketed
Securities(SM) due 2012 (the "MOPPRS"), 7.24% Senior Notes due 2004 (the "2004
Senior Notes"), 7.36% Senior Notes due 2005 (the "2005 Senior Notes"), 7.44%
Senior Notes due 2006 (the "2006 Senior Notes") and the 7.41% Senior Notes due
2007 (the "2007 Senior Notes" and, together with the 2004 Senior Notes, the 2005
Senior Notes and the 2006 Senior Notes, the "$180 Million Notes"), the
opportunity to exchange such notes, for the 6.375% Notes due 2003, 6.625% Notes
due 2005, 6.750% Notes due 2008, 7.250% Notes due 2018, 6.376% MandatOry Par Put
Remarketed Securities(SM) due 2012 (the "Exchange MOPPRS"), 7.24% Senior Notes
due 2004, 7.36% Senior Notes due 2005, 7.44% Senior Notes due 2006 and the 7.41%
Senior Notes due 2007, respectively, offered pursuant to the Prospectus
(collectively, the "Exchange Notes"), which Exchange Notes have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement of which the Prospectus is a part. The $1.25 Billion
Notes, the MOPPRS and the $180 Million Notes are sometimes collectively referred
to as the "Private Notes." Capitalized terms used but not defined herein have
the respective meaning given to them in the Prospectus.

The term "Holder" with respect to the Exchange Offer means any person in
whose name Private Notes are registered on the books of the Issuer or any other
person who has obtained a properly completed bond power from the registered
Holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Private Notes must
complete this Letter of Transmittal in its entirety. Notwithstanding the
foregoing, Holders of Private Notes eligible to utilize DTC's Automated Tender
Offer Program ("ATOP"), who have opted to comply with the ATOP procedures set
forth in the Prospectus under the caption "Exchange Offer -- Procedures for
Tendering," need not complete, sign or deliver this Letter of Transmittal.

The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.

IF YOU WISH TO EXCHANGE PRIVATE NOTES FOR AN EQUAL AGGREGATE PRINCIPAL
AMOUNT OF EXCHANGE NOTES PURSUANT TO THE EXCHANGE OFFER, YOU MUST VALIDLY TENDER
(AND NOT WITHDRAW) PRIVATE NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION
DATE.

PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW. THE INSTRUCTIONS CONTAINED HEREIN MUST BE
FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE
PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.

2
<PAGE> 3

Please list below the Private Notes to which this Letter of Transmittal
relates. If the space below is inadequate, please list the certificate numbers
and principal amounts on a separately executed schedule and affix the schedule
to this Letter of Transmittal.

DESCRIPTION OF PRIVATE NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------
DESCRIPTION OF 2003 NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aggregate
Name(s) and Address(es) Principal Amount Aggregate
of Registered Owner(s) Represented by Private Principal Amount
(Please fill in, if blank) Notes Tendered(1)
==========================================================================================================
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>

DESCRIPTION OF 2005 NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aggregate
Name(s) and Address(es) Principal Amount Aggregate
of Registered Owner(s) Represented by Private Principal Amount
(Please fill in, if blank) Notes Tendered(1)
==========================================================================================================
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>

DESCRIPTION OF 2008 NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aggregate
Name(s) and Address(es) Principal Amount Aggregate
of Registered Owner(s) Represented by Private Principal Amount
(Please fill in, if blank) Notes Tendered(1)
==========================================================================================================
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>

(1) Unless otherwise indicated, any tendering Holder of Private Notes will
be deemed to have tendered the entire aggregate principal amount represented by
such Private Notes. All tenders (i) of $1.25 Billion Notes or MOPPRS must be in
minimum denominations of $100,000 aggregate principal amount and integral
multiples of $1,000 in excess thereof; and (ii) of $180 Million Notes must be
tendered in integral multiples of $1,000 principal amount.

3
<PAGE> 4

DESCRIPTION OF 2018 NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aggregate
Name(s) and Address(es) Principal Amount Aggregate
of Registered Owner(s) Represented by Private Principal Amount
(Please fill in, if blank) Notes Tendered(1)
==========================================================================================================
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>

DESCRIPTION OF MOPPRS TENDERED
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aggregate
Name(s) and Address(es) Principal Amount Aggregate
of Registered Owner(s) Represented by Private Principal Amount
(Please fill in, if blank) Notes Tendered(1)
==========================================================================================================
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>

DESCRIPTION OF 2004 SENIOR NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aggregate
Name(s) and Address(es) Principal Amount Aggregate
of Registered Owner(s) Represented by Private Principal Amount
(Please fill in, if blank) Notes Tendered(1)
==========================================================================================================
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>

4
<PAGE> 5

DESCRIPTION OF 2005 SENIOR NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aggregate
Name(s) and Address(es) Principal Amount Aggregate
of Registered Owner(s) Represented by Private Principal Amount
(Please fill in, if blank) Notes Tendered(1)
==========================================================================================================
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>

DESCRIPTION OF 2006 SENIOR NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aggregate
Name(s) and Address(es) Principal Amount Aggregate
of Registered Owner(s) Represented by Private Principal Amount
(Please fill in, if blank) Notes Tendered(1)
==========================================================================================================
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>

DESCRIPTION OF 2007 SENIOR NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aggregate
Name(s) and Address(es) Principal Amount Aggregate
of Registered Owner(s) Represented by Private Principal Amount
(Please fill in, if blank) Notes Tendered(1)
==========================================================================================================
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>

5
<PAGE> 6

TENDER OF PRIVATE NOTES
- --------------------------------------------------------------------------------

[ ] Check here if tendered Private Notes are enclosed herewith.

[ ] Check here if tendered Private Notes are being delivered by book-entry
transfer made to the account maintained by the Exchange Agent at DTC
and complete the following (For Use By Eligible Institutions Only):

Name of Tendering Institution:

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

DTC Account Number:
------------------------------------------------------------------------

Transaction Code Number:
------------------------------------------------------------------------

[ ] Check here if tendered Private Notes are being delivered pursuant to a
Notice of Guaranteed Delivery enclosed herewith and complete the
following (For Use By Eligible Institutions Only):

Name of Registered Note Holder(s):
-----------------------------------------------------------------------

Window Ticket Number (if any):

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

Date of Execution of Notice of Guaranteed Delivery:
-------------------------------------------------------

Name of Eligible Institution that Guaranteed Delivery:
-----------------------------------------------------

[ ] Check here if you are a broker-dealer who acquired the Private Notes
for its own account as a result of market making or other trading
activities (a "Participating Broker-Dealer") and wish to receive
additional copies of the Prospectus and any amendments or supplements
thereto. In such case, please complete the following:

Name:
------------------------------------------------------------------------

Address:
------------------------------------------------------------------------

Area Code and Telephone Number:

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

Contact Person:
------------------------------------------------------------------------

Quantity:
------------------------------------------------------------------------

6
<PAGE> 7

LADIES AND GENTLEMEN:

The undersigned hereby tenders to the Company the above described aggregate
principal value of Private Notes in exchange for a like aggregate principal
value of Exchange Notes, upon the terms and subject to the conditions set forth
in the Prospectus.

Subject to and effective upon the acceptance for exchange of all or any
portion of the Private Notes tendered herewith in accordance with the terms and
conditions of the Exchange Offer (including, if the Exchange Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to or upon the order of the
Company all right, title and interest in and to such Private Notes as are being
tendered herewith. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as its agent and attorney-in-fact (with full knowledge that
the Exchange Agent is also acting as agent of Company in connection with the
Exchange Offer) with respect to the tendered Private Notes, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), subject only to the right of withdrawal described in
the Prospectus, to (i) deliver such Private Notes, or transfer ownership of such
Private Notes on the account books maintained by DTC, to the Company and deliver
all accompanying evidences of transfer and authenticity, and (ii) present such
Private Notes for transfer on the books of the Company and receive all benefits
and otherwise exercise all rights of beneficial ownership of such Private Notes,
all in accordance with the terms and conditions of the Exchange Offer. The power
of attorney granted in this paragraph shall be deemed to be irrevocable and
coupled with an interest. See "The Exchange Offer -- Procedures for Tendering"
in the Prospectus.

THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
PRIVATE NOTES TENDERED HEREBY AND TO ACQUIRE THE EXCHANGE NOTES ISSUABLE UPON
THE EXCHANGE OF SUCH TENDERED PRIVATE NOTES, AND THAT, WHEN SUCH PRIVATE NOTES
ARE ACCEPTED FOR EXCHANGE, THE COMPANY WILL ACQUIRE GOOD, MARKETABLE AND
UNENCUMBERED TITLE THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES
AND ENCUMBRANCES AND NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE
UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS
DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE PRIVATE NOTES TENDERED
HEREBY, INCLUDING THE TRANSFER OF SUCH PRIVATE NOTES ON THE ACCOUNT BOOKS
MAINTAINED BY DTC. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF
THE EXCHANGE OFFER.

The undersigned understands that tenders of Private Notes pursuant to any
one of the procedures described in "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions hereto will, upon the
Company's acceptance for exchange of such tendered Private Notes, constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer. The undersigned recognizes
that, under certain circumstances set forth in the Prospectus, the Company may
not be required to accept for exchange any of the Private Notes tendered hereby.

The undersigned, if a Holder of $1.25 Billion Notes or MOPPRS, hereby
waives the right to receive any payment in respect of interest on the $1.25
Billion Notes or MOPPRS, as the case may be, accrued from the later of February
18, 1998 or the Interest Payment Date immediately preceding the date of issuance
of the $1.25 Billion Exchange Notes or Exchange MOPPRS, as applicable, to the
date of issuance of the $1.25 Billion Exchange Notes or Exchange MOPPRS, as
applicable. The undersigned, if a Holder of $180 Million Notes, hereby waives
the right to receive any payment in respect of interest on the $180 Million
Notes accrued from the Interest Payment Date immediately preceding the date of
issuance of the $180 Million Exchange Notes to the date of issuance of the $180
Million Exchange Notes. Interest on the Private Notes which are exchanged for
the Exchange Notes will cease to accrue on the day preceding the date of
issuance of the Exchange Notes. Interest payable on the first Interest Payment
Date with respect to the Exchange Notes will include accrued but unpaid interest
due on the Private Notes (which they replace) for the period from the later of
(i) with respect to the $1.25 Billion Exchange Notes and the Exchange MOPPRS,
February 18, 1998 or (ii) the Interest Payment Date immediately preceding the
date of issuance of the applicable Exchange Notes (currently expected to be the
Interest Payment Date of March 1, 1998 with respect to the $180 Million Notes)
to the date of such issuance and will be paid to persons in whose name the

7
<PAGE> 8

applicable Exchange Notes are registered in the security register applicable to
the Exchange Notes as of the close of business on the date 15 days prior to such
payment date.

Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes
issued in exchange for Private Notes accepted for exchange be issued in the
name(s) of the undersigned or, in the case of a book-entry transfer of Private
Notes, that such Exchange Notes be credited to the account indicated above
maintained at DTC. If applicable, substitute certificates representing Private
Notes not tendered or not accepted for exchange will be issued to the
undersigned or, in the case of a book-entry transfer of Private Notes, will be
credited to the account indicated above maintained at DTC. Similarly, unless
otherwise indicated under "Special Delivery Instructions," the undersigned
hereby directs that Exchange Notes be delivered to the undersigned at the
address shown below the undersigned's signature. In the event that "Special
Issuance Instructions" and/or "Special Delivery Instructions" are completed, the
undersigned hereby directs that the Exchange Notes issued in exchange for
Private Notes accepted for exchange be issued in the name(s) of and/or delivered
to, and any Private Notes not tendered or not exchanged be returned to, the
person(s) so indicated. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Private Notes from the name of the registered
holder(s) thereof if the Company does not accept for exchange any of the Private
Notes so tendered for exchange.

The undersigned acknowledges that this Exchange Offer is being made in
reliance upon interpretations contained in no-action letters issued to third
parties by the staff of the Division of Corporation Finance of the Securities
and Exchange Commission (the "Staff") and that the Exchange Notes issued in
exchange for the Private Notes pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by Holders thereof (other than any such
Holder that is (i) an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act or (ii) a broker-dealer that acquired the Private Notes
in a transaction other than as part of its market-making or other trading
activities), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of such Holders' business and such Holders are not
engaging in and do not intend to engage in a distribution of the Exchange Notes
and have no arrangement or understanding with any person to participate in a
distribution of such Exchange Notes.

BY TENDERING PRIVATE NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY FURTHER REPRESENTS AND WARRANTS THAT: (I) NEITHER THE HOLDER
NOR ANY OTHER PERSON RECEIVING EXCHANGE NOTES FROM THE HOLDER IS AN "AFFILIATE"
OF THE COMPANY WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT; (II) THE
EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED IN EXCHANGE FOR PRIVATE NOTES
TENDERED HEREBY ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS,
WHETHER OR NOT THE UNDERSIGNED IS THE HOLDER; (III) NEITHER THE UNDERSIGNED NOR
ANY OTHER PERSON RECEIVING EXCHANGE NOTES IS ENGAGING IN OR INTENDS TO ENGAGE IN
A DISTRIBUTION OF THE EXCHANGE NOTES, AND (IV) NEITHER THE UNDERSIGNED NOR ANY
OTHER PERSON RECEIVING EXCHANGE NOTES HAS AN ARRANGEMENT OR UNDERSTANDING WITH
ANY PERSON TO PARTICIPATE IN A DISTRIBUTION OF EXCHANGE NOTES TO BE RECEIVED IN
THE EXCHANGE OFFER.

BY TENDERING PRIVATE NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING
THIS LETTER OF TRANSMITTAL, A HOLDER OF PRIVATE NOTES THAT IS A BROKER-DEALER
REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY
THE STAFF TO THIRD PARTIES, THAT (A) SUCH PRIVATE NOTES HELD BY THE
BROKER-DEALER ARE HELD ONLY AS A NOMINEE, OR (B) SUCH PRIVATE NOTES WERE
ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING
ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER A PROSPECTUS (AS
AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING THE REQUIREMENTS OF THE
SECURITIES ACT IN CONNECTION WITH ANY SALE OF SUCH EXCHANGE NOTES (PROVIDED
THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER
WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF
THE SECURITIES ACT).

The Company has agreed that, subject to the provisions of the Registration
Rights Agreement, the Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of the Exchange Notes received in exchange for Private Notes for a period ending
180 days after the Expiration Date (subject to extension under certain limited
circumstances described in the Prospectus) or, if earlier, when all such
Exchange Notes have been disposed of by such Participating

8
<PAGE> 9

Broker-Dealer. In that regard, each Participating Broker-Dealer, by tendering
such Private Notes and executing this Letter of Transmittal, agrees that, upon
receipt of notice from the Company of the occurrence of any event or the
discovery of any fact which makes any statement contained or incorporated by
reference in the Prospectus untrue in any material respect or which causes the
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference therein, in light of the
circumstances under which they were made, not misleading or of the occurrence of
certain other events specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of Exchange Notes pursuant to
the Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to the Participating Broker-Dealer or the Company has
given notice that the sale of the Exchange Notes may be resumed, as the case may
be, if the Company gives such notice to suspend the sale of the Exchange Notes,
it shall extend the 180-day period referred to above during which Participating
Broker-Dealers are entitled to use the Prospectus in connection with the resale
of Exchange Notes by the number of days during the period from and including the
date of the giving of such notice to and including the date when Participating
Broker-Dealers shall have received copies of the supplemented or amended
Prospectus necessary to permit resales of the Exchange Notes or to and including
the date on which the Company has given notice that the sale of Exchange Notes
may be resumed, as the case may be.

All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and every
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned.

For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange validly tendered Private Notes when, as and if the Company
gives oral or written notice thereof to the Exchange Agent. Any tendered Private
Notes that are not accepted for exchange pursuant to the Exchange Offer for any
reason will be returned, without expense, to the undersigned at the address
shown below or at a different address as may be indicated herein under "Special
Delivery Instructions" or, if tendered by book-entry transfer, by crediting the
account indicated above maintained at DTC, as promptly as practicable after the
Expiration Date.

Please be advised that the Company is registering the Exchange Notes in
reliance on the position of the Staff enunciated in Exxon Capital Holdings Corp.
(available April 13, 1989) and Morgan Stanley & Co. Incorporated (available June
5, 1991). The Company has not entered into any arrangement or understanding with
any person to distribute the Exchange Notes to be received in the Exchange Offer
and, to the best of its information and belief, each person participating in the
Exchange Offer is acquiring the Exchange Notes in its ordinary course of
business and has no arrangement or understanding with any person to participate
in the distribution of the Exchange Notes to be received in the Exchange Offer.
In this regard, the undersigned is aware that if the undersigned is
participating in the Exchange Offer for the purpose of distributing the Exchange
Notes to be acquired in the Exchange Offer, the undersigned (a) may not rely on
the Staff position enunciated in Exxon Capital Holdings Corp. or interpretative
letters to similar effect and (b) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. The undersigned is aware that such a secondary
resale transaction by a person participating in the Exchange Offer for the
purpose of distributing the Exchange Notes should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 of Regulation S-K.

9
<PAGE> 10

SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, AND 6)
To be completed ONLY if the Exchange Notes or any Private Notes delivered, but
not tendered for exchange, are to be sent to someone other than the registered
holder of the Private Notes whose name(s) appear(s) above, or such registered
holder(s) at an address other than that shown above.
Issue: [ ] Exchange Notes and/or
[ ] Private Notes delivered but not tendered for exchange:

Name(s)
- -------------------------------------------------------
(Please Print)

Address:
- -------------------------------------------------------
(Please Print)

- -------------------------------------------------------
(Please Include ZIP Code)

- -------------------------------------------------------
(Telephone number with Area Code)

- -------------------------------------------------------
Tax ID Number

SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, AND 6)

To be completed ONLY if the Exchange Notes or any Private Notes delivered, but
not tendered for exchange, are to be issued in the name of someone other than
the registered holder of the Private Notes whose name(s) appear(s) above.
Issue: [ ] Exchange Notes and/or
[ ] Private Notes delivered but not tendered for exchange:

Name(s)
- ------------------------------------------------------
(Please Print)

Address:
- -------------------------------------------------------
(Please Print)

- -------------------------------------------------------
(Please Include ZIP Code)

- -------------------------------------------------------
(Telephone number with Area Code)

- -------------------------------------------------------
Tax ID Number

10
<PAGE> 11

HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(Please Complete Substitute Form W-9 Contained Herein)
(Note: Signatures Must be Guaranteed if Required by Instruction 2)

Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificates for the Private Notes tendered (or, in the case of book-entry
securities, on the relevant security position listing), or by any person(s)
authorized to become the registered holder(s) by endorsements and documents
transmitted herewith (including such opinions of counsel, certifications and
other information as may be required by the Company to comply with the
restrictions on transfer applicable to the Private Notes). If signature is by an
attorney-in-fact, executor, administrator, trustee, guardian, officer or a
corporation or another acting in a fiduciary capacity or representative
capacity, please set forth the signer's full title. See Instruction 5.

X
- -----------------------------------------------------
X
- -----------------------------------------------------
(SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY)

Date:
- -----------------------------------------, 1998
Name(s):
- ------------------------------------------------------
- ------------------------------------------------------
(PLEASE PRINT)

Capacity:
- ------------------------------------------------------
Address:
- ------------------------------------------------------
- ------------------------------------------------------
(PLEASE INCLUDE ZIP CODE)
Telephone No. (with area code):
- ------------------------------------------------------
Tax ID No.:
- ------------------------------------------------------
GUARANTEE OF SIGNATURES
(See Instruction 2 and 5 below)
Certain Signatures Must be Guaranteed
by an Eligible Institution

- ------------------------------------------------------
(AUTHORIZED SIGNATURE)

- ------------------------------------------------------
(CAPACITY (FULL TITLE))

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

- ------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURE)

- ------------------------------------------------------
(ADDRESS OF FIRM -- PLEASE INCLUDE ZIP CODE)

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

Telephone No. (with area code) of Firm:

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

Date:
- -----------------------------------------, 1998

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

1. DELIVERY OF LETTER OF TRANSMITTAL AND PRIVATE NOTES OR BOOK-ENTRY
CONFIRMATIONS; GUARANTEED DELIVERY PROCEDURES. This Letter of Transmittal is to
be completed either if (a) certificates are to be forwarded herewith or (b)
tenders are to be made pursuant to the procedures for tender by book-entry
transfer set forth in "The Exchange Offer -- Procedures for Tendering" in the
Prospectus. Certificates representing, or timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of, such Private Notes into the Exchange
Agent's account at DTC, as well as this Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent at its address set forth herein on or prior to
the Expiration Date.

11
<PAGE> 12

Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available or (ii) who cannot deliver their Private Notes,
this Letter of Transmittal and all other required documents to the Exchange
Agent on or prior to the Expiration Date or (iii) who cannot complete the
procedures for delivery by book-entry transfer on a timely basis, may tender
their Private Notes by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery Procedures" in the Prospectus.
Pursuant to such procedures: (i) such tender must be made by or through an
Eligible Institution (as defined on the cover hereof); (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by the Company, must be received by the Exchange Agent on or prior to
the Expiration Date; and (iii) the certificates (or a Book-Entry Confirmation)
representing all tendered Private Notes, in proper form for transfer, together
with a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within three New York Stock Exchange ("NYSE") trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in "The
Exchange Offer -- Guaranteed Delivery Procedures" in the Prospectus.

The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Private Notes to
be properly tendered pursuant to the guaranteed delivery procedure, the Exchange
Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration
Date.

THE METHOD OF DELIVERY OF PRIVATE NOTES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT, IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

The Company will not accept any alternative, conditional or contingent
tenders. Each tendering Holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.

2. GUARANTEE OF SIGNATURES. NO SIGNATURE GUARANTEE ON THIS LETTER OF
TRANSMITTAL IS REQUIRED IF:

(i) this Letter of Transmittal is signed by the registered holder (which
term, for purposes of this document, shall include any participant in
DTC whose name appears on the relevant security position listing as the
owner of the Private Notes) of Private Notes tendered herewith, unless
such holder(s) has completed either the box entitled "Special Issuance
Instructions" or the box entitled "Special Delivery Instructions"
above, or

(ii) such Private Notes are tendered for the account of a firm that is an
Eligible Institution.

In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.

3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Private Notes Tendered" is inadequate, the certificate number(s)
and/or the aggregate principal amount of Private Notes and any other required
information should be listed on a separate signed schedule which is attached to
this Letter of Transmittal.

4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS.If less than all the Private Notes
evidenced by any certificate submitted are to be tendered, fill in the aggregate
principal amount of Private Notes which are to be tendered in the applicable box
entitled "Aggregate Principal Amount of Private Notes Tendered for Exchange." In
such case, new certificates (s) for the remainder of the Private Notes that were
evidenced by your old certificate(s) will be sent to the holder of the Private
Notes (or such other party as you identify in the box captioned "Special
Delivery Instructions"), promptly after the Expiration Date. All Private Notes
represented by certificates delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.

12
<PAGE> 13

Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at its address set forth above on or prior to the Expiration
Date. Any such notice of withdrawal must specify the name of the person who
tendered the Private Notes to be withdrawn, the aggregate principal amount of
Private Notes to be withdrawn, and (if certificates for Private Notes have been
tendered) the name of the registered holder of the Private Notes as set forth on
the certificate for the Private Notes, if different from that of the person who
tendered such Private Notes. If the Private Notes have been delivered or
otherwise identified to the Exchange Agent, then prior to the physical release
of such Private Notes, the tendering holder must submit the serial numbers shown
on the particular Private Notes to be withdrawn and the signature on the notice
of withdrawal must be guaranteed by an Eligible Institution, except in the case
of Private Notes tendered for the account of an Eligible Institution. If Private
Notes have been tendered pursuant to the procedures for book-entry transfer set
forth in "The Exchange Offer -- Procedures for Tendering," the notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawal of Private Notes, in which case a notice of withdrawal will
be effective if delivered to the Exchange Agent by written, telegraphic, telex
or facsimile transmission. Withdrawals of tenders of Private Notes may not be
rescinded. Private Notes properly withdrawn will not be deemed validly tendered
for purposes of the Exchange Offer, but may be retendered at any subsequent time
on or prior to the Expiration Date by following any of the procedures described
in the Prospectus under "The Exchange Offer -- Procedures for Tendering."

All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
The Company, any affiliates or assigns of the Company, the Exchange Agent or any
other person shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Private Notes which have been tendered but which
are withdrawn will be returned to the holder thereof without cost to such holder
promptly after withdrawal.

5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Private
Notes tendered hereby, the signatures(s) must correspond exactly with the
name(s) as written on the face of the Private Note(s) (or, in the case of
book-entry securities, on the relevant security position listing) without
alteration, enlargement or any change whatsoever.

If any of the Private Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.

If this Letter of Transmittal or any Private Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to the Company, in its sole discretion, of such persons'
authority to so act.

When this Letter of Transmittal is signed by the registered owner(s) of the
Private Notes listed and transmitted hereby, no endorsement(s) of Private
Note(s) or separate bond power(s) are required unless Exchange Notes are to be
issued in the name of a person other than the registered holder(s). Signature(s)
on such Private Note(s) or bond power(s) must be guaranteed by an Eligible
Institution.

If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Private Notes listed, the Private Notes must be
endorsed or accompanied by appropriate bond powers, signed exactly as the name
or names of the registered owner(s) appear(s) on the Private Notes, and also
must be accompanied by such opinions of counsel, certifications and other
information as the Company may require in accordance with the restrictions on
transfer applicable to the Private Notes. Signatures on such Private Notes or
bond powers must be guaranteed by an Eligible Institution.

6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTION. If Exchange Notes are to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than shown above,
the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Private Notes not exchanged will be returned by

13
<PAGE> 14

mail or, if tendered by book-entry transfer, by crediting the account indicated
above maintained at DTC. See Instruction 4.

7. IRREGULARITIES. The company will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tender of Private Notes, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for, may, in the view of
counsel to the Company, be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any conditions or irregularity in any
tender of Private Notes of any particular holder whether or not similar
conditions or irregularities are waived in the case of other holders. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including this Letter of Transmittal and the instructions hereto) will be final
and binding. No tender of Private Notes will be deemed to have been validly made
until all irregularities with respect to such tender have been cured or waived.
The Company, any affiliates or assigns of the Company, the Exchange Agent, or
any other person shall not be under any duty to give notification of any
irregularities in tenders or incur any liability for failure to give such
notification.

8. QUESTIONS, REQUEST FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.

9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Private Notes have been lost, destroyed or stolen, the holder
should promptly notify the Exchange Agent. The holder will then be instructed as
to the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost, destroyed or stolen certificate(s) have been
followed.

10. SECURITY TRANSFER TAXES. Holders who tender their Private Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, Exchange Notes are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of the
Private Notes tendered, or if a transfer tax is imposed for any reason other
than the exchange of Private Notes in connection with the Exchange Offer, then
the amount of any such transfer tax (whether imposed on the registered holder or
any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.

IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.

IMPORTANT TAX INFORMATION

Under federal income tax law, a holder whose tendered Private Notes are
accepted for exchange is required by law to provide the Exchange Agent with such
holder's correct taxpayer identification number ("TIN") on Substitute Form W-9
included herein or otherwise establish a basis for exemption from backup
withholding. If such holder is an individual, the TIN is his or her social
security number. If the Exchange Agent is not provided with the correct TIN, the
Internal Revenue Service may subject the holder or transferee to a $50.00
penalty. In addition, delivery of such holder's Exchange Notes may be subject to
backup withholding. Failure to comply truthfully with the backup withholding
requirements also may result in the imposition of severe criminal and/or civil
fines and penalties.

Certain holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Exchange Agent. A foreign person, including entities, may qualify as
an exempt recipient by submitting to the

14
<PAGE> 15

Exchange Agent a properly completed Internal Revenue Service Form W-8, signed
under penalties of perjury, attesting to that holder's foreign status. A Form
W-8 can be obtained from the Exchange Agent. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instruction.

If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments made to the holder or other transferee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.

PURPOSE OF SUBSTITUTE FORM W-9

To prevent backup withholding on payments made with respect to Private
Notes exchanged in the Exchange Offer, the holder is required to provide the
Exchange Agent with either: (i) the holder's correct TIN by completing the form
included herein, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such holder is awaiting a TIN) and that (A) the holder has not
been notified by the Internal Revenue Service that the holder is subject to
backup withholding as a result of failure to report all interest or dividends or
(B) the Internal Revenue Service has notified the holder that the holder is no
longer subject to back withholding; or (ii) an adequate basis for exemption.

NUMBER TO GIVE THE DEPOSITORY

The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered holder of
the Private Notes. If the Old Notes are held in more than one name or are held
not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.

15
<PAGE> 16

<TABLE>
<S><C>
- -----------------------------------------------------------------------------------------------------------------------
PAYER'S NAME:
- -----------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX Social Security number or
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING ---------------------------------
BELOW. Employer identification number
----------------------------------------------------------------------------------
PART 2 -- Certification -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Number (or I am waiting
for a number to be issued to me) and
(2) I am not subject to backup withholding because (i) I have not been notified
by the Internal Revenue Service ("IRS") that I am subject to backup withholding
as a result of failure to report all interest of dividends, or (ii) the IRS
has notified me that I am no longer subject to backup withholding.
----------------------------------------------------------------------------------

PAYER'S REQUEST FOR TAXPAYER Certification Instructions -- You must cross out item
IDENTIFICATION NUMBER (TIN) (2) in Part 2 above if you have been notified by the
IRS that you are subject to backup withholding
because of underreporting interest or dividends on
your tax return. However, if after being notified by
the IRS that you are subject to backup withholding
you received another notification from the IRS PART 3
stating that you are no longer subject to backup Awaiting
withholding, do not cross out item (2). TIN [ ]
Date , 1998
------------------------ ---------
Signature

------------------------------------
Name (please print)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE ENCLOSED GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU CHECKED THE BOX IN PART 3 OF THIS SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all payments made to me on account of the New Notes
shall be retained until I provide a taxpayer identification number to the
Exchange Agent and that, if I do not provide my taxpayer identification number
with 60 days, such retained amounts shall be remitted to the Internal Revenue
Service as backup withholding and 31% of all reportable payments made to me
thereafter will be withheld and remitted to the Internal Revenue Service until
I provide a taxpayer identification number.

SIGNATURE DATE: DATE 1998
-------------------------------- ----------------------

NAME (PLEASE PRINT)
-----------------------------
- --------------------------------------------------------------------------------

<PAGE> 1

EXHIBIT 99.2

NOTICE OF GUARANTEED DELIVERY

EOP OPERATING LIMITED PARTNERSHIP

OFFER TO EXCHANGE

PURSUANT TO THE PROSPECTUS DATED , 1998

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1998 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER
IS EXTENDED BY EOP OPERATING LIMITED PARTNERSHIP.

This form or one substantially equivalent hereto must be used by a holder
of Private Notes (as defined below) to accept the Exchange Offer of EOP
Operating Limited Partnership (the "Issuer") and to tender Private Notes to
State Street Bank and Trust Company, as exchange agent (the "Exchange Agent")
pursuant to the guaranteed delivery procedures described in "The Exchange
Offer -- Guaranteed Delivery Procedures" of the Issuer's Prospectus dated
, 1998 (the "Prospectus") and in Instruction 1 to the related Letter
of Transmittal. The Exchange Offer provides holders of the Issuer's outstanding
6.375% Notes due 2003 (the "2003 Notes"), 6.625% Notes due 2005 (the "2005
Notes"), 6.750% Notes due 2008 (the "2008 Notes"), 7.250% Notes due 2018 (the
"2018 Notes" and, together with the 2003 Notes, the 2005 Notes and the 2008
Notes, the "$1.25 Billion Notes"), 6.376% MandatOry Par Put Remarketed
Securities(SM) due 2012 (the "MOPPRS"), 7.24% Senior Notes due 2004 (the "2004
Senior Notes"), 7.36% Senior Notes due 2005 (the "2005 Senior Notes"), 7.44%
Senior Notes due 2006 (the "2006 Senior Notes") and the 7.41% Senior Notes due
2007 (the "2007 Senior Notes" and, together with the 2004 Senior Notes, the 2005
Senior Notes and the 2006 Senior Notes, the "$180 Million Notes"), the
opportunity to exchange such notes, for the 6.375% Notes due 2003, 6.625% Notes
due 2005, 6.750% Notes due 2008, 7.250% Notes due 2018, 6.376% MandatOry Par Put
Remarketed Securities(SM) due 2012, 7.24% Senior Notes due 2004, 7.36% Senior
Notes due 2005, 7.44% Senior Notes due 2006 and the 7.41% Senior Notes due 2007,
respectively, offered pursuant to the Prospectus (collectively, the "Exchange
Notes"), which Exchange Notes have been registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a Registration Statement of
which the Prospectus is a part. The $1.25 Billion Notes, the MOPPRS and the $180
Million Notes are sometimes collectively referred to as the "Private Notes." Any
holder who wishes to tender Private Notes pursuant to such guaranteed delivery
procedures must ensure that the Exchange Agent receives this Notice of
Guaranteed Delivery prior to the Expiration Date of the Exchange Offer.
Capitalized terms used but not defined herein have the respective meaning given
to them in the Prospectus.
<PAGE> 2

STATE STREET BANK AND TRUST COMPANY, EXCHANGE AGENT

<TABLE>
<CAPTION>
By Mail: By Facsimile Transmission: By Overnight Delivery or Hand:
-------- -------------------------- ------------------------------
<S> <C> <C>
State Street Bank and (For Eligible Institutions State Street Bank and
Trust Company Only) Trust Company
P.O. Box 778 (617) 664-5232 Two International Place
Boston Massachusetts 4th Floor
02102-0778 Confirm by Telephone: Boston Massachusetts 02110
Attention: Corporate Trust (617) 664-5590 Attention: Corporate Trust
Window Window
</TABLE>

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

DELIVERY OF THIS NOTICE TO AN ADDRESS OR TRANSMISSION OF INSTRUCTIONS VIA
FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN ELIGIBLE INSTITUTION UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED ON THE LETTER
OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
<PAGE> 3

LADIES AND GENTLEMEN:

The undersigned hereby tenders to the Issuer, upon the terms and subject to
the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amounts of
Private Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction of the Letter of Transmittal.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF PRIVATE NOTES TENDERED
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CERTIFICATE NUMBER(S) (IF KNOWN) OF PRIVATE AGGREGATE AGGREGATE
NOTES OR ACCOUNT NUMBER AT THE BOOK-ENTRY PRINCIPAL AMOUNT PRINCIPAL AMOUNT
FACILITY AND SERIES OF PRIVATE NOTES TENDERED REPRESENTED TENDERED
- ---------------------------------------------------------------------------------------------------------------------------

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

------------------------------------------------------------------
TOTAL
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

Signature of Registered Holder(s) or Authorized Signatory:

Date:
- ------------------------------------------------------

Name(s):
- ------------------------------------------------------

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

Address:
- ------------------------------------------------------

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

- ------------------------------------------------------
Zip Code

Area Code and Tel. No.(s):
----------------------------

- ------------------------------------------------------
(Please Type or Print)
Principal Amount of Private
Notes Tendered: $
-------------------------------------

Certificate Nos. (if available):

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

Total Principal Amount Represented
by Private Note Certificate(s):

$
- ----------------------------------------------------

CHECK IF PRIVATE NOTES WILL BE TENDERED BY BOOK-ENTRY TRANSFER

[ ] The Depository Trust Company

Account Number:
--------------------------------------

THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED
<PAGE> 4

GUARANTEE
(Not to be used for signature guarantee)

The undersigned, being an Eligible Institution, hereby guarantees deposit
with the Exchange Agent of either (i) the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, together with the Private Notes tendered hereby in proper form for
transfer (or confirmation of the book-entry transfer of such Private Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility described in
the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures" and in the Letter of Transmittal, in proper form for transfer), and
any other required documents, or (ii) a properly transmitted Agent's Message as
described in the Prospectus under the caption "The Exchange Offer -- Procedures
For Tendering," as the case may be, all by 5:00 p.m., New York City time, within
three New York Stock Exchange trading days following the Expiration Date.

- ----------------------------------------------------
Name of Firm

- ----------------------------------------------------
Address

- ----------------------------------------------------
Zip Code

Area Code and Tel. No.:
-----------------------------

- ----------------------------------------------------
Authorized Signature

- ----------------------------------------------------
Title

Name:
-----------------------------------------------
(Please Type or Print)

Dated:
----------------------------------------------

NOTE: DO NOT SEND PRIVATE NOTE CERTIFICATES WITH THIS FORM. ACTUAL SURRENDER OF
PRIVATE NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY
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